Thoughts on Flickr changes and Second Life, with a little advice from Berry

via Flickr.com

Update, November 5th: Today I received an e-mail from Flickr support which may be of interest to quarterly Pro account holders: The 30% one year discount on annual Pro subscriptions (available through until the end of November) is also available to those who opt to  switch from the quarterly plan to the annual plan. 

Quite a few people have registered disappointment over the recently announced changes being made to Flickr free accounts by new owners SmugMug.

Personally, I admit to finding Flickr has been good value for money as a Pro member. I’ve enjoyed unlimited storage (and could continue to do so) and – more particularly – ad-free browsing of the Flickr site, as well as a good level of support. True, I am a little narked that in August Flickr removed the grandfathered rate for Pro users (introduced when Yahoo decided to up free accounts from 200 photos to up to a terrabyte of storage) without apparently e-mailing all Pro users about the change; but, at the end of the day, even the increase still represents pretty reasonable value for a dedicated service that offers a solid platform for image sharing.

Further, the upping of Pro fees puts Flickr on a par with SmugMug’s Basic offering, allowing a fairer comparison between the two for those who might want to have a potentially more flexible approach to how they organise and share their images. For example, SmugMug’s offering includes customisable web page options for displaying images, a greater video length (20 minutes / 3Gb per video, rather than Flickr Pro’s 10 min maximum).

Of course, we all hate paying for something: but like Second Life, Flickr is a business, and as such, SmugMug need to ensure it remains viable. As such, the revisions to the free account are, at the end of the day, something of a reasonable balance: the provision of 1,000 free images is still 5 times the volume originally offered to free account holders at the time free accounts were extended to 1 Tb of storage, allowing what SmugMug to see as the majority of the free account users going without forcing them to upgrade, while it is not so excessive as to have Pro account holders looking elsewhere for a home given that the grandfathered rate for long-time Pro users has been rescinded.

In my piece covering the announcement by SmugMug I offered a link to Toms Guide’s recommended photo sharing sites for those SL users on Flickr free accounts who might be considering their options. Whether people decide to move or not is entirely a personal choice. But it is worth that given Flickr’s track record on frequency of changes, it’s likely there will be few additional pricing updates to the platform in the near future; thus, Flickr does still represent good value for money. Less that US $5.00 a month when paying annually, and US $6.00 a month for those on the quarterly plan (with the ability to make a swap to elsewhere with greater ease than annual subscribers are able to enjoy).

Even so, for those remaining with Flickr (either by limiting themselves to the free account or upping to Pro), there are some understandable concerns. In blogging about spam on Flickr, SmugMug came close to sounding as if digital images from the likes of Second Life would no longer be welcome. However, Don MacAskill, SmugMug’s CEO, has made it clear this is not the case.

Black Bayou Lake; Inara Pey, October 2018, on Flickr
SL images uploaded to Flickr should be labelled “Screenshots” to meet SmugMug’s Terms of Service requirements. Strawberry Singh has provided instructions on how to do this – also see the video below. Image: Black Bayou Lakeblog post)

But, as Strawberry Singh points out, in an exceptionally clear and concise blog post, in order to ensure SL images do not run afoul of SmugMug’s Terms of Service, it is essential they are correctly labelled as screen shots). Strawberry provides clear instructions on how to do this in her blog post. In addition, she also provides some important advice to Second Life Flirckr group owners, and for SL content creators using Flickr; as such I strongly recommend reading her post if you do intend to continue to use Flickr.

Berry has also produced a video on making the required changes to meet SmugMug’s TOS (together with other information), so I’ve taken the liberty of embedding it here for those who prefer a video guide to what needs to be done.

 

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Private region price reduction: 2 weeks of grid growth but still early days

Strawberry Lake; Inara Pey, July 2018, on FlickrStrawberry Lakeblog post

It’s been two weeks since Linden Lab introduced the new pricing structure for private regions, and as Tyche Shepherd reports, her Grid Survey shows the grid has experienced its second consecutive week of net private region growth since the change came into effect.

