Sundry thoughts on regions, revenue, tier and platforms

A quiet afternoon at Hollywood Airport
A quiet afternoon at Hollywood Airport

The year-end brought with it a round-up of Second Life in terms of region numbers, courtesy of Tyche Shepherd and her excellent Grid Survey. 2014 continued to see the downward count in the number of private regions in SL, with some 673 regions vanishing through the course of the year (from 19,273 at the start of the year to 18,600 at the end of the year).

Expressed as a percentage, this means that the main grid has shrunk by 3.5%. That compares to an 8.2% shrinkage in 2013 (from 20,992 to 19,273 regions, a loss of 1719) and a 12% reduction in 2012 (23,857 to 20,992, a loss of 2865 regions).

There are likely to be a number of reasons for the slow down in losses, all interacting with one another. While  one ideologue opted to pooh-pooh it, in September 2011 I pointed to one contributing factor to the then increasing rate of decline in region numbers as likely being due to physical world economic issues. With their disposable income diminishing, people were finding an outlay of $125 a month for virtual land increasingly hard to justify, and so were divesting themselves of it; something which likely continued through 2012 and early 2013.

Private regions numbers through 2014 (source: Tyche Shepherd, SLU forums)
Private region numbers decline through 2014 (source: Tyche Shepherd, SLU forums)

While I’m not about to say we’ve turned the corner where the physical world economic situation is concerned, it is probable that by late 2013 we’d reached a point where those still with a residential homestead of their own were more willing to grit their teeth and pay for the land they hold, thus contributing to the slowing of shrinkage.

So what does that mean for the year ahead? While nothing is guaranteed, I tend to sway towards the view that the decline in region numbers will continue to slow, but at less than the rate we’ve seen in from late 2013 through 2014. I’m also inclined to think we won’t see any significant rise in region numbers through 2015 (unless some kind of external factor comes into play or the Lab does opt to do something quite unexpected to cause people to suddenly want lots of land).

One thing the slow-down will hopefully do is decrease future calls for tier cuts. As I explained back in January 2013, unless the Lab have a substantive means of compensating for the revenue loss resulting from any “reasonable” tier, any such cut will likely hurt the company (and SL) more than help. Nor is the Lab’s profit margin anywhere near the levels sometimes mentioned (e.g. the 200% recently claimed in this blog), such that they could simply “absorb” any tier cut without feeling the impact.

The decline in private regions, January 2012 through December 2013 (source: Tyche Shepherd, SLU forums)
The decline in private regions, January 2012 through December 2013 (source: Tyche Shepherd, SLU forums)

In 2008, estimates put the Lab’s earnings at around $90-95 million, and their possible profit margin at between $40-$50 million (48-50%) – see the articles here and here. I assume these estimates are for gross profits, as neither makes allowances for tax.

More to the point, there seems to be a slight flaw in both estimates: they only appear to reference the costs involved in running simulator servers. No mention is made of the various back-end services such as group chat, group management, asset management, login, transaction management and payment, (and today, the avatar baking service), the various web services (Marketplace), and so on. While the costs associated with all of these are obviously going to be a lot lower than those for the simulator hosts, they shouldn’t be entirely discounted. There’s also third-party support costs (in 2008-2010, for example, the Lab was paying Rivers Run Red and 80/20 Studio; today there’s the costs involved in using the Highwinds CDN service).

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SL project updates 2015 week 2: server, viewer, experience keys, group chat

The Chamber Library
The Chamber Libraryblog post

Server Deployments – Week 2

There were no server deployments to either the Main (SLS) or RC channels for the week.

Upcoming Deployments

There is likely to be a server-side RC deployment in week 3 (week commencing Monday, January 12th). Details on what it will contain have yet to be finalised, however, during the Server Beta User Group (SBUG) meeting on Thursday, January 8th, Maestro Linden indicated it would contain miscellaneous fixes an improvements which will likely include:

  • A fix for BUG-8002
  • Removal support for legacy viewer-side avatar baking
  • Region crossing improvements.
Simon Linden - tidying-up avatar region crossings
Simon Linden – tidying-up avatar region crossings

The region crossing improvements are for avatars only (not vehicles), and are described by Simon Linden as, “all internal and pretty minor, so please don’t get hopes up for performance improvements,” and being about “clean-up and small polishing.”

A number of regions on Aditi are running the updates  – DRTSIM-273 – (Ahern, Bonifacio, Morris and Rizal), and a group test was carried out during the SBUG meeting with people walking / flying and TP’ing between these regions and between them and other regions without the updates as a further check that the changes wouldn’t result in any failures / breakage. “I’m most worried about some data subtly changing or getting lost between crossings, Simon added in this regard, following the test. “but I haven’t seen anything like that.”

Details on the updates related to legacy avatar baking will be posted with the package release notes, when available.

SL Viewer

On Monday, January 5th, the HTTP pipelining RC viewer was updated to version 3.7.24.297623, bringing it up to par with the current release viewer, and therefore matching the Experience Keys RC viewer which slipped out just before Christmas.

Experience Keys / Tools

“It’s really quite close,” Oz Linden said of the Experience Keys / Tools project at the SBUG meeting. “We’re upgrading and testing some back end infrastructure to support it; when that’s ready, we’re good to go.”

As indicated in my original overview of Experience Keys / Tools, the tools come with a number of safeguards to reduce the risk of them being used for mischief. In addition, and as a further discouragement, those wishing to use the tools to build experiences will be required to pay a fee. This has now been set by the Lab, but is not at this time being made public. Expect to hear more about it when the tools are formally released.

In the meantime, you can read more on the project in these pages using the Experience Keys tag, and those wishing to try-out beta Experiences can do so via the Seamless Experiences section of the Destination Guide. You do not need to have the Experience Keys project viewer in order to do so – although it does provide you with access to more information about any Experience you try – see my project viewer overview for details (do keep in mind that both this and the project overview linked-to above are now several months old, and certain details may have changed in the interim; I’ll have a further article on Experiences when they are launched).

Group Chat

Simon Linden is continuing to work on group chat. No major news at this time, other than he’s been carrying out further digging into why some servers seem to get “stuck” every two weeks or so and require a restart. Further data was gathered during the region crossing tests mentioned above.

Other Items

Alpha Map Support for Mesh

I first reported on this matter, which forms feature request BUG-8100 – in week 52. Since then, the idea has received a lot more feedback and further thought. However, following initial triage, the JIRA was closed by Kyle Linden on Wednesday, January 7th, with the standard, “We’ve reviewed your request and determined that it is not something we can tackle at this time.”