Archive for September, 2010

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Second Life Growth, Land and Economy – Meh, Yawn

Sep12
on 2010/09/12 at 9:00 am
Posted In: Business, Controversy, Grids, Linden Lab, Trends, Virtual Worlds

This could be described as old news, but I haven’t really seen anyone pull it all conveniently together, and I wanted to post this with some commentary as a follow up to my What Is The Linden Master Plan? blog posting earlier.

The Past – A Year In Review

Some time ago, I spotted an update from wizardgynoid on Twitter that the SharesPost perceived value for Linden Labs had dropped about 30% in 5 months, from $383 million in March, to $271 million in August.

This month, they now value Linden Lab at $248 million.  That is a drop of just over 35% in the last 6 months.

I don’t know, but I would imagine that all of this may shed some light into the sudden return of Philip (Rosedale) Linden as CEO, perhaps back to protect his investment.

One year before that, Nielsen published some statistics for online PC games for March 2009 that showed Second Life as the number 1 game when sorted by the average number of minutes spent online in the game each week, with 760 minutes per week, on average.

Blizzard’s World of Warcraft followed close behind, with an average of 653 minutes per week, although they were keeping separate statistics for World of Warcraft III: Reign of Chaos, which grabbed another 213 minutes per week.  It should also be noted that Starcraft, another hit from Blizzard, grabbed another 334 minutes per week.

The Decline of Second Life

However, the point I am making here is not one of comparisons to other online environments.  The comparison is the timeline for Second Life alone.  By June of this year, 15 months later, Second Life had dropped from an average of 760 minutes per week to 451 minutes per week.  That’s down more than 40%.

While there are many reasons that could be promoted for this decline, it follows a very long sample period, of 15 months.  So it represents a trend, or at least a long-term decline, and one that Linden Labs must do something to correct, or the Second Life world will be in very, very big trouble.

But what does a decline in average minutes per week really mean?

Well, this blogger thinks that average minutes per week is an indicator of how serious the residents of Second Life take that environment, how addicted they might be to being online in that world, and how much they are enjoying their time there.  And that can mean only one of two things.  Either:

  • the number of “serious” full-time, hard-core supporters of Second Life is decreasing, or
  • the number of “lighthearted” or “volatile” part-time residents is increasing.

Either way, community support for Second Life would seem to be getting “watered down”.  If you thought, “meh, yawn”, then that’s another sign of the problem here.

I believe that many of the long-term, most ardent supporters of Second Life have changed over the last 12-24 months, to a position of “interested observer”, taking more of an attitude of a “well let’s wait and see if Linden Lab can turn things around”.  Many have chosen to also experiment with new homes on other virtual worlds, like InWorldz or Open Sim grids.  Others have given up on Second Life entirely, or almost entirely, abandoning assets and investment in Second Life for whatever alternatives may be available.  Sometimes for those new grids, sometimes just abandoning it entirely.

Even the keenest supporters of Second Life are likely to be worried by the decline above, and the effects that loss of company value may be having on policies.  Was the closing of the teen grid directly related to the loss of share value?  The 30% layoffs?  Did it lead directly to the return of Philip Rosedale to the CEO position?

The Residents Are The Future

This blogger feels that there is one major thing leading to the decline of support, or interest, in Second Life: the perceived attitudes and business philosophies of Linden Lab.  Residents need to perceive that there is a future there, and a future that still recalls the past, when Second Life was a land where a resident could make many of their dreams come true.  An environment where they could do anything, be anything, build anything.  Whatever they desired.  A time of partying in packed clubs, a virtual career in modeling, fame and/or fortune in retail business, night after night of cybersex and debauchery, or success (or failure) in the virtual real estate market.  But whatever the dream, the dream was that of the resident’s, and theirs to succeed in, or fail.

I no longer believe that to be the case for Second Life.  Now too much depends on the policies of Linden Lab.

