Land supply freeze extended again: Has Linden hit a wall?
By Eric Reuters
It’s getting to be a familiar story. In June “Jack Linden” said Linden was freezing additions to Second Life’s mainland until July. In July Jack said “the previous decline in average Mainland price per meter has halted,” but that there would be no new land until August. And just last weekend, Jack had this to say:
…after reviewing the current market, we are remaining unchanged on Mainland supply. There will be no new whole regions offered at auction.
Until now, Linden’s business model had been a simple, and profitable, one: An ever-increasing avatar population had an insatiable appetite for land, and the company had both a monopoly on the land supply and charged monthly fees to landowners. The principal challenge for Linden was to figure out the pace at which new land could be introduced, minding both Second Life’s ability to scale and prices in the avatar-to-avatar land aftermarket. When Linden said it was freezing the land supply in January, prices spiked, prompting the company to begin new land rollouts in April, reaffirming the premise of an ever-increasing demand for virtual land.
So what’s going on? A few contributing factors:
- Linden’s customer base has been shrinking for six consecutive months, and the total number of mainland-owning premium accounts is smaller than it was a year ago.
- A migration by Second Life veterans to private islands and budget “Openspace sims”, which takes them out of the mainland market and depresses prices
- OpenSim. OpenSim evangelists insist — sometimes in heated tones — that their project will only bring new interest and users to Second Life. But in the short term, as Second Life’s all-important power users create OpenSim virtual world grids on their home PCs for free, at least some of them may scale back on charge-incurring Second Life land acquisitions.
We’ll be keeping an eye on whether land prices in Second Life begin to tick upwards under Linden’s extended supply freeze. If prices don’t rise, Linden will find it difficult to grow Second Life — or its bottom line.