In the week immediately following the introduction of the new pricing structure (Monday July 2nd through Sunday July 8th), the SL grid saw a net increase of 34 private regions, while in the week Monday July 9th through Sunday July 15th, the net increase was 35 private regions.

As Tyche indicates, these increases have helped slow the overall rate of private region attrition to just 0.3% – a net loss of 52 private regions between January 1st, 2018 and July 15th, 2018. By comparison, some 326 private regions were lost to the grid between January 1st and July 16th, 2017 (with an overall net loss of 667 private regions through the entire year).

The two weeks following the private reduction pricing changes have seen net increases in the number of regions on the grid. However, it’s still too early to call this a trend or draw significant conclusions. Credit: Tyche Shepherd

So, have regions losses turned a corner as a result of the price change?

Frankly, it is too soon to tell; two weeks is only two weeks – we need to see how things trend out over a longer period before anything can really be determined. A lot here will depend on how much of the tier reduction land rental businesses pass on to their tenants in order to make private rentals more appealing; something I noted in passing in Looking at the new private region and L$ fees. Plus, a simple count of region growth isn’t the entire story here.

Simply put, the private region pricing restructure will have seen the Lab take a reduction in monthly revenue generation. It’s questionable whether such a modest increase in region numbers, even when coupled with other options for increased revenue generation such as the Mainland price restructuring (with its possible attendant increase in Premium subscriptions) and the US $0.50 increase on L$ purchase transaction fees, has wholly overcome the immediate deficit of the tier rate cut.

Thus, while the uptick in private region count is a positive turn, it is too early to be celebrating. We’ll need another 4-6 weeks before we can start to get a genuine feel for how things are going as a whole. It will also be interesting to see how long new regions entering the grid remain in place or whether we see some rapid comings / goings month-to-month. I’m also curious as to how the restructuring affects the Full / Homestead product ratio on the grid, so will be looking to see if Tyche can provide some updates on this in the coming weeks / months.

In the meantime – and totally off-topic as far as private regions are concerned – I wonder if Tyche has had time to have a bop around Mainland to see how the abandoned land situation there is fairing? As of January 2018, abandoned land stood between 22% and 23% of all Mainland; it would be interesting to see how it now stands, some four months on from the Mainland price restructuring.

Looking at the new private region and L$ fees

Village of Ahiru; Inara Pey, May 2018, on FlickrPrivate region set-up fees and monthly tier rates are reduced from July 2nd, 2018, together with an increase in L$ purchase fees. Picture:  Village of Ahiru (blog post)

A major goal at the Lab is to “re-balance” the Second Life economy – shifting the onus of their revenue generation away from a heavy reliance on virtual land leasing to distribute it more broadly across all fronts  – land, Premium subscriptions, transaction fees, Marketplace fees, etc. Over the last few years we’ve seen some of this in action:

  • In April 2016, increases were made to all transaction processing fees and Linden Dollar processing fees (raising the latter by 30% to US $0.40 per L$ purchase).
  • In June 2017 increases were made to the maximum fee for processing credit transactions was raised to US $25, and the fee charged per L$ purchase was raised to US $0.60.
  • In November 2017, increases were made to L$ purchase fees (to US $0.99 per transaction) and to fees charged for transferring money via PayPal or Skill from the start of 2018, raising both to 2.5% with no maximum limit on the application of the fee.

Some of these increases were couched as being in part to meet the costs involved in the Lab handling the transactions and ensuring all proper fiscal and legal requirements for money handling are properly met. Doubtless, this was the case – the Lab has invested heavily in matters of compliance. However, it’s also not unfair to say that once the initial expense in performing this work has been recouped, these fee increases enable the Lab to both cover the cost of transaction handling and generate some revenue through such transactions (however modest on the individual transaction it might be).

On the other side of the scale, we’ve seen efforts to make virtual land more attractive – notably through the region buy-down offer of April-September 2016, and more recently the changes to Mainland pricing.

