Chilly policy reception causes exceptional Second Life shrinkage
by Tateru Nino 
Nov 12th 2008 at 9:00AM
Filed under: Business models, Economy, News items, Second Life, Virtual worlds
Since the announcement of Openspaces 3.0 product pricing for Second Life (and the subsequent update to a reduced specification Openspaces 4.0 product), Linden Lab has seen its virtual world shrink for the first time on record with a net loss of 24.05 million square metres (a little less than 6,000 acres).
That's a net loss, so however many new simulators have been brought online since the beginning of the month, those gains have been canceled out by customers dumping land, and an additional 24 million square metres have been lost. During its Q2 2008 report, Linden Lab identified the (now deprecated) Openspaces 2.0 product as a primary growth driver.
It isn't presently clear how long this downward trend will last. So far, those net losses amount to just 2.8% of the total Openspaces 2.0 product that are actually out there on the Second Life grid. Many owners, however, have said that they intend to hang on to their void simulators for as long as possible, and dump them just before the jump to Openspaces 4.0 (or Homesteads 1.0) becomes mandatory. It remains to be seen if the Lab can shake off the chill and push those figures up in the latter half of the month.
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Reader Comments (Page 1 of 1)
Corman said on 9:34AM 11-12-2008
Given the number of void sims that were sold, what percentage reduction would you consider significant?
And what percentage might represent a substantial revenue reduction?
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Tateru Nino said on 9:57AM 11-12-2008
We think the reduction is already significant. If we assume that the number of new simulators purchased in the first ten days of the month was no higher than the mean rate for October (of course it might be much less than that), then the actual number of simulators dumped lies between 367 and 740 over a ten day period. Also, as noted, that results in a net loss of land area.
We think that's significant right there.
Assuming those 367 were dumped, rather than consolidated, that is a monthly reduction of at least US$27,000/mo at Openspaces 2.0 pricing.
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NekoAli said on 10:35AM 11-12-2008
Honestly, what did they expect when they announced the price increase? I know some people who bought up dozens of voidsims to help with their sprawling city-like builds. And people who are not bringing in much if any money on these void sims and are paying completely out of their own pocket so they could have a nice space of their own. For these people, a big increase in monthly costs, which could be hundreds of dollars for some people, is simply not an option that they can afford.
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Ciaran Laval said on 11:39AM 11-12-2008
What this doesn't tell us is how many are lost and how many have been converted to full sims. A full sim conversion loses space but not revenue so please try to put the whole picture in context.
The undercurrent of this policy change will be felt in other areas and Linden Lab need to work hard to regain trust, their silence on the issue is just adding fuel to the fire.
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Tateru Nino said on 11:45AM 11-12-2008
Indeed not. Linden Lab refuses to give out even breakdowns by product - at least formally. Linden staff have mentioned various figures at their office hours, which is how we've obtained many of the numbers we've been discussing over the last couple of weeks.
That's why I mentioned the issue of conversions as a modifying factor you'll notice; where I discussed the revenue question.
We're not aware of any conversions having taken place in this period. It doesn't mean that there aren't any.
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River Ely said on 12:42PM 11-12-2008
I realy think those guys at the Linden Labs glass table don't actually have a shred of business sense. Though they seem happy to take money from the system in the form of super wages, they failed somehow to see the change in use over six months while full regular sims lost their residents to open spaces and sim prices became depressed, not a peep out pof the lindens. Suddenly , its a massive price increase and a quickie rule change in the hopes of stemming the self created losses.
No, for my money, and I was happy once paying 4000 usd a month in tiers, but for my money, they are a bunch of idiots each beleiving the others have sufficient business acumen to see them through. Now, they realise they dont have a clue between them. Any other business and it would have floundered months ago, the product here is so good, the user base hangs on hoping someone will get a grip.
I have no formal business quallies, but I ran my estate business very succesfully in SL and I bet I could run the company a darn site better than the idiots around the glass table in M Lindens office.
River Ely
http://rivers-rock.blogspot.com/2008/11/linden-labs-loses-direction.html
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SignpostMarv Martin said on 1:03PM 11-12-2008
As Tat notes, the loss of OpenSpaces sims is cancelled out by new regions being added- in the period between last month's composited map update and this month's shows that the grid has grown from the approximate size of West Yorkshire (2029sqkm) to the approximate size of Leicestershire (2083sqkm). However, I only started tracking the size of the mainland this month (the approximate size of the Isle of Wight, or about twice the size of Washington D.C.), so I've no idea how much of the increase in the size of the grid is due to mainland expansion.
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Doubledown Tandino said on 1:58PM 11-12-2008
I'm not understanding the logic on these shrinkage metrics here. I mean I do see that the sq.m. are shrinking....
