Tateru at Massively reports on the Second Life economy, and while I won’t argue that any down tick because of the OpenSimpace pricing change is a bad thing, I wonder whether flat figures is really so awful.
As Massively reports:
- PMLF (accounts with a positive monthly Linden Dollar flow) is down by 3.32%
- The amount of USD exchanged during October fell for the fourth month running. The previous three months saw a fall of 4.8% (US$459,000). In November, it fell another 4.8% (US$440,000) in only 30 days, now at its lowest since February 2008.
- Land area fell by 142 million square metres (7.05%) representing the first decline on record.
Now, consider these November figures:
- US Labor Department data show that the number of people collecting unemployment benefits is at a 25-year high.
- Personal bankruptcies soared 40% in October from a year ago according to the American Bankruptcy Institute.
- The unemployment rate in October was 6.5%, the highest in 14 years.
- With the Dow Jones Industrials Average down 40% from a year ago, consumers’ stock
portfolios are taking a hit. Moody’s.com recently estimated that for every $10,000 in lost equity, consumers spend about $500 less over the next two years.
- Retail sales remain dismal. Motor vehicle sales in October, in units, sank to a level not seen since 1983. In dollar terms, sales have declined in 11 of the last 13 months, representing a record contraction in sales, going back to 1992.
- The annualized rate of existing home sales is off 31% from its 2005 peak. New home sales in October were down 40% from their year-ago level.
- Corporate after-tax profits (with inventory valuation and capital consumption adjustments) declined in the third quarter. Factory orders fell in September, and various businesses are reporting that their exports are now feeling the effects of the global downturn.
Further, from the New York Times:
“In the span of just a few weeks, orders for both business and consumer tech products have collapsed, and technology companies have begun laying off workers. The plunge is so severe that some executives are comparing it with the dot-com bust in 2000, when hundreds of companies disappeared and Silicon Valley lost nearly a fifth of its jobs….
Cisco was the first large technology company to reveal its sales data from October, noting a 9 percent fall in sales compared with the same month last year. On Nov. 5, Cisco, which is based in San Jose, cautioned that because of a “completely different environment,” revenue in its current quarter could plummet as much as 10 percent — a major reversal from the 7 percent growth that Wall Street had been expecting.”
OK, look….I don’t mean to be doom and gloomy. But how about this headline:
Second Life Defies the Odds of a Dismal Economy
“Against the backdrop of plunging consumer confidence, rising unemployment, increased personal bankruptcies and foreclosed houses, Second Life has performed a miracle when around it even the high tech Silicon Valley companies are soft or struggling: its economy has registered the impact of all of this only slightly, and perhaps not at all if the Open Space pricing was taken out of the picture.”
You mean OpenSpace. Welcome to the confusion.
Thanks, Dusan. I was listening to all of the doom and gloom predictions about the economy of Second Life with great puzzlement. There’s a little dip in the numbers? Wow. Does anyone realize what’s going on out here in the real world? It’s getting scary.
But get this: since my partner was laid off at the beginning of September(luxury travel industry isn’t doing so well) our SL spending has actually increased a little.
Why is that? Well, there are fascinating things to do and see and buy in SL, and even if they cost hundreds of Lindens, that’s less than the cost of parking in Seattle—heck, it’s less than the cost of the gas to drive to Seattle and back.
So we are spending more time at home with our laptops instead of out with our credit cards, and a slight increase in spending in SL is the result. I can’t imagine we’re the only ones doing this—funny that the new concurrency records have occurred smack in the middle of a major RL economic downturn.
I wonder if everyone spending pennies an evening for entertainment in SL instead of dollars an evening in RL is mostly offsetting the economic damage done by the OpenSpace issue.
Well, obviously we’d prefer to see the numbers going up rather than declining. The losses recently wiped most of the gains through 2008 – and that doesn’t seem like a good thing.
I don’t disagree, Tateru, however in the context of the wider economy a “not so good thing” can seem like a bloody brilliant amazing thing. Having said that, I’m not all rose-colored glasses – I think the first quarter of 09 will be more telling when tiers come due and businesses and individuals need to decide whether to maintain their investments in-world. For the time being, against the backdrop of everything else, I don’t feel discouraged by flat numbers.
Adz – oops, I always try to catch that, thanks!
Dusan, I’m somewhat inclined to sit on your side of the fence on this one. Once the non-economic cycle-driven behavior of abandoning the Open Spaces subsides, and once the vocally aggrieved souls depart Second Life for places unknown (and probably return when they learn that OpenSim is crash-tastic and even more sparsely populated than SL), I have a feeling that the SL community will just keep motoring on. It’s a resilient bunch.
One thing I’ve picked up on in conversation with other avis is the theme that SL is a place of emotional refuge. In chaotic times life these, you can’t overstate the value of having a “safe place” like SL. People will pay for that.
The sky isn’t falling on the SL economy. If the Lab can keep the competitors at bay, it should be able to weather this storm. Of course, they would have to cut back on the goofball policy pronouncements that put the residents’ knickers in a knot. Not sure that’s possible.
I have to agree with Doreen, the RL economic crisis has a good impact on things like SL. If you can’t spend lots of money anymore on expensive RL fun like going out, to the movies, travel – you turn to cheaper entertainment. And even with the ridiculous land prices, SL still is cheap entertainment, compared to other things.
On the other side you can’t just look at what was lost because of the OpenSpace debacle – you also have to look at what wasn’t gained because of it. Not only did SL lose roughly 2000 regions in november, the actual loss is bigger because SL didn’t gain the roughly 1000 new regions that would have been added without that debacle.
I was reading my local newspaper on Saturday and they have a memorable quotes of the week in it. And one quote attributed to an anonymous moenymarket guy was “the slightly down is the new up”. It made me smile because with all the RL bad news lately at least someone can still find time to try and brighten their day. And thinking about what you have written here and what that other guy said, then while things maybe not to good in SL right now for everyone there is a little bit bright still in SL. So thats good I think.