On July 2nd, 2018, the most ambitious change to private region pricing in Second Life came into effect: a reduction of 15% in private region maintenance fees (tier) for all current region types and reductions in the set-up fees for Full and Homestead regions (new OpenSpace (“water”) regions no longer being offered as a product from July 2nd, 2018).

These changes – it should be noted – come with a further increase in Linden Dollar purchase fees, which increase to US $1.49 per transaction.

New Private region pricing structure. Note that as from July 2nd, 2018, new OpenSpace regions will not longer be available as a product, and Linden Dollar purchase fees increase to US $1.49 per transaction

It’s fair to say that any change of this kind, be it in land pricing or transaction fees, can generate heated feedback (witness this forum thread on the 2017 increases). The changes to private region fees have been no exception, with views being expressed via in-world groups, within assorted forums (such as SLU) and even in blog comments. Some have been upset over the L$ transaction fee increase; others  – notably those in the virtual land rental business  – have been upset by the change no extending to grandfathered regions; others apparently don’t see the move as “enough”, protesting that the tier rate should be cut to US $195 (or similar). And there has been a fair amount of reaction to the L$ purchase fee increase.

Obviously, time will reveal the outcome of these changes, but as is my want, I’d pass comment on a few things.

When it comes to the land rental business, it is hard to see why the exclusion of  grandfathered regions is being taken so negatively. For one thing, these are already below the new tier rates, as the Lab states. Further, it is now 18 months since the buy-down offer closed. This should have been enough time to recover the up-front cost of converting regions to grandfathered status (US $600 / Full; US $180 / Homestead), and now leave rental companies in a position to enjoy a modest increase in income from such regions whilst also offering customers using them a degree of lower rent.

Which is pretty much also the opportunity they have with this tier reduction. Frankly, 15% is unlikely to have people leaping in droves to gain Premium membership any buying Full regions directly from the Lab. But what it might do is once again increase people’s desire to have Homestead regions as private homes. Given that these remain tied to holding at least one Full region, it’s not unfair to say that should it happen, land rental companies can only benefit. And even if the private land market remains relatively flat, such businesses should still be able to lower their rental rates to attract new customers without damaging their existing margins.

So it really is hard to see why some in the land rental business are so put out by grandfathered regions being excluded, or to claim they get “none” of the benefits of this fee reduction.

When it comes to the increase in Linden Dollar transaction fees (which with this increase will have rise by 198.4% since April 2016), the impact will perhaps be harder to gauge, simply because people can offset at least some of the impact by adjusting the amounts of Linden Dollars they purchase in a single pass. Just how much of an offset can be achieved depends on a range of factors – the amount of L$ someone buys in a single pass, how easily they might be able to consolidate purchases, etc. – but this doesn’t deny the fact it is precisely what people have been doing as a result of past increases.

Even so, it will in interesting to see what, if any, impact this has on actual spending in SL – although I suspect that changes to fees elsewhere that have been hinted at (such as with the Marketplace) might have more of a visible impact, if and when they come into effect.

There will always be positives and negatives to just about anything the Lab does. However, “the tier is too damned high!” has long been a mantra within Second Life and while it is “only” a 15% reduction in tier, this is a positive step towards addressing this mantra when it comes to private regions fees (and it’s not unreasonable to assume there might yet be more in the future – although they are unlikely to be even close to appearing over the horizon at this point in time). Similarly, while people are likely to continue to be put out by it, the increase in to the L$ transaction fee is a relatively “fair” move, as it spreads at least some of the burden of revenue generation for the Lab across a much broader section of the SL user base.

Crunching some numbers: the 2018 SL infographic

Courtesy of Linden Lab

On Monday, April 23rd, Linden Lab issued an infographic on the state of Second Life as the platform approaches its 15th anniversary. The last time the company did this was, I believe, for the  platform’s tenth anniversary in 2013.

Both infographics obviously offer a potted view of Second Life which some might choose to take as spin – but casting the platform in a positive light is what PR is about. More than that, when all is said and done, the figures do go some way to showing the platform is still a vibrant place with a healthy economy and a (broadly speaking) positive engagement on that part of active users.

