New World Notes

How Linden Lab Could Pay Back Its Original Investors (Including Jeff Bezos) and Split Into Two Companies (Comment of the Week)

Above: Linden Lab's Crunchbase listing

Last week's reader comment from "Irihapeti'" suggesting that Linden Lab should sell off Second Life provoked so many further comments that I looked up the startup in Crunchbase. I believe there was a round of seed funding around 1999/2000 that's not reported there, but according to Crunchbase, since 2004 the company has raised $19 million in total investments -- most recently in 2006, when a lead investor was Jeff Bezos. (Which yes, suggests that the future of Second Life may be impacted by Bezos' upcoming divorce settlement.) That's less an investment than I had recalled last week. With Second Life still returning relatively reliable revenue of about $60-70 million a year, the company could probably find a buyer for SL-- at, perhaps, $250 million -- give its original investors a very decent profit, and still have enough to function.

However, Irihapeti returned to write out an even more intriguing thought experiment: Turn Linden Lab into two companies, one running Second Life, the other running Sansar and other projects. As she argues:

It doesn't have to be sold to a single buyer. Concerns over a sale can be ameliorated by issuing new additional shares in the Second Life company to new investors who put their money into dividend-returning (cash cow) investments. A cash cow investment is what Second Life now is from an investors' point of view.

The existing Linden Lab shareholders would get some buyback cash from this, and can either retain their existing shares in the Second Life company, or sell them on the open market as they choose. While also retaining for themselves all the shares in Linden Lab Research (Sansar, and the other Lab games) with a cash infusion to the Lab from the sale of new Second Life shares, and a second cash infusion from a sale of additional shares in Linden Research if they so choose.

In that scenario, Sansar "will stand or fall on its own merits in the marketplace. And not be tied to the continued success or otherwise of Second Life." And then this second company could focus on SL and its established customer base -- a good thing for them, Irihapeti argues:

iPhone/iPad "Companion App" for Second Life Coming Soon from Linden Lab

Last August Linden Lab started advertising to hire a "mobile app engineer to deliver a compelling, responsive mobile interface into Second Life", and now the Modem World blog has an official confirmation that the company is indeed creating some kind of iOS "companion app" for SL:

[W]e’re in the early stages of work on an iOS companion app for Second Life.  Right now we’re focused on getting a prototype out to our Residents, at which point we’ll be looking for feedback and suggestions. In the early stages, we will not be tying the app to a streaming service. However, we don’t have anything to formally announce yet about the specific features, capabilities, and availability.

The specific wording strongly suggests this won't be full-featured 3D graphics client for SL. More likely, it'll enable SL chat, inventory management, and other select features for iOS, much like the (sadly discontinued) Pocket Metaverse for iOS once did. The original job listing required "Experience developing consumer-oriented mobile applications for Android and iOS", so expect some kind of Android app for SL from Linden Lab too. Until then, there's the third party, feature rich Lumiya Android app for SL (pictured above).

Sansar's Steam Reviews Decidedly "Mixed" One Month After Publication

Since Sansar hit Steam almost exactly a month ago, we now have a better picture of how it's perceived by Steam's established userbase of core gamers. Based on most recent reviews, their reaction is distinctly Mixed. Here's a sample of reviews from people who are not evidently from Sansar's early beta, pre-Steam period, but discovering the platform for the first time:

It certainly has potential. The engine is absolutely gorgeous, and runs decently. Some of the worlds blew me away with how nice they looked. But I cannot enjoy them. Sansar has horrible controls in VR. It is very uncomfortable to use. The feeling of embodiment that I can get in other social VR platforms does not happen here...

Weird game with nothing to do. The executable itself acts suspicious and never shuts down.

Sansar could still use some work, but has a lot of potential. The game looks amazing, and the people I've met are friendly and helpful. I attended a live comedy event this past week and it was hilarious when one of the comics started wandering out into the crowd to interact with people.

I'll try it again once it's more optimized because it seems as if it has potential. I couldn't really read the descriptions of the "worlds" as the font is too small and burry in VR and they're a set distance away so you can't move forward to look closer which was a bad start. Also it annoyingly pushed me out of VR for passwords then T&C updates. I think the recommended spec of a 970 GTX doesn't cut it, it needs something way more powerful to run it properly.

Much more here. Overall, there's a stark difference between users who got into Sansar during its closed beta period (and by definition, are more dedicated to the ultimate vision for Sansar imparted by Linden Lab), and those coming across it now -- perhaps after trying other social VR experiences on Steam. By contrast, current social VR leader VRChat has very positive reviews on Steam, as does runner-up RecRoom.

