Looking at the Second Life 2016 year-end Grid Survey report

The Prim Rig, ANWR Channel
The Prim Rig, ANWR Channel – blog post

On January 2nd, Tyche Shepherd issued her year-end summary on the general size and state of the Second Life main grid.

In all, 2016 has seen a slightly larger loss of private regions compared to 2015: 992 private regions (Full and Homestead) removed from the main grid in 2016 compared to 825 the previous year. This represents a reduction of some 5.6% over 4.4% for 2015. In terms of grid size, the loss of private regions was slightly mitigated by an increase in Linden owned regions, leaving the grid with a net shrinkage of 884 regions overall for 2016.

Taking the year-on-year figures from 2010 onwards (that being the last year the grid exhibited a growth in the number of regions), we get the following breakdown for private regions:

2010 2011 2012 2013
2014
2015 2016
24,483 23,857 20,994 19,273
 18,600
17,775 16,738
Increase
%age
Loss
%age
Loss
%age
Loss
%age
Loss
%age
Loss
%age
Loss
%age
810 3% 626 2.56% 2863 12% 1719 8.2% 673 3.5% 825 4.4% 992 5.6%

While the loss is something of an acceleration over 2015 and 2014, it is still not as drastic as the declines in private regions seen in 2012 and 2013 . Nevertheless, it does indicate a further drop in approximate gross monthly revenues for the Lab. Working on the basis of Tyche Full Private Region surveys I have to hand, a breakdown of recent monthly revenue from private regions can be given as:

  • November 2013: US$3,857,000 (+/- US $52,000)
  • March 2016: $3,385,000 ( +/- US $43,000)
  • December 2016: US$3,162,000 (+/- US $39,000)

This represents around an 18% drop in monthly revenues over a three-year period. While uncomfortable, it’s not outright alarming at this point in time, representing an average loss of about US $19,305.55 per month, compared to the staggering US $63,500 (approx) per month loss the Lab experienced in  2012.

Of course, a loss is still a loss, and sooner or later, continuing revenue decline will have an a visible impact. But it is hard to determine when that might actually be. The surface evidence seems to be that at this point in time, while of concern, the decline isn’t adversely affecting the Lab’s ability to do business. They are still continuing to invest in both Second Life and Sansar, including recruiting for positions working on both. While it is hard to be precise, a reasonable estimation suggests that the company is generating around US $49 million in revenue through Second Life. While we don’t know how much of that is bankable as profit, it’s still a tidy sum in terms of operating revenue for a company of LL’s size.

Some have raised concerns over how much of an impact Sansar will have on SL’s landmass in 2017. I actually don’t think it will. While I anticipate the decline in land will continue (but hopefully at a slower rate than 2016), I simply don’t think Sansar will have any immediate impact on Second Life one way or the other. Not in its first year, at least.

To me, the more interesting question is what can LL do to further offset revenue drops incurred by region losses (and sadly, the answer isn’t simply to reduce tier: that could actually do far more harm than good, given the amounts involved). The Horizons initiative, for example, is one way of spawning additional revenue. We’re now around half-way through that process, and I estimate the Lab has generated around US $45,000 from it thus far. 2016 also saw the private region buy-down offer, which appeared to be enthusiastically received, although numbers are far harder to ascertain on that. Are we liable to see further initiatives in 2017? I’d actually be very surprised if we didn’t.

Private estate numbers ups-and-downs in 2016
Private estate numbers ups-and-downs in 2016

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