The was a time when there was a place in Second Life for a entrepreneurial startup, say, a struggling new Anshe Chung, to succeed beyond her wildest dreams in the area of virtual real estate investment.  That possibility seems to be all but dead now, with the policy changes that pretty much insist that all significant profit from virtual land sales belongs to Linden Lab.  The Lab has directly entered the market for rentals, using their position as platform supplier to compete against independent resident land owners, and has held the price of “mainland” land (which they are the sole estate owner) to be constant, even though much of the mainland has been abandoned by land owners.  There is a huge surplus of land on the mainland, and yet Linden Lab cannot even bother to set the parcels for sale once again when someone returns land.  Perhaps that is a failed attempt to try to hold the price of land artificially high, but clearly it is not working.  It’s difficult to sell land even for L$1 per sqm.  That figure used to be fairly stable at 6-7 L$/sqm, so the value of land has dropped about 80% in the last 2-3 years.   In the meantime, Linden Lab has increased the cost of private estate homesteads, a key staple of independent landlords, by 66%.  For anyone wishing to point out that private estate full regions have not increased in price, it should be noted that those regions were already 50% higher than mainland regions, which cannot be a privately owned estate.

That might be survivable, but these changes were done in addition to changes to search, that leave in-world shopping in an almost incomprehensible state.  Now, for your shop to show up in search, you have two choices: cheat the system, or bribe the system.  You can pay (dearly) for your searches to appear at the top, or you can use bots and other false promotions to “game the system” such that it artificially inflates your search score.  So now, if you managed to survive the huge and dramatic increase in costs, there’s fewer residents to actually find your land, your club, your retail store.  Unless you cheat the system… or pay even more… again… to Linden Lab.

I would love to see a virtual world where the only purpose for bots was for automating tasks, searching the grid for affordable land, building a list of parcels with certain keywords, etc.  Not just for the sake of having them, to drive up traffic scores.  Parcel traffic is a great statistic to have, but should not be applied when determining search results relevancy, i.e. the default presentation order of the search results.  Neither should bribes payments by landowners.

In a world where traffic and payments do have an effect on search, it renders the operation virtually meaningless.  It forces retailers to look for an alternative to having an in-world store.  Oh look… XStreetSL sales are up 224% in the last year.  What a surprise!  That must be good news!  For someone, but not for Second Life businesses and residents.  Not for in-world activity.  But it’s not because of a viable online market.

Some people blame XStreetSL for the barren wasteland of abandoned parcels that once was called Second Life.  I blame the totally dysfunctional search.  Now to find a product, you… well you effectively leave Second Life and use a browser.  That’s a victory for the web.  And instead of working your way through the search results in-world, visiting relevant stores, camera-shopping and exploring all the new places within draw distance of that search result, residents now don’t even need to log in to Second Life!  How convenient!  (For robots.  How antisocial for us humans.)

Linden Lab needs to remember what it was like… how pleasurable it was for the residents to be in-world… shopping… dancing… sending naughty IMs.  It’s difficult to IM that person shopping on XStreetSL.  Oh you still can, but not in Second Life.  Once again, that’s something you would do… outside Second Life.  Once again, Linden Lab decisions are discouraging residents from spending time in-world.

The lure of Google-like search revenues may be to great for them to resist; may make it too difficult for them to see the big picture: that with fewer people left in-world, there will be fewer people in-world adding to all the things that make made Second Life great, and fun.  If they want to turn Second Life into a web-based virtual shopping experience, and try to compete with IM and social networking programs without actually getting the residents in-world, all that will happen is they will pick up some short-term residents that don’t really invest or contribute or add to the world, and lose the long-term ones who do.

I returned my region to Linden Lab last week.  I tried to sell it, but when the next monthly payment is due, and you can’t even sell it for the amount of that monthly payment if you do sell it, then the financially prudent action is to have them remove the region from the grid before the next payment is due.  $295 a month.  That’s a sizable chunk of someone’s real-life monthly rent.  Or put another way, it’s a car lease payment, month after month.  I’ve returned my region now; that’s like winning (for free) a brand new car.

Linden Labs cut all the statistics that show declines from the economic stats reports.  Well they left one in: user hours.  There, Linden Labs themselves report a 13.5% drop in user hours from 126 million to 109 million.  Nelson Linden, who posted the results, blamed that on their new improved policies on bots.  Frankly that isn’t believable; a policy change would show a more sudden drop, not a gradual decline over a full year.  And I don’t really believe the hours anyway as real, human, user hours.  It conflicts with the Nielsen report above that shows a 40% drop in minutes per week. And if I have to choose who to believe, Nelson or Nielsen, well Nielsen aren’t the ones changing their stats reporting each time, preventing any half-decent trend analysis.

They call the economy “stable” — that’s a great euphemism for “flat”, which in the online gaming and social networking worlds means “dying”.  You are either growing, and quickly, or you are dying and soon to be replaced by The Next Big Thing.  Sorry Lindens, but “stable” means “pull up soon before you slam into the ground”.