... but doesn't it make sense that it would since 4 void sims cash into one regular sim? I would think the shrinkage we're seeing is people removing 4 void sims for 1 reg sim. no?
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Tali said on 7:46PM 11-12-2008
While initially, I thought, "it's 4 openspaces being converted to one sim for the same money", it struck me that most of those who need to convert probably haven't had time to do so yet. They would need to coordinate it with the people using the four openspaces.
Also, there is no pressing reason to drop an openspace until the next billing; you might as well hang on to it and perhaps see if you can sell it to recoup a little. And some will likely hang on to them until the price increases kick in.
If this is true, the shrinkage so far represents only those who have thrown down the towel immediately in sheer disgust and protest, which would make the numbers pretty grim.
shin said on 2:26PM 11-12-2008
I would say to those who feel the guessed figures may be wrong....keep in mind that this noticed shrinkage is after only a couple of weeks. Most openspaces will have been rented for a month or longer at a time, and most owners won't be able to either combine or drop them until sometime in December, after tenants have left. Whether or not they will be combined or dropped would...I would think..depend on how many of the current crop of tenants decide to rent a full 1/4 sim. I suspect many came from areas that were not 1/4 when they moved to full openspaces..willing to pay a bit more tier for a bit more space. For every 4 people that do not downgrade to a full 1/4 region..that will be a loss of revenue for the landlords...and that much less ability for them to hang on to a newly combined region.
I suspect in December there will be a lot more total loss of land area (as openspaces are combined) ...and after that..depending on how the old openspace users decide to play it...a drop in full regions to follow in January and beyond until things stabilize again at their new levels....
Oh..and for those of you "real estate speculators" who are saying "good, mainland sale prices will go back up then"...I sold off my mainland years ago during a previous period of instability when I realized that LL could not be trusted to be transparent enough for me to make viable investment decisions based upon released data. I for one won't be going back to "buying" land. I pay a small tier premium to someone else as a reward for their taking the risks..and will continue to do so. This current situation is just one of the reasons why. Anyone who has been around for a while knows that stuff like this happens with a certain unpleasant regularity in the land of the Lindens...^_^
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Seann Sands said on 2:51PM 11-12-2008
In addition: I think LL is also being hit by the economy as well. Remember that the world is undergoing an once in a century recession and for many people spending money on "non essentials" like SL is going to drop. Especially those who had huge sim builds and weren't making profit from them (doing it just for fun). And many businesses (and educational nonprofits) are realizing the 'non-worth' of SL and dumping their islands in huge numbers. Don't just blame it on this void sim issue, there are bigger reason afloat.
Side note: I'm happy that LL are doing something against the abuse of cheapo void sims (mostly the ones using them as rentals to newbies), it's killed the main (and others) rental business in SL. Stupid Lindens didn't realized people would abuse an easy money maker.
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TigroSpottystripes Katsu said on 7:39PM 11-12-2008
this post by Zee Linden is somewhat enlighting I think (but perhaps I'm interpreting it wrong)
http://forums.secondlife.com/showpost.php?p=2218702&postcount=15
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(a copy-paste of the post follows)
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Greetings
Yes, bots are included in the user hours. You are correct there's no good way to consistently distinguish bot activity. Our estimates are that about 10 to 15% of the hours do come from bots. We think that's been relatively consistent over time and if so, then while it may increase the numbers, the underlying trend is still valid. Growth of user to user economic activity, LindeX volume and our revenue have been quite consistent with the growth in user hours...
If I could figure out a way to sell more to bots I would!
Here are the detailed key metrics in Google Docs format. The links to this on our website have not yet been updated.
http://spreadsheets.google.com/pub?key=pxbDc4B2FH95uo0x67N5CIw
Also, the number of Openspace sims is now greater than the number of full regions. We're 39% Full regions, 44% Openspace regions and 14% mainland.
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rightasrain said on 1:46PM 11-14-2008
10-15million hours per quarter of bots--seems like a lot. Bet that does not include campers--and would be interesting to know how you can tell the difference between a bot and a camper.
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Vex said on 4:23PM 11-14-2008
Hmmm: a 558 sim loss so far... divisible by three. Here's my guess: that they've sold no new sims at all, and this number is 774 OS sims that have been aggregated into 186 full estate sims. If so, that doesn't bode at all well. Furthermore, the going resale rate for OS sims seems to be US$150 with seller paying transfer... if that goes any lower, it is looking REALLY bad.
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les white said on 9:22PM 11-15-2008
Many of us dont have 4 OS sims, or even numbers of 4. I don't think most of the dumped sims have been "consolidated". I know mine went right into the trash bin.
LL should offer buy back on the vaporware they sold us. They are unethical. To invest with these twits would be a great error of judgement.
Frankly...they make me sick.
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