On Second Thought, Maybe Second Life Does Need A Bailout
from the will-some-VC-play-its-Ben-Bernanke dept
Just a week ago, we were laughing at Second Life's attempt to position its economy as being safe compared to the real economy. That seemed difficult to believe, as a variety of things have been conspiring against Second Life for quite some time, and much of its own economy was based on its own inflated hype-bubble that overstated how many users there were and misled companies concerning what people actually did in Second Life (hint: it wasn't visit virtual clothing stores). With that bubble rapidly deflating, it really was only a matter of time until the wider Second Life economy faced its own crisis, and apparently (despite claims to the contrary) that's manifesting itself in a real estate crash within Second Life. At least in the real world, the property is a physical thing that has some intrinsic value. We've pointed out in the past that betting your business model on an economy made up of virtual goods is quite dangerous, and it appears Second Life is discovering that fact pretty quickly.
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Filed Under: economy, financial crisis, second life
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Bailing out SL
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The Business Model isn't all that strange
What Second Life COULD have been good for was "Virtual 3D Modeling" for all sorts of Industry. Especially useful would have been for the general Mall type application. With a large number of people living in remote locations, it could have been an opportunity for some of these normal REAL STORES to venture into the Virtual World, and for just pennies on the dollar, compared to advertising, could have had a store-front that people in the remotest locations could have visited.
Now, did Linden Lab falsify their numbers, well, they reported they had 14 million LOGINs, which means nothing, what they failed to report was that they had only about 300K actual individual users. This, along with shoddy management, have brought Linden Lab to the point of going out of business on it's own merit. Even if Linden Lab figures a way out of this latest crisis (that they caused), it's only a matter of time before one of the "Big" boys get into the Virtual World swing, and when that happens, Linden Lab will be behind the 8-ball.
It's too bad really, Second Life on the face is a great Virtual World with a LOT of potential uses, none of which it seems Linden Lab cared to go after, and that's where they failed as well.
Virtual Worlds like Second Life will be a mainstay in our society soon enough. Second Life itself was a mix of Social Play for people, Commercial Play for others, and a bit inbetween for a number of them. The problem seems to be that Linden Lab can't figure out if it's going to support the Social Class, the Commercial Class, or what exactly. Instead, they've been caught more then once like "deers in the headlights" and haven't reacted or acted fast enough to take advantage of several good business opportunities. In the end, Linden Lab will go down with the first Virtual World ever, and people will be talking about what killed off Second Life for years, but, one thing is for sure, Virtual Worlds are here to stay, like them or not.
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The current world economy will stop real-life businesses from throwing money away on a product that produces little measurable return or benefit. Linden Labs' business practices will stop all the others. I wonder how long they can hold it all together before they disappear into the same virtual wasteland that Hotline Communications disappeared into seven years ago.
I look forward to the bigger and hopefully more stable options that will replace it.
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Um...
So will World of Warcraft need a bailout too? It's a business model supported by virtual goods for damn sure, and it doesn't show any signs of failing.
I'm still iffy on the whole virtual world concept, but I do see very large potential if the model is built successfully. After all, people spent BILLIONS on DRM music, and that's a virtual good.
After all, these companies don't really care about the products within the model so long as they generate revenue. By the time the virtual world fails, they'll have laughed themselves all the way to the bank.
I've never visited Second Life but hear about it often, mostly due to bad press. If given the right management, it could easily turn around to be profitable.
One thing to note: Virtual goods are no different than the microtransactions sweeping the gaming industry. People are spending money on this.
So where's the "failure" in this business model again?
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Re: Um...
Actually, WoW's business model is based on a *service*, which is different.
One thing to note: Virtual goods are no different than the microtransactions sweeping the gaming industry. People are spending money on this.
So where's the "failure" in this business model again?
Huge differences between virtual goods and micro transactions. But the problem is in the sustainability of the model. It's a bubble and it will collapse.
Just like derivatives built off of subprime mortgages. A year ago you'd have been saying that those were great too.
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Repercussions of the Online Gambling Ban
From what I understand the ban is causing quite a bit of chaos in the world economy, not just in Second Life but in the real world. The US cannot ignore the problem for much longer. The Right Wing Christian Fascists who run the country right now could find themselves out of a job come November 4th when Obama wins. I'm certain he'll have the ban reversed when the World Trade Organization brings it up again. The US is not long the world power it used to be, other nations that were once below us are starting to rise up and gain power and wealth. Its a new reality, we aren't the center of the world anymore and its high time Washington finally woke up and realized it.
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Re: Repercussions of the Online Gambling Ban
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Re: Repercussions of the Online Gambling Ban
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Re: Re: Repercussions of the Online Gambling Ban
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Re: Repercussions of the Online Gambling Ban
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Re: Repercussions of the Online Gambling Ban
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Re: Re: Repercussions of the Online Gambling Ban
The only reason online gambling isn't legal in the US is because they haven't figured out a good way to extract tax revenue for it.
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