The phony economics of Second Life

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The Register digs into what they call the phony economics of Second Life, “What the business press didn't tell you”.

In short:

  • SL burnt $8M in its first three years, remaining invisible
  • SL gained visibility after another $11M cash infusion, and hiring a professional PR agency — “It was now business journalists who began to spread the word.”
  • SL's servers can only support between 50 and 100 avatars in one place at one time — “Melbourne's The Age reported Ben Folds launching an album before an "in world" audience of 25” (I'm curious about the ROI of that, at least they're getting free press)
  • SL's front page now proclaims 3.1 million residents, El Reg reckons there are only 15,000 connected at any one time, and may be as few as 3,000 paying customers among those, “turning over only a token sum”
  • Only 15% of those who became residents in October of last year ever logged in again after their first 30 days

I love the conclusion :

Second Life's "virtual economy" with "real money" has yet to be visited by the Feds. If it is, then Linden Lab will reserve the right to say that Second Life is only a game.

I've never been any further in SL than looking at their home page for a few seconds. I don't know why, but that phenomena —which occupies a preoccupying number of people I know and bloggers I read— fails to trigger any kind of interest for me. May be I don't need a second life to “get” my first one. This said, more power to them if they survive the next bubble, and it's not because I'm not interested that the game is bad. It's just that I fail to understand all the rage.