Second Life

Second Life Economy “Grows” 94% Over Previous Year

With the world economy shrinking by 4% over last year, Second Life bucked the trend with a 94% increase over the previous year. The economic stats, published just in time for SLCC, give a shot in the arm to an overall impression that Linden Lab continues to trend in the right direction.

A few highlights:

- USD 144 million dollars in total user-to-user transactions, an increase of 94% from the same quarter last year
- Voice minutes totaled 3.2 billion minutes, up 48% from the same quarter last year
- LindeX and Xstreet hit new all time highs
- Resident-owned land in Second Life increased 11% from last year

Now, a few things about all these stats. First, I think it’s great that user-to-user transactions keep trending up. But on their own, those numbers don’t actually mean that much because it obscures actual value created.

I can give you a buck, and you can give me a buck back, and we can do that 94% more times than last year, but it doesn’t mean that anything really changed other than the buck got a little more worn around the edges.

So it’s encouraging to see that the increase in transactions is matched by an increase in sales on XStreet, which was recently purchased by the Lab and integrated into the platform. What may be a little misleading, however, is that the increase may be attributable to this very integration. The advantage of having XStreet on the log-in page was surely bound to give transactions there a bump.

It IS, however, interesting to finally see numbers coming out of XStreet. You can extrapolate that before its buy-out by the Lab, the V-commerce site was doing in the $1M USD range, which would have represented a $40,000 annual profit for the previous owners on transactions, (they also made money on classifieds and banners and exchange, of course).

So that leaves us with land which also increased. The post notes, however, that this was largely driven by an increase in Homesteads:

“In Q2 2009 Resident-owned land increased to reach a total of 1.743 billion square meters. This is 7% growth over Q1 2009 and 11% growth over the same quarter one year ago.

The increase was driven primarily by the addition of new Homesteads in the month of June, which added approximately 98 million square meters to the world. Many Residents purchased new Homesteads to take advantage of the $95/month pricing, which ended on July 1, 2009.”

While the stats suggest that the number of transactions is growing, I’m not entirely convinced that SL has had its best season. The impact of the policy change excluding bots makes the user hours and concurrency numbers hard to parse and it will be some time before we’ll be convinced that a) the bots are actually gone and that b) we’re actually seeing NEW users coming in-world, staying, and spending money.

Finally, I can’t help wondering that with the Lab’s revenue model based primarily on land (or server rental for the rest of you) whether an 11% growth in land sales based on sales of Homesteads is a good thing or a bad thing. Basically, they increased their revenue from land sales based on a cheaper type of land (although not as cheap in the long run as the open space simulators).

We’ll see where the trends take us in the Fall. It would be nice to get a few quarters of statistics where we’re not still ‘clearing out’ the impact of policy changes like bots, open space, or who knows what else.


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