Wednesday, April 28, 2010
April 28, 2010
Today Linden Lab announced that Second Life's economy had grown to an all-time high in Q1 2010, defying recent trends toward decline in virtual worlds. Users spent $160 million in user-to-user transactions, a 30% gain year-over-year and a new all-time high. Over half a million Second Life residents were active in the world's virtual economy and over 800,000 unique users logged in repeatedly every month. Second Life continues to be the world's single largest virtual economy, despite the record-breaking sums spent in rival virtual world Planet Calypso.
In its report, Linden Lab attributed its economy growth to several different factors. Perhaps the most important was Valentine's Day, which is usually a major virtual goods-selling holiday. Linden Lab reports that this year's Valentine's Day saw the highest-ever single day sales of virtual goods on the Xstreet SL marketplace.
Xstreet SL sold $2.3 million in virtual goods throughout the quarter, up 82% year-over-year. Xstreet Valentine's Day 2010 sales were up 28% over the previous all-time high for single day sales, Christmas Eve 2009. Linden Lab noted that it made changes to the Xstreet marketplace that made it easier for users to access their L$ balances through the Web interfaces, which drove a 25% overall increase in purchases.
Linden Lab also attributes a major cultural factor to Second Life's growth in Q1 2010, the release of the James Cameron film Avatar. Linden Lab believes the popular film's themes may have sparked new interest in exploring virtual spaces, by making the concept of online avatars easier for mainstream audiences to understand. Avatar was screened widely in 3D, which Linden Lab believes may have driven desire to interact in an online space rendered in three dimensions. Linden cites, as evidence, increased traffic to Second Life's Web destinations and increased search traffic.
Coincidentally, Linden Lab had chosen Q1 2010 to begin an advertising campaign designed to attract new users. Advertisements for Second Life began appearing in Google searches, on Youtube.com, in display ads, and in affiliate website programs. Linden Lab reports that the amount spend on advertising was not significant, but probably acted as a key driver in the overall increase in number of repeated monthly repeat logins that occurred during the quarter.
New Features, New Growth
This quarter saw Linden Lab introduce a new feature, Linden Homes, that it believes increased the overall number of premium subscribers. In particular, Linden Lab states that many Residents reactivated lapsed subscriptions in order to gain access to a Home for their avatar. Linden Lab also believes that Homes helped drive Xstreet purchases during the quarter, with users purchasing furniture items and media players for use in their new virtual living spaces.
Other factors cited by Linden Lab include technology upgrades, like moving critical databases to new generations of server hardware and migrating the Second Life data center from San Francisco to Dallas. Linden Lab believes these moves increased uptime, decreased latency, and overall helped hold onto new and returning users through increased performance.
Linden Lab believes winter seasonal issues like fewer daylight hours may have driven more users into Second Life from northern hemisphere territories. A trend toward declining user hours spend in the virtual world reversed itself, with users spending a total of 116 million user hours in Second Life. While this number is still a 6% decline from Q1 2009, it is a 3% increase from Q4 2009. Linden Lab expects further growth in Q2 2010, driven by ongoing efforts to promote Second Life.
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