The one statistic I would have liked to have seen is how much land has been abandoned, either still existing but unowned land, or returned to Linden Lab and removed (like my region).  In the past couple of months, I have returned 2 homesteads and a full region.  That’s 196,608 sqm removed from the grid.

And that’s just me, a modest land owner.  A 4-year veteran of Second Life who has been promoting it pretty heavily for the first three years… until the last year, and now leads a disillusioned life in the Linden-free alternative of InWorldz.  The scariest part of all this: I don’t feel like I’m losing something.  I feel like I’m finally escaping the trap.

Links:
Nielsen Top PC Game Titles – March 2009
Nielsen Top PC Game Titles – June 2010 
Second Life Economy – Q2 2010

5 Comments

InWorldz Attitudes Redux

Sep09
on 2010/09/09 at 3:58 am
Posted In: Controversy, Grids, InWorldz, Virtual Worlds

Just for the record, I think it is fundamentally wrong to try to pressure business owners into changing their business model.  If you don’t like someone’s business model, spend your money somewhere else, and/or start your own business and “show them how it’s done.”  And don’t be offended if they still want to go with their own plan.

I also have no trouble whatsoever — and based on the first paragraph, it doesn’t matter even if I did — with InWorldz businesses taking whatever profits they may or may not make from InWorldz and investing them in Second Life.  Business owners who make money from their businesses should be able to spend them on anything they like.

Liquor and hookers is just fine with me, if that’s what business owners want to do with their profits. Although, if it were me, I would instead probably reinvest mine in my business in an attempt to continue to grow it.  And by comparison to liquor and hookers, taking the profits to SL is practically noble, so you know where I stand on that.  Furthermore, if that was the case, word will probably spread that InWorldz is the land of opportunity, and more businesses will bring their products to InWorldz.

My previous blog entry was a response to one such owner who felt attacked and pressured to change their business model, and apparently has.  Unfortunately she also lashed out somewhat against the community in general, and some very good and innocent friends of mine.  I felt the need to post a strong counter-argument, but I can understand how that must feel sometimes and how it is difficult to direct your frustration at the specific cause.

I just wanted to make it clear that my previous blog entry was in direct response to what I considered very misleading information, and an attack on others not involved in this conflict, and my attempt to set the record straight there.  It is not an attempt to intervene in that dispute at all; in fact if you read my first three paragraphs above you will see I am actually supportive of that business.

Now that the ugly defensive stuff is (hopefully) out of the way, I am hoping that this business will actually just do whatever the owners feel is best for that business, and not worry too much about what one or two others (or even more) might think of their model and/or pricing.  It takes time to test a business model, and I think it is very common for new businesses to come to InWorldz and have to experiment with several different models until they find something that works there.  It is probably not uncommon to have to adjust prices over time, and just because others have been through it before doesn’t mean a new business can’t try their own approach before heeding the suggestions of others.  Go for it, I say!

And I want to extend my welcome to this business, in spite of the previous… um… somewhat passionate defense of my friends and environment.  That’s a totally separate thing, and I have no trouble separating the passion of the moment from long-term feelings.

1 Comment

InWorldz Attitudes

Sep08
on 2010/09/08 at 2:25 am
Posted In: Business, Controversy, InWorldz, Virtual Worlds

A recent blog posting by a very misguided author caught my attention today.   The blog posting — which will not be linked to from this article — is almost entirely full of wild-ass speculation stated as fact, and dead-wrong on almost all counts.  Here are some quotes: 

I am so very disturbed by the latest spin of the moral compass by the highly esteemed (at least they hold themselves in high esteem) of the whats being called the Inner Circle (defined: a term being more and more widely used to refer to a clique of long time residents of Inworldz) in the virtual world known as Inworldz.

Blink blink.  Okay, I will partially agree, and refer to this author as “very disturbed”.

/me rereads that.  Again.  Must be a different InWorldz than the one I know.

First — and I recognize that this is subjective and personal assessment, and the other author is entitled to their own — the residents of InWorldz are the most laid-back collection of folks I’ve come across.  Somewhat protective and passionate at times, and squabbling among themselves sometimes, yes, but typically sorting this out as the best families do.  The fact that this is done transparently, in the full view of anyone who wants to read it, with the direct participation of the InWorldz owners (known as “the founders”), is encouraging to say the least, after the experience I have endured in the Second Life world over the last several years.  The residents are also very inclusive, with respect for everyone’s differences.  There certainly *is* a moral compass there, unlike some grids, but there is no “Inner Circle” as the author implies negatively.  I would not be posting this article if this was the only faux pas on the part of the other other… but what I want to correct the most is the (restraining my language now) complete crap that spewed after this point.

