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  Avatar Anshe Chung:  Millionaire?  
Posted 2006-11-26 by Tony Walsh
Avatar Anshe Chung:  Millionaire?
Stalwart tabloid The Second Life Herald broke the news this weekend that avatar Anshe Chung, Second Life's most successful entrepreneur, has surpassed a net worth of $1M USD. According to an official announcement published by Anshe Chung Studios today, Chung "has become the first online personality to achieve a net worth exceeding one million US dollars from profits entirely earned inside a virtual world." I'm a bit confused by the announcement, mostly because I'm not equipped with an economics background--my understanding is that "profit" isn't the same as "net worth," but the announcement seems to consider the two to be synonymous. Isn't net worth an estimation of potential, rather actual profit? I don't think much of investments in Second Life, a highly interesting but technically-flawed, insecure virtual world owned and operated by a single company. If Second Life shut down today, how much would Chung be worth tomorrow?

Fragility aside, Chung's official announcement details her investments as "virtual real estate that is equivalent to 36 square kilometers of land – this property is supported by 550 servers or land 'simulators'. In addition to her virtual real estate holdings, Anshe has 'cash' holdings of several million Linden Dollars, several virtual shopping malls, virtual store chains, and she has established several virtual brands in Second Life. She also has significant virtual stock market investments in Second Life companies."

Chung's rise to mainstream attention was kicked off in part by SL-maker Linden Lab. Chung was often used as an example of how Second Life could be used as a "serious" business platform with the potential for real-world income. Her success as a real estate magnate was cited so frequently by Linden Lab that the real-world media finally took notice--Chung was featured on the cover Business Week magazine last spring. She's an extremely clever businessperson, and has a gift for using both the real-world and virtual-world media to her advantage. According to her announcement, Anshe Chung Studios has offices in Wuhan, China and is currently seeking to expand its workforce from 25 to 50.
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Comment posted by Urizenus
November 26, 2006 @ 3:30 pm
I take it that she is figuring one million in retained earnings, yielding one million in current assets. I asked her if any of this was leveraged with debt and she said no, which is pretty amazing. If true that means she has an owners equity of over one million.

There are a lot of questions, of course: Is this figuring the replacement value of the servers or what she would get selling them on the open market. Does she actually own the servers or does she just own the priviledge of using them (like most 'island owners' do). If she owns the servers then I wonder if she depreciates them over time. If not, I don't have an issue with claiming them as assets -- or rather claiming the priviledge to use them as assets. Its easy enough to quantify the value here.

There is no doubt in my mind that she could get more than a million if she sold her operation whole. I'm guessing she would get millions (at least two).
Comment posted by Tony Walsh
November 27, 2006 @ 11:43 am
Thanks for this additional info and analysis, Uri. Some good questions and considerations here.
Comment posted by Tony Walsh
November 28, 2006 @ 11:07 am
I found an earlier case of an avatar achieving a net worth of $1.5M USD in 2006. Jon "Neverdie" Jacobs, who has had ties with MindArk, maker of Entropia Universe, announced his net worth accumulated via Entropia at E3 earlier this year. I don't see how Anshe's announcement is essentially any different from Neverdie's.
Comment posted by Urizenus
November 28, 2006 @ 6:14 pm
Tony, what are you talking about. All Jon Jacobs did at the time was announce that he was opening a club or something on the $100K island he bought and that he *expected* to make $1.6 million or whatever during 2006. I've never seen another report from Mr. Jacobs, and for all we know he's been *losing* money ever since.
Comment posted by Urizenus
November 28, 2006 @ 6:16 pm
I should have said 'space resort' instead of 'island', whatever difference that might make here.
Comment posted by Tony Walsh
November 28, 2006 @ 10:51 pm
I re-read the announcement -- you're right, Uri. I get press releases from Entropia Universe once a month or so, and they are always going on about how people (usually Jacobs) are making money hand over fist there. It's kