More theories as to what has prompted the recent “restructuring” at LL are popping up.
While Hamlet offers a concise argument, I still don’t buy his “Viewer 2 has failed to increase adoption” line, for reasons already stated. Viewer 2 doesn’t exist in a vacuum, to “increase adoption” it needs support – advertising and promotion well beyond the walls of the Second Life garden, and this has yet to happen in any real way.
Similarly, it is hard to judge what impact the SL Enterprise issue has had on LL’s fortunes – if any. In terms of straightforward revenue generation, I’m inclined to agree with Gwyn Llewelyn (to a point) and say, not a lot. SLE was, from the start flawed, again, for reasons I’ve gone into at length … several times … previously. However, I can see the Hamlet is potentially hitting the mark here in that there has been a negative outcome in so far as possible projections of cashflow into the LL coffers as a result of the SLE launch not achieving any significant levels are concerned.
Again, products don’t exist in a vacuum: some projections as to the potential take-up of SLE and the possible partnering of its use with the renting of SL Workspace sims must have been carried out at some point in Linden Lab. And having a company internally translate a projected income into something that influences their entire bottom-line financial structuring is not a rarity. Even big companies can get it wrong, issuing profitability warnings when sales fail to meet expectations / forecasts…
In both Viewer 2, the New User Experience, and SLE, I think it is more a case that those running Linden Lab simply took a gamble – risking stability and steady-state growth in order to re-invent the Second Life wheel and spin it up into a rapid revenue earning machine that could draw in the trendy and the shiny in terms of casual and business users.
In short, in the drive to make Second Life “profitable” in a very real sense and break free from the constraints of being considered a “gamble” for new investors, or still sporting the buffed-up shine of a “start-up”, Mark Kingdon and his fellow executives simply tried to drive LL to far to fast. The gamble required large-scale expenditure, it required personnel expansions that were perhaps not the wisest. Linden Lab simply over-extended itself.
This doesn’t mean that the management team themselves have massively failed; companies can and do get it wrong. When they do, the wise ones take similar steps to LL: they retrench, they lay-off staff, they reduce overheads. And while some may see the laying-off of some 30% of staff as “massive” – the reality is, LL are in fact bringing staffing levels back to the “pre-expansion” levels of last October when, as Hamlet points out, Kingdon was talking about recruiting some 70 staff.
If anything at all, the fact that someone within LL has reacted so swiftly to the situation could be seen as completely positive: the errors have been realised, the need to retrench to firmer ground agreed to and the necessary action taken. While it has hurt a lot of people within LL in the process – surely it is better the hard steps are taken now, than the company wallow on in the face of potential waning income streams and increasingly upset investors edging ever closer to pulling the plug once and for all?
The flipside to this is, of course, that if the above is true – that those at the top misjudged their market and their platform – then the blame for this rests in one place and one place only. And it is not among the departed souls, so to speak.
As others have said, and I’ve analysed, and Grace McDunnough oh so eloquently phrased it, in careering in the direction of the shiny and new, Mark Kingdon and the executive management team again demonstrated that they simply don’t grok what they have. Rather than embracing the community already on their doorstep – the community that has shown a dedication to their platform that has translated into hard dollars for the company, Linden Lab has time and again demonstrated everything from lip service through indifference to outright hostility towards its customer base since the end of 2006.
Under Mark Kingdon’s leadership these mixed attitudes towards the existing user base reached new heights; first came the OpenSpace / Homestead debacle; while not the blatant bait-and-switch many claim, it did hurt and upset a very large number of SL “residents”; then came the increasingly vocal and anti-resident demands of people LL chose as strategic partners – people like Justin Bovington of Rivers Run Red, who gained somewhat tacit support from the likes of Amanda Linden; then came the entire Adult Change fiasco, in which Linden Lab blatantly demonstrated its lack of concern for the well-being of a sizeable portion of its community that represented a major influx of funds to LL in terms of land and overall in-world revenue transactions through the sale of goods.
This in turn gives rise to another, and very fundamental reason as to what “went wrong” at Linden Lab – and in fairness, it pre-dates Mark Kingdon’s tenure at Battery Street as well as cutting through a lot of Hamlet’s more corporate-perspective speculations. It is simply this:
Linden Lab lost sight of what their platform really is.
When all is said and done, all the debates held, the navel-gazing done with and with all the cows home, milked and safely in their stalls, Second Life is at its heart a recreational activity. True, it is a highly unusual one in that a) it doesn’t have any quantifiable goals in the same way that other “games” do – but then, I didn’t call it a “game”; and b) it enables those participating in it to not only spend “real money”, but also earn it as well.
Instead of focusing on the ability for Second Life to engage, inspire and ensuring it remained an “open” and balanced environment in which the words your world, you imagination had genuine meaning to whoever came into SL; Linden Lab chose to start tinkering with the fundamentals of the platform – not so much the technology – but the manner in which SL could be used. They started slanting it this way and that, trying to capture real and imagined markets, chasing illusive (and sometimes imaginary) goals. In doing so, they fell victim to their own – dare I use the term – propaganda as to the potential of the platform, with the result that when things didn’t turn out “right” the first time (the ’06-’07 “boom”), they started tinkering and tipping things more aggressively, further losing sight of the potential before them, and thus created a downward spiral that has done much to alienate those who have most supported the platform and within whom, LL had perhaps the strongest allies who might have otherwise helped spur on the growth of the platform.
It may well be that the end of the road is now in sight and that, as Hamlet speculates, the company is quietly being prepared for outright acquisition; it may also be that the management team are attempting one last-ditch effort to make LL work by switching tracks and going the SAAS route, as I and others have speculated.
In looking at the ToS, it is easy to see that in its restructured form, it supports either of these eventualities. So does the restructuring. Were either to occur, one would have to say that, in purely business terms, the management team have “succeeded” in “keeping Second Life alive”.
In terms of the current user base and the potential that it once – and still – represents the truth is very much otherwise.
Inara Pey: Living in a Modemworld 