Friday, April 7, 2017

News and Commentary: Second Life Revenue Reportedly Down By Half In Eight Years, Number of Sims Drops Below 24K

Some troubling news was posted on the SL Universe forums by Tyche Shepard, and passed on by Hamlet Au. In Tyche's private estate survey in January, she estimated that the revenue Linden Lab makes from Second Life sim tiers had dropped to just under three million US dollars a year, or 36 million a year. Hamlet Au when seeing this information calculated that as the Lab makes about 80% of it's money from Second Life through tier payments, the rest through premium accounts, Linden dollar purchases, and fees, their total income from the virtual world was about 50 million US dollars.

While that is a lot of money, consider that in 2009 Linden Lab's income was estimated to be about 100 million dollars. This represents a drop in income of fifty percent. The Lab is making only half now what they were eight years ago.

This drop in revenue can easily be seen as an explanation for certain actions Linden Lab has taken over the past year and a half, such as reducing the set-up fees for getting sims, lowering sim tiers for a time (in exchange for a fee), and increasing the prim capacity for sims. It's also a partial explanation for why Linden Lab is making a gamble with Sansar. They're not making the money they used to.

But according to Tyche's statistics from January 2, despite the moves Linden Lab has made, the overall slow decline of the number of sims in Second Life continued throughout 2016. In the first quarter of 2017, the total number of sims dropped below 24,000. Linden Lab may very well conclude Sansar is their sole chance for stopping their revenue slide. Hamlet's earlier observation that Sansar was starting to remind him more and more of the old Blue Mars virtual world, which after less than two years was pretty much on it's way out, is not exactly an encouraging sign.

While Sansar may not be "do or die" for Linden Lab as Hamlet also suggested, it's failure would be a huge blow as it would mean a significant investment in resources would get no return, and limit the Lab's options. In the short term, it might mean more tier reductions and more advantages for premium account members as Linden Lab takes more steps to try to stop the decline. In the long term if the decline continues, the Lab may decide to let some of it's members go in a "restructuring," reduce customer service, and other steps to reduce their overhead. And if that doesn't work, well, that may be best left unmentioned.

Sources: New World Notes, SL Universe, Second Life Grid Survey

Bixyl Shuftan

1 comment:

  1. Sansar is part of the problem, not the solution. When Ebbe announced that they were moving into developing Sansar instead of SL, some people lost confidence in SL, left or scaled back their efforts. The resulting death spiral started with the words of their own CEO. His exact quote "Rezzing is stupid, no one should have to rezz anything." And he went on to say that SL was old fashioned and Old, and that Sansar would be better, etc. etc. But Sansar is still not ready for prime time three years later and during those three years, SL has declined in regions. I am not sure we have less people, just speaking from personal experience we scaled down from four sims to one sim because there was no reason to pay LL so much money every month, one sim was enough - and arguably even that is not "needed." Sansar is like Blue Mars, pretty but no life - and no way to do what is most fun in SL - create things together in world. Doing everything in off world tools may look super "efficient" to Ebbe, but it's not the point of what SL created which was so unique.