The first thing I want to point out is:
Anyone who thinks the founders of Inworldz are not in this business to make money then they’re delusional. The founders make money on leasing virtual real estate AND they also make money on IZ sales and exchanges. I wonder what the IZ is backed with. Don’t you? Now I know we can all sit around and sing the praises of and cannonize the founders but fact of the matter is, they are making money. You better believe there are benefits for them. Sit back and hone your math skills by crunching some numbers. Sorry for suggesting this but go check the Lindex. The founders HAVE based the IZ on the L$ but really, most hrrmmm “BIG NAME” pricing is based on USD. I am waiting to see how long it takes for the price control mafia to move from the forums to in world.

Well… where to begin with that?  First, I think the author of the quote above is the only one who wants to “cannonize the founders”.  The residents, who live there, and know the founders well, want to canonize them.

Those who do not know the InWorldz founders may believe this nonsense, but it just goes to who how fundamentally wrong the author of that article is. Complete and utter manure coming from that author.  Show what numbers “your math skills” have crunched, shall you, you delusional twit.

The founders make money on leasing virtual real estate AND they also make money on IZ sales and exchanges.

No, no, NO!  InWorldz LLC, the company, gains revenue from the subscriptions for virtual land, yes, but that money is then reinvested in InWorldz.  The founders prefer to encourage the growth of InWorldz, and to enable others to live that virtual dream, keeping resident costs down, charging just enough to pay for the professionally hosted servers and the bandwidth of the residents, and maintain a balance there for the considerable expenses that come along.  Every week they need to purchase more and more hosted servers, and the required upgrades, such as the new cluster of database server additions to which they are upgrading tomorrow.  As I understand things, InWorldz is a corporation, and prior to September 1st (last Wednesday), all employees have been unpaid staff.  They have been volunteering huge amounts of time and energy and personally putting their own money at times into making things better there.

Some day it may grow enough that everyone who works for InWorldz will actually be paid, but as I write this, there has only been one paid employee, and he has worked a total of 5 paid days so far (and probably hasn’t actually been paid yet).  And this comes after many many months of unpaid 80-hour weeks (on top of his full-time “RL” job).  As the software engineer responsible for the grid servers, IT infrastructure, security, architecture and server software, “Tranq” has a lot on his plate, and it is about time that InWorldz has been able to finally steal him from his full-time position elsewhere.  So he’s been able to trade one full-time job for another, which hopefully will allow his weeks to drop from about 120 hours of work to only something like 100 hours, total (an increase for InWorldz!).  (This are my rough estimates, based on seeing him in action every day.)  The other two founders, Legion and Elenia, have been working very long hours for almost 2 years now, unpaid, without so much as a day off.  Elenia has been starting work each day very early, hours before 8am, and not stopping until she practically drops every night, usually well after midnight.  I have no idea how she can go on day after day with such little sleep.  And all of that is unpaid.  For the benefit of the residents.  Maybe some day they will be rewarded; I hope so, they sure do deserve it.

Anyone who thinks they don’t deserve a pat on their back for their never-ending contributions and dedication to the residents has no idea what they are talking about. It is just uninformed total bullshit and misguided speculation, and the author should be ashamed for writing such drivel.

The founders HAVE based the IZ on the L$

Well that is a common misconception, so I forgive the author, but completely false.  The InWorldz exchange rate is based on — and tied solely to — the US dollar.  The author is probably basing this false belief on the fact that currently there is no direct InWorldz-to-US$ cash-out mechanism, but that is a matter of mechanics, not exchange rate.  This is why the InWorldz-to-Linden$ exchange rate was adjusted recently — the Linden$ has tanked so badly (due to the Lab’s mismanagement of land and economy) that the InWorldz founders could no longer swallow the difference out of InWorldz funds (keeping it simpler for everyone), but instead had to finally adjust that rate to keep the InWorldz dollar closer to the US$ value.  The exchange rate is 1 US$ == 500 InWorldz.  End of story. 

they also make money on IZ sales and exchanges.