Is there another social VR platform on Steam that is getting Mixed reviews more similar to Sansar? Yes:

Linden Lab Should Sell Off Second Life to Focus on Sansar, Return to Being More Like a Lab (Comment of the Week)

This is probably more of a thought experiment than something that can actually happen, but reader Irihapeti's intriguing prediction for 2019 is this -- Linden Lab sells off Second Life to laser focus on Sansar:

As Fortnite is showing, and Minecraft before it, something is eating Second Life for lunch. And it isn't Sansar. What's eating Second Life is that Linden Lab is getting eaten for lunch and dinner by other companies. Family-oriented, all-ages-targeting companies. Second Life for better or worse is now a product for adults. It can never be a family-oriented product. The family-oriented part was all over when the Teen Grid was abandoned. Linden Lab needs to split. Spin Second Life into a separate company. When they do this then Linden Lab can get back to being a lab -- like a research lab -- using Sansar to push the technological boundaries. Which is what the Lab has always been good at - innovating and pushing technology to its limits and beyond, and nevermind its users.

It's definitely the case that Linden was once an actual lab, even creating VR hardware way back in the day. The idea of selling Second Life is worth thinking about. With relatively reliable revenue of about $60-70 million a year (by my rough estimate), the company could probably find a buyer at, say, $250 million.

Irihapeti thinks this is a good idea because the current executives have lost sight of the Second Life userbase, and lost focus as a company:

Sansar to Close Sandex, Move Platform to Steam in Search of VR Users

Well this is quite a virtual shoe to drop -- the end of Sansar's virtual currency to US$ exchange (called the Sandex), and a transition to  publishing the social VR platform on Steam:

The cornerstone of our growth effort will be to put Sansar on Steam. Steam is where more than half of the VR market goes to find software. It also is a huge pool of users who are interested in our space and are likely to have the hardware required to run Sansar. We anticipate being able to get onto Steam by the end of this year... n order to do this, we are obligated to make significant changes to how Sansar works, especially in how the Sansar Dollar and process credit system work. These changes, will also make the credit process for Creators far more consistent and predictable. The first change is that we will be discontinuing the Sandex as of December 4, 2018.

Sometimes I feel like Linden Lab's strategy is to do the direct opposite of what New World Notes just reported, because as I posted yesterday, Oculus and Vive usage appears to be flat or declining on Steam. And also, early this year: That only twelve of all the thousands of compatible games have attracted meaningful sales on Steam. And that when it comes to social VR on Steam, only VRChat has a (relatively) large user base, with the rest struggling with concurrencies in the two to three figures. But all that to one side, you can't blame Linden Lab for making what seems to be a hail Mary pass in the face of low user numbers.

Then again -- and this was years before Ebbe Altberg became CEO, and I'm not sure any executive from 2012 is still there, to tell him -- Linden Lab unsuccessfully attempted a similar strategy with Second Life: 

Mysterious New Second Life Continent Takes on Seahorse Shape, Grid of Tracks, New Emoji Island

The vast continent which emerged from the waters last Summer to the far NorthEast beyond grid civilization (first spotted by Tyche Shepherd) has taken on more detail since then. Comprised of 384 sims -- in real world terms, about 16 square miles, i.e. about a third the size of San Francisco -- it now looks somewhat like a seahorse, nibbling on a blade of seaweed. (Is that even a thing? Work with me here.)

Also notable, it comes with a grid of earthen tracks (roads? paths?) and two massive gray rectangles (runways?), one of which is floating in an circular lake. And where, back in August, it included an island in the shape of an emoji saying "Hi!", a new island-based-emoji has taken its place -- now sending a perhaps more mysterious message:

Inside Secrets: Did Linden Lab Ban the Owners of Second Life’s Largest Blog to “Protect” the Virtual Community?

Virtual world gossip leads to death threats, doxxing, and a suicide hotline

Update, 9/24: While SL Secrets is currently among the very most visited user-run SL blogs, it's not necessarily the largest sites -- see this correction post.

If you want to know the current state of Second Life, the virtual world that turned 15 years old this year, consider [one of] its most visited user-run blogs: It’s not about virtual fashion, or in-game events, or roleplay. No: The most popular Second Life blog by far is SL Secrets. According to Similar Web, the site attracted 140,000 visits last month, slightly down from a peak of 170,000 visits, last May -- which very roughly translates to about 20,000-40,000 monthly readers, a significant segment of SL’s total active population of some 500,000.

Launched about a decade ago and loosely inspired by the popular PostSecret blog, SL Secrets operates on a similar premise, publishing anonymously submitted confessions every Sunday -- except with SL Secrets, they’re confessions about life in the virtual world. And where Post Secret entries tend be unspoken revelations about the sender, SL Secrets largely traffics in Second Life-based gossip, virtual drama, and scandalous avatar-to-avatar accusations -- in other words, less like found diary entries from random nameless souls, than a slam book composed during a high school reunion by bitter attendees high on Jack Daniels and amyl nitrate.  

