Monday, December 19, 2011

Bock Reports From the Phoenix/Firestorm Conference on Saturday- And My Take on Second Life Viability

From Bock's Blog

If you have not seen Bock's excellent post on this inworld conference with Jessica Lyons, you need to see it.  Jessica hints at Linden Lab's financial strategy in this overview.  It is important for anyone concerned with the future of Second Life.

I am also going to rerun a long comment that I ran on Bock's blog here-- about what I think about Linden Lab financial performance and the future viability of Second Life, which overall, I feel is strong -- see my 2012 Predictions to learn more.

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My response to the below point:

If Linden Lab doesn't start creating profits for it´s shareholders soon, we will lose our world. SecondLife will be no more.

I feel that this is a bit simplistic.

Lab Lab in not a publicly held company. It is owned by a few key individuals, investment concerns, and one imagines venture capitalists. Phil Rosedale certainly owns a large, but not a controlling share, of Linden Lab. I have read that Mitch Kapor, the founder of Lotus 1-2-3- (Lotus Notes) which he sold to IBM is another key player. Other important executives of Linden Lab surely own shares, as anticipation of future profits can attract key executives at lower pay rates than they would earn at more established companies.

First of all, we do not know if Second Life is losing money, breaking even, or earning a small profit. They do not need to make this information public. Based on Phil Rosedale's recent comments to the New York Times, one can ascertain that they are not making substantial profits for their shareholders now -- or he would have been more positive. Once can also ascertain that they are not losing substantial sums of money, because the virtual world category right now is of such low opinion for future growth (the reason why Blue Mars is on "hold" for example) that the existing shareholders will probably not "penny up" substantial funds.

I am one who thought five years ago that the growth of Virtual Worlds and related technology would be booming by now. I worked as an technology industry analyst for an important research company then and was not the only one who though virtual worlds were are the beginning of a great rise, like Facebook and other social media. This was not to be the case. Virtual Worlds are not "dead" now, moribund might be a better way of putting it.

I know that venture capital money in virtual worlds has dried up. There is no new funding available-- a reason which was confirmed to me by the management of Blue Mars for their "freeze" and letting go of top management last January.

Second Life will not just "stop", if it can continue to break even or even lose a little it will continue in the hopes that the ending of the worldwide great recession which is stymieing consumer spending is reversed over the next several years, and somehow, perhaps as a component of Web 3.0, virtual worlds and virtual reality can "get hot" like they did in 2007. It could happen.

Future anticipations of investment recoup are what is fueling the continuing of Second Life. Not just "profit or loss". This is why public and analyst relations (Second Life used to have a staff just to deal with us "industry analysts") is so important right now.

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