No, actually they don’t.  The original author should at least make an attempt to verify facts before spewing such falsehoods.  However if the founders did make money on cash-outs, there would be nothing wrong with bolstering the InWorldz financial stability by taking a small share of the economic trade.  That kind of small “sales tax”, and only when cashed out, would also help to keep land prices low for a longer period.  I hope they move to this model in the near future, perhaps when the direct InWorldz-to-US$ cash-out exchange work is completed.  Hopefully at that time the InWorldz-to-Linden$ exchange will be shut down.

Secondly: Anyone who thinks for one second any income a “BIG NAME” can earn in Inworldz can do anything other than support their holdings in Inworldz with income from Inworldz, then again, is delusional.

I’m not sure I can even read that.  If I am interpreting that poorly-phrased statement correctly, I believe the author is saying that big name vendors in InWorldz won’t have anything leftover to withdraw, to help fund their SL activities.  Well, we know this to be false, especially in the case of the landlords in InWorldz, who initially complained about the exchange rate change cutting into their pocket, which only applies on transfers from InWorldz back to Second Life.

Furthermore, the author of this statement claims this second point is false with the third point below. Saves me the trouble of arguing against it.

Thirdly: If Inworldz residents wanted Inworldz to be a world of only creators, stagnant with a total lack of growth, it’s economy based on residents creating and giving each other free skins, clothing, textures, sculpt maps, hair, shoes .. you get the idea and/or just create your own items, then why did the founders create a currency and a way to cash out. Oh .. Ohh .. OHHHH that means someone must have been making MONEYYYYY!

Yes, exactly, the InWorldz residents do not want a stagnant world of creators only.  Fortunately, that is not the case.  Many Second Life content creators have come to InWorldz and are making money, as this author speculates.  Many have also come only to expand into a new and growing market, investing in the future.  New content creators from Second Life are very welcome in InWorldz, and regularly praised and welcomed on the InWorldz forums.  It is a world growing tremendously quickly, first in content, then economy, and now I believe we are on the verge of a significant growth in the social side of things.  All three are critical for the long-term and continued growth of InWorldz.

I think the second and third points above contradict each other.  Also, the third point is meaningless, if it is meant as a criticism, since it fully supports the notion that there is money to be made by investing time and effort in InWorldz.  Okay, point accepted.  I agree.

Fourthly: Let’s be done with all the chest beating, the finger pointing, the name calling, the accusations, the intimidation, and the attitudes

Kinda defeats the fourth point if the first two are spent chest beating, finger-pointing, … and attitude.

To the original author, I have not seen such an unfounded, speculative and grossly incorrect article since I read a couple of Prok’s wild-ass personal attacks on people she did not know.  Congratulations on a total waste of Internet bandwidth.

By the way, it’s “I’z$”  not “IZ”.

17 Comments

InWorldz Hits Two More Milestones

Sep02
on 2010/09/02 at 9:33 am
Posted In: Business, Grids, InWorldz, Technology, Trends, Virtual Worlds

With all the recent negativity, regarding the changes to Second Life that have residents in an uproar, as well as the seemingly never-ending Emerald drama, I wanted to take this moment to report on two positive things that occurred in the last 24 hours.

Both are significant achievements for the InWorldz virtual world environment, which has been operating with increasing momentum in recent months: 

InWorldz Has Reached 500 Regions
This is a major accomplishment for a professionally hosted virtual world.  Other than a small number of regions used for the operation of InWorldz itself (such as the InWorldz Desert Island welcome region, the 4 public sandbox regions, and a couple of staff personal home regions), all of the regions in InWorldz are paid for, monthly, by residents who are actively using them.  Compared to many other grids, this means these regions are thriving, often busy, populated worlds in their own right.

Congratulations to InWorldz on reaching this new milestone!

Tranquility Has Landed
I wish I could take credit for that subtitle, but the credit goes to Lalo for his reply to my earlier tweet about this.

In another sign of growth and another milestone for InWorldz, yesterday marked the first day for InWorldz founder Tranquility “Tranq” Dexler as a full-time paid employee there.  While previously volunteering massive amounts of personal time, Tranq has been instrumental in bringing significant performance improvements to InWorldz, along with improved stability, disaster recovery, and lately, increased security to that world.  He has been working hard to turn a “beta” virtual environment into a solid foundation that can be grown safely and effectively in the years to come.

This is quite a coup for InWorldz; stealing Tranq away to accomplish even more for this world, where the founders are doing an incredible job of providing virtual residents with an environment to live their dreams.  All of InWorldz waits now to see what might happen now with Tranq focused squarely on InWorldz… This is his RL work now!

/me beams with joy

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