If you want to know the current state of Second Life, consider what just happened to the co-founders of SL Secrets, Lourdes Denimore and Kesseret Steeplechase: For reasons that aren’t completely clear, Linden Lab has blocked both from using Second Life. This week, Kesseret’s SL account was put “on hold” (she sent me a screen grab indicating as much), while last May, Lourdes’ account was “terminated”. (Copied here, the e-mail Linden Lab sent her.)

“I had to call them in order to get that e-mail,” Lourdes Denimore tells me. It explains the ban for repeated violations of Linden Lab’s Terms of Service, specifically pointing to sections 2.7, 5.2, 5.3, and 6.1. Lourdes flatly denies she has done such a thing: “No I did not violate the Terms of Second Life in Second Life.”

However, 5.3 of the ToS includes this highly broad, nuclear option clause:

"We may terminate your Account if we determine in our discretion that such action is necessary or advisable to comply with legal requirements or protect the rights or interests of Linden Lab, the Service community or any third party."

And since both women describe themselves as not currently active in the virtual world, a consensus among many in the SL community has emerged: Lourdes and Kesseret were banned not for anything they did in Second Life, but for what they did on the web, with SL Secrets.

“Banning people for only hosting gossip memes created by others is unfair and ridiculous,” as Cajsa Lilliehook, a longtime SLer, well-known community figure, and occasional New World Notes contributor, puts its. “People should be banned for violations in-world.”

For the record, I asked Linden Lab about the official reasons for Lourdes and Kesseret’s banning, but seeing as the company doesn’t publicly comment on policy enforcement, it’s unlikely they’ll reply. However, the invocation of 5.3 strongly suggests the company sees SL Secrets as a threat to “the rights or interests of Linden Lab [and] the Service community.”

Is SL Secrets a threat to the user community and the company that depends on it? Speaking on condition of anonymity, several well-known SL content creators emphatically say yes -- or at best, characterize it as highly corrosive:

Linden Lab Creating iOS & Android Versions of SL, Job Listing Suggests

Second Life community members have been clamoring for it for years, and now, according to a job listing posted on Linden Lab's website, the company is creating a version of Second Life for iPhones and Android phones:

Linden Lab is looking for an innovative mobile app engineer to deliver a compelling, responsive mobile interface into Second Life. If you’re passionate about the latest cross platform mobile technologies and would be psyched to wake up every morning knowing that your efforts will enhance the largest, most successful virtual world on the Internet then we want to hear from you!

Job requirements include "Experience developing consumer-oriented mobile applications for Android and IOS." Also notable: Based on this job requirement, it looks like the company is planning to create a cloud-streaming version of SL for mobile: 

Experience with AWS or other cloud-based deployment models, especially streaming cloud-based rendering.

Back in 2014, Linden Lab partnered with the now-defunct OnLive to do just that, so it's good to know they're going in that direction again.

Job is remote and "deep familiarity with and enthusiasm for Second Life is a HUGE plus", so this could be a dream gig for SL's many talented community developers. My recommendation, of course, is to hire Alina Lyvette, whose Lumiya viewer for Android (pictured above) has already sold well over 100,000 copies.

Will Linden Lab's New 15% Price Discount on SL Sim Tier & Increase on L$ Purchase Fees Hurt or Help the Company? NWN Does the Rough Math

For Second Life's 15th anniversary, some 15-themed news from Linden Lab:

Effective July 2, monthly maintenance fees on Private Estates are dropping by up to 15%! In addition, one-time land set-up fees are also reduced by as much as 41%. And remember, the setup fee includes your first month’s payment... Education/Nonprofit (EDU/NP) discounted full islands will be re-priced to maintain their 50% discount off the regularly priced full islands. The new price of $124.50 will go into effect at the start of that island's next invoiced billing term.

According to Tyche's latest SL economic data, there's now 15,969 private sims on the grid, So by making this discount, Linden Lab is taking an annual hit of a few million dollars a year about $8 million per year [Update: See Comments].

But wait, Linden Lab has a way of offsetting that discount -- raising the price of L$ purchases by 50 cents:

Second Life Land Developers Have (Mostly) Left, Hobbyists (Mostly) Remain -- Comment of the Week

Good point from "irihapeti", analyzing the news that the loss of private Second Life sims is (finally) slowing:

Most of the sim/parcel ownership downturn I think is that historically a significant number of people obtained land and built on it a space for others. When the others didn't/don't come then the land is abandoned.

Building spaces for others often comes with an owner hope/expectation (stated or unstated) that the others will contribute to the tiers in some way. Item purchases, parcel rentals, donations, tips, group fees, tier contributions, etc. When the hope/expectation is not met then abandon.

Linden Lab has never released any data on the status of the others but I am pretty sure that land occupants today are more proportionately residentials/hobbyists now than in any previous year. Residential and hobbyist occupants who have no expectation that others will contribute to the occupants' tiers/costs.

In other words, we're at the point where SL sims are either owned by "land barons" who have a stable income source -- or folks can afford to pay hundreds of dollars a month without depending on monetizing visitors: