Business in Virtual Worlds, Serious games

Massively Reports on Second Life Economy: And this is BAD News?

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’ 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.”


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