SL posts strong economic growth on dwindling enrollments
By Eric Reuters
SECOND LIFE, April 15 (Reuters) - Fewer new users are signing up for Second Life, but the faithful are spending more time and money than ever inside Linden Lab’s virtual world.
Second Life’s in-world economy is growing at a rate of 15 percent annually, Linden Lab CFO John Zdanowski (writing as Zee Linden) said on Tuesday. User hours, concurrency, and economic transactions all showed robust growth.
But even as time and money spent in Second Life swells, Linden’s premium subscriber base — the paid accounts that are allowed to own land on Second Life’s mainland — declined for the fourth consecutive month in March. The total avatar population grew by 3.2 percent to just over 13 million, the slowest month-to-month growth on record.
The numbers suggest that a smaller, highly engaged base of Second Life users is intensifying its interest in the virtual world even as Second Life’s appeal to new users fades.
Zdanowski said Second Life achieved a gross domestic product of US$300 million by the end of March, a larger total economy than real-world nations such as Dominica or Micronesia. While Second Life’s economy is still significantly smaller than it was before gambling was banned last summer, the number of financial transactions between users shows relatively steady growth.
More money is also circulating through the LindeX, Linden Lab’s exchange for converting real-world currency into Linden Dollars, and strong consumer demand has pushed average land prices up from L$6.3 per meter to L$11.5 per meter in three months. Linden has said it will increase its supply of land to put downward pressure on prices, a move that angered some existing owners of virtual homesteads.
But even as the overall demand for land surges, there are fewer buyers in the market. Second Life shed 1,656 paid accounts in March, the fourth month in a row more people got out of the land trade than entered it. Total premium accounts stand at 89,875, below last summer’s 94,607 peak.
Second Life’s population at March’s end grew to just over 13 million, although that number includes an unknown number of inactive accounts widely thought to be about 90 percent. But in March only 408,000 new accounts were created, the smallest gain in absolute numbers since September 2007, and the smallest monthly percent gain since Second Life’s debut in April 2001.
The loss of premium accounts may relate to EU citizens switching to renting land in order to avoid VAT.
Tue Apr 15, 2008 2:04pm PDTGood News, hope LL have more premium accounts in the next quarter..
Tue Apr 15, 2008 5:04pm PDTinteresting trend and makes sense for any product. back in the day when Flash first came on the scene, lots of peeps got into it and did freelance. that number has significantly reduced and the remaining tend to be better and more passionate.
Tue Apr 15, 2008 6:04pm PDTNo, Mercia, the loss of premiums is due to the 5,800 accounts that have billing problems by LL’s own admission. This has been an exasperatingly persistent problem, whereby some banks refuse to bill on even valid and covered debit and credit cards. I’ve spent a lot of time investigating this, as it affects my customers and curiously, even one of my alts, although the exact same payment form is used on my other accounts going through.
When a billing is rejected (getting a debit from the UK saying VIDEO GAME ARCADE as a category might well be the trigger!), some banks or cards or Paypal type services refuse it. Then once it has that mark on it, LL’s outsourced billers lock it down — and getting it unlocked is a HUGE problem.
So people give up. I did on that one account; many others did the same.
Tue Apr 15, 2008 8:04pm PDTI’d go with Mercia on that.
Tue Apr 15, 2008 10:04pm PDTPeople are sick of LL:
Wed Apr 16, 2008 7:04am PDT- They make major decisions virtually overnight affecting a large portion of their consumer base without prior notice and without compensation to those affected.
- They rush unstable and untested code out to production status then residents have to cope with the issues.
- Their support stinks. I have 4 open tickets that havent been answered for over a month and even when they do answer it is usually a statement of how they can’t help you.
- The client crashes very often. Virtually every other MMO I have tested and played will only occasionally crash (as in
I am encouraged by this latest round of statistics. They confirm my own experience - the SL economy and user base is still strong and growing.
The decline in premium accounts does not necessarily mean less money or fewer users for LL. There is no need to be a premium account holder if you do not rent Linden land. If you rent land off of the mainland it makes sense to be a basic, free account holder. LL still makes money from these basic accounts via $L sales/conversions and from the landlords who rent sims to rent to these residents.
I am a very active user ancontent creator - nd I am also a basic account holder. Basic accounts are not ’second class citizens’ and can contribute just as much to SL as premium account holder.
Fri Apr 18, 2008 12:04am PDTThe drop in paid accounts is not bad news, it just shows that, despite LL efforts to clean up the mainland with draconian adfarm bans, New Deal-ish Department of Public Works projects, more and more people are learning that the private estates are where its at. You dont need a premium account to buy estate land, and provided your estate owner is a good business person, the living there is as good or significantly better than the mainland.
We at Brautigan & Tuck Holdings are enjoying an occupancy rate that varies from 91-95% occupancy from week to week, and we are adding more sims. Our monthly churn rate is under 10%, showing that the overwhelming majority of people who come here are happy residents.
People are coming to us to even buy full sims through us for a fraction of the retail price, keeping their sims in our estates, enjoying estate manager powers in their sims, while paying tier marked up over what LL charges, but in most cases still below what Europeans pay to LL with VAT (and as an exclusively American based company, we do not collect VAT for any European or other foreign country).
In return they get top notch estate support services, our exclusive 911-Help Request system, the finest infrastructure in SL, and a staff always ready and willing to help residents with their needs.
There are many other estates like ours that provide higher quality services than Linden Lab does, and we disprove every day the myth perpetrated by mainland slum lords that estate owners ’scam’ people.
It is the diligent hard work estates like ours do on a daily basis to provide a high quality SL experience to our residents that keeps our happy customers around, and spending more time and money inworld. If more new users found estates like ours sooner, more of them would stay in SL.
Fri Apr 18, 2008 3:04pm PDTWhat LL needs to do is offer other benefits to premium subscribers besides the ability to buy land on the mainland, get tech support, and a monthly allowance.
Some of the other benefits that could help are…
1. The ability to join more groups.
2. More space in their profile to write.
3. A special “premium” account tag or item or piece of clothing (or whatever) that basic members cannot get (although I am sure someone will duplicate this somehow, but whatever).
4. Buy land or islands at cheaper prices.
5. A certificate or something in the mail (or inworld) that indicates you are an “official” SL resident
Just some thoughts…
Tue Apr 22, 2008 11:04am PDTSLs login numbers are seriously inflated and linden is fully aware of this problem and seems to be doing very little to stop it. The actual memebership numbers could be as much as 25% to 35% lower than what they are willing to admit too. The reason for this is a massive inflex of alt account clones being used to increase search engine stats and possibly even money transfers from one account to many. Why is this account inflation being allowed to happen. Also does this sort of activity violate the TOS we all agreed too? Last but not least, is it time to end free account in SL?
Sat Apr 26, 2008 2:04pm PDT