The “spin” element might be seen in elements such as the number of accounts created in Second Life: a total of 36 million between 2003 and 2013, and a further 21 million in the last five years (for a total of 57 million since 2003, when SL formally opened its doors to the public at large). These figures sound impressive, but when push comes to shove, “accounts created” is a pretty meaningless figure. What really matters is the number of active accounts operating within Second Life; and the fact is that over the years these have been dropping – perhaps not by the amounts some might think – although it is admittedly hard to pin things down to a precise figure.

Similarly, the number of new user registrations (400,000  reported in 2013 and 350,000 reported in 2018) doesn’t add up to a major indicator of SL’s health – but, in fairness nor do they indicate any kind of major decline, despite the 50,000 drop over the intervening period between the two infographics. But really, the issue with Second Life is not the number of sign-ups achieved, but the number of retained active users the platform obtains.

Side-by-side: the 2013 (SL10B) and 2018 (SL15B) infographics. But how useful are they?

Perhaps of more value, to a degree, are figures like the total hours users have spent engaged in the platform. in 2013, this cumulative total for 10 years was stated as an equivalent of 217,000 years; for the 15th anniversary it is put at 482,000 years.  What these show is that while the number of active users engaged in Second Life may have shrunk somewhat (notably since its peak in around 2008), those still engaged in the platform are between them potentially spending more time logged-in to the platform than they were five years ago.

Why this might be is open to speculation; but one group of reasons could be that the time an effort Linden Lab has put into improving the overall Second Life infrastructure, making batter use of technology, improving the performance of much of the platform (simulators, back-end systems, etc.), and the work put into enhancing user-facing capabilities, which have collectively encouraged people to spend more time in-world now than five years ago.

This increase in time spent engaged in the platform has other potential benefits as well – such as in increased economic activity. This is somewhat indicated by the 2018 infographic, which indicates that Second Life creators and land holders cashed out some $67 million in 2017. During sessions such as Lab Chat, and other public meetings, it had been indicated that the amount cashed-out by users in 2015/2016 was around $60 million; so it would seem that overall, the SL economy is experience an upturn, albeit a modest one. The strength of the economy might also be indicated by the rise in the number of virtual goods for sale: 2.1 million in 2013 and a stated 5 million in 2018 – although I point to this increase with the caveat that items for sale doesn’t necessarily translate directly into increases in goods sold.

Given that the 2018 infographic would tend to indicate overall engagement in the platform among engaged Second Life users has increased, the economy has apparently undergone something of a growth as well, it’s perhaps understandable why – as per the recent town hall meeting – there is now a much stronger emphasis within the Lab to pro-actively try to grow the user base going forward – and some interesting approaches are being tried.

So, what of the issues of active user numbers and new user accounts? It is true that Second Life is experiencing shrinkage in the number of active users. However, a degree of perspective is required when discussing it. At its peak in around 2008, SL averaged around 1.1 million active monthly log-ins. Today, it is lower – but by how much? That’s a tough nut to crack.

One of the few sources of real data we have comes from the SL Statistical Charts Page put together many years ago the most respected Second Life blogger (whose insight is genuinely missed), Tateru Nino, which is still active today. Among other things, it provides a series of breakdowns of concurrent log-ins – current and over set periods of times. These tend to collectively show that by-and-large average concurrency is between 30,000 and 50,000. Even when taking the bottom end of this range as the daily “average”, it still yields around 900,000 active monthly log-ins. That’s just 200,000 from the platform’s peak.

Second Life average concurrency is around 30,000-50,000 per day, as illustrated by these two 14-day extracts from Tateru Nino’s Statistics Charts, deliberately collected just over a month apart from one another

Of course, it might be argued that some of these concurrent log-ins are alt accounts or possible bots and so “don’t count”. But how large a figure is that likely to be? It’s impossible to know. Some factor it as being more than one-third, which might not be a wholly unreasonable figure; however, a counter-point to this is that just because someone is logged-in on two accounts doesn’t mean they’re not actively contributing to things like the economy through both of those accounts; so while it might be argued such activities reduce the total user count, it may not negatively impact the platform’s economy. Similarly, and where there are no empirical numbers available, it is fair to say that bot usage today is a lot less prevalent than when SL was at its peak; thus while their influence cannot be completely discounted, they are likely to have less of an influence on concurrency today than a decade ago.

The most interesting aspect of the figures is perhaps those of sign-ups As noted above, the Lab notes a decline in monthly sign-ups of around 50,000 since 2013. Looking at Tateru’s data for 2011 (the nearest 6 month period to 2013 I have archived) and 2018, shows the average daily rare of sign-up hasn’t varied overly much across the years – although arbitrary daily figures can show more of a variation.

Sign-up across 2 6-month periods, in 2011 and up to April 2018. The averages for both are not too far apart

Both the infographic and Tateru’s stats would again point to the Lab’s optimism around growth, indicating as they do that while daily sign-ups have dropped somewhat over the years – Second Life potentially still generates interest, not all of which can be put down to existing users creating thousands of alt / bot account daily. The problem is, as noted earlier, getting more of those sign-ups converted to active, retained users.

Overall, the current infographic reveals that while there is undoubtedly room to grow the numbers of active users, and despite the downplaying of monthly active users by some, Second Life is still a healthy platform for both users and the Lab when it comes to generating revenue – and the weight of virtual goods tends to point to the Lab’s hopes to re-balance their own revenue generation away from such a heavy reliance on land tier as having merit.

More to the point, it does demonstrate that, despite all the fears about the arrival of Sansar, etc., as Second Life approaches a celebration of it’s fifteenth anniversary, it still offers a richness and depth that can keep us all engaged with it.

Ebbe and Oz talk Second Life in the cloud

Credit: Linden Lab / Amazon Web Services Inc.

It’s a huge effort. Right now the Second Life grid is a proprietary set-up in a hosting facility that we have customised for the purposes of what we’re doing – which made sense a decade and half ago. But these days, with the services from Google and Amazon and Microsoft with cloud infrastructures, it makes a lot of sense to shift our technologies to be on top of those cloud infrastructures instead of having our own.

Ebbe Altberg, VWPBE, March 15th, 2018.

That the Lab is working on moving Second Life to the cloud is becoming more and more widely known. First mentioned by Landon Linden (aka, Landon McDowell, the Lab’s Chief Product Officer) during his SL14B Meet the Lindens session, it was “officially” announced in August 2017 via a blog post.

Landon Linden, June 2017, talking about the Lab’s hope to move Second Life services to the cloud.

It’s a long-term project, which will extend well into 2019 (at least), building on a relationship with Amazon dating back to 2008, and which today both Blocksworld and Sansar (see: “Project Sansar”: an Amazon ECS case study), from which the Lab hope to gain a range of benefits, including – in time – perhaps the opportunity to offer a broader range of products at more comfortable (for users) price points.

There are some significant technology challenges the Lab faces with the move. However, progress is being made. Some non-user visible services are already running in the cloud, and more recently, the Lab has started preliminary testing with cloud-based simulators – although they are fair from ready for users to access, as Oz Linden outlined at the March 16th TPV Developer meeting:

We have actually run experimental regions on cloud servers, and it worked. There were some functional limitations that we have to do a lot of work to solve before we could begin to do regions that ordinary users can get to … It’s something we’re pursuing as aggressively as we can [but] I’m not even sure we have a sufficiently comprehensive view of the problems … some of them will only become apparent as we actually put things into production.

Oz Linden, TPVD meeting, March 16th, 2018 – full audio below.

Oz Linden, March 16th, 2018, talking about progress to date, and how things are likely to progress.

For the Lab, the benefits of the move to the cloud include things like a reduction in their capital expenditure  – no need to maintain their own dedicated hardware (or continuously update / replace it) within a dedicated operating environment. It also means they can more dynamically scale consumption according to needs – this could be beneficial for a number of the back-end systems within Second Life.

It turns it into less capital expenditure to have to buy all the equipment and doing all the maintenance on that. You kind-of pay for what you use; with Second Life [right now], once we’ve bought a piece of hardware, we have to sit on it whether it’s being utilised or not, whereas you can kind-of dynamically scale your consumption as necessary when you use something like AWS … which we believe will reduce costs for use and then ultimately, we hope to pass that on to customers.

Ebbe Altberg, VWBPE, March 15th 2018.

Once the transition has been completed and the Lab has had time to evaluate things, the move might allow them to offer a more varied land product – something again touched upon in Ebbe Altberg’s 2018 VWBPE address, and allow them to more extensively “re-balance” the revenue model – something that is also an ongoing project at the Lab.

We’re really thinking hard about the economic model of Second Life. We share a belief inside the Lab that land is quite expensive. so we’re constantly looking at ways to lower land prices and find other ways to find revenues. So I think you will see us try to shift from what I would say [are] high real estate taxes to more consumption taxes or fees to create an environment where it’s easy for people to create and own experiences, and we [the Lab] participate more in all the transactions that take place.

Ebbe Altberg, VWBPE, March 15th, 2018.

Given that land tier provides the lion’s share of the Lab’s revenue, this re-balancing is far from easy to say nothing of the potential for user outcry at any fee increases). Ergo, having better means to lower fees such as through reduced operating costs and a broader spread of more “affordable” products could – depending on the time frames involved – go a long way towards helping the Lab achieving that re-balancing goal.

So what might the move to the cloud mean for users? That’s hard to quantify at the moment, simply because the project has so far to go.However, some hints at what might happen have been offered.

For one thing – and on the subject of different land products – it might allow the Lab to offer two broad categories of region / server type; I’ll call them “always on” and “on demand”.

  • “Always on” would be simulators running 24/7 as with SL at present. These would be ideal for handling Mainland, large open spaces like Blake Sea and the larger, contiguous private estates. Such regions might have a similar type of fixed-fee tier cost associated with them as we have today (although not necessarily the same price points).
  • “On demand” would be simulators that are only active (and charged for) when in active use. When devoid of avatars, they are saved to disk and spun down. These types of region could be ideal for special events, or for private business / residential regions which don’t have any surrounding regions, and would only be charged for when avatars are present; once the last avatar leaves, following an appropriate pause, the region is saved, and the instance spun-down.

Such an approach has been alluded to by Ebbe Altberg:

Some experiences might want to have continuous persistence over time, and maybe that’s one type of pricing model, for an “always on” type of scenario. Maybe other will be fine with, “hey, I’m only using this for a few hours in a class a few times a week” or something. and if that can spin-up in a few seconds, and then I just need to basically pay for the time that I’m utilising it. Those could be potential options for us to explore.

Ebbe Altberg, VWBPE, March 15th, 2018.

Land offerings could be broadened in other ways. Again, as Ebbe Altberg indicated at VWBPE 2018, there might be high-performance, high-capacity, “upper tier” servers available for those needing them for specific uses (e.g. events need high concurrency levels or similar), sitting alongside more moderate, lower-cost servers for things like residential use.

More intriguingly, cloud hosting might even allow the Lab to more readily geo-locate simulators / regions with their physical world audience. Such regions wouldn’t necessarily have to be grouped together in-world, they are simply located a lot close to the user base that most frequently uses them, potentially improving performance for that audience.

Today we are located in the US, which means that people from Australia or Asia or Europe have to travel quite a ways, which is hundreds of extra milliseconds of latency. So if you want to have a very dedicated community in Australia or somewhere, we could maybe start to distribute our server infrastructure to be closer to where the actual customers of those regions are, which would make things more performant.

Ebbe Altberg, VWBPE, 15th, March 2018.

There will be more to come on SL and the cloud and the Lab provide further updates as the work progresses, and I’ll hopefully report on them as they are made public. In the meantime, and for those who haven’t waded all the way through the VWBPE 2018 video with Ebbe Altberg (and Brett Linden), or who don’t want to read either my transcript of that event or the bullet-point summary, here’s the audio of Ebbe’s comments on SL and the cloud:

Looking at the Second Life 2017 year-end Grid Survey report

La virevolte; Inara Pey, December 2017, on FlickrLa virevolteblog post

On December 31st, 2017, Tyche Shepherd issued her year-end summary on the general size and state of the Second Life main grid.

In terms of a percentage loss, 2017 saw private region losses return to the 2014/2015 levels, with a 4% decrease through the year, somewhat lower than seen in 2016. In all, 677 private regions of all classes were removed from the grid in 2017, compared to 992 in 2016. At the same time, the number of Mainland  / Linden held regions increased very slightly from 6,744 to 6,806 (up by 62), leaving an overall net loss of 605 regions across the grid as a whole.

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
24,483 23,857 20,994 19,273
Increase
%age
Loss %age
Loss
%age
Loss
%age
810 3% 626 2.56% 2863 12% 1719 8.2%
2014
2015 2016 2017
18,600 17,775 16,783 16,106
Loss
%age
Loss
%age
Loss
%age
Loss
%age
673 3.5% 825 4.4% 992 5.6% 677 4.0%

Working on the basis of Tyche’s Full Private Region surveys I have to hand, a breakdown of approximate recent monthly revenues from private regions over the most recent four-year period might be given as:

  • November 2013: US $3,857,000 (+/- US $52,000)
  • March 2016: US $3,385,000 ( +/- US $43,000)
  • December 2016: US $3,162,000 (+/- US $39,000)
  • December 2017: US$ 2,970,000 (+/- US $36,500)

This represents around a 23% drop in monthly tier revenues over a four-year period. Of course, there are other revenue routes associated with Second Life – notably Premium memberships (which the Lab has in the past indicated account for around 20% of revenues). More directly, the end of 2016 / start of 2017 saw the Lab generate an estimated US $80,000, which doubtless help offset the decline in tier revenues to some extent. So, taking these factors into consideration, I would suggest that overall, the Lab might still be generating around US $48-49 million in revenue, or roughly the same as my estimate from my 2016 end-of-year article.

In 2016 there was some speculation that any opening of Sansar might have an impact on SL’s landmass. In my 2016 piece, I expressed the opinion this would not be the case, noting:

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.

Unsurprisingly, this has proven to be the case: region losses for the second half of 2017, following the opening of Sansar’s public Creator Beta, remained pretty much on a weekly par with the months prior to the Creator Beat opening. I expect this will continue to be the case through much – if not all – of 2018.

Private estate numbers downs and ups in 2017 – click for full size

For me, the question remains as to how the Lab might respond to the slow tier revenue decline. As unpalatable though it may be to some, the answer still isn’t any tier cut, for the same reasons I gave back in 2013.  Simply put, from the Lab’s perspective  – and contrary to popular misconceptions on the matter – what users might consider  a “reasonable” tier reduction could actually be more immediately damaging to LL’s bottom line revenue generation, and bring with it no actual guarantee it would be overcome through any sustained demand for private land.

A better way – again from the Lab’s perspective – to relieve any pressure causing by reductions in revenue would be to reduce the costs involved in running ad maintaining Second Life. Doing so may not yield direct benefits to users in terms of tier reductions – but given the Lab’s sensitivity to the subject, they could over time provide the means for the Lab to reduce the tier paid by users. In the meantime, reducing costs allows the Lab to better leverage revenue into bankable profits. This is true, as well, for the work to move Second Life to the cloud – although hopefully, as the Lab has indicated, this might also eventually result in new land products / more flexible pricing. We just perhaps shouldn’t anticipate this happening in the near future.

Might we see Horizons expanded or a re-run of the buy-down offer in 2018? Possibly; although if either were to be tried, I suspect were there to be a move towards one or the other, it would likely be more to s further run of the buy-down offer, rather than an expansion of Horizons. That said, I actually anticipate that 2018 will see a further drop in region numbers, albeit one hopefully / most likely slower as then year unfolds than that of 2017. I doubt there will be any significant reversal unless something happens to cause a sustained growth in the overall numbers of users actively engaged in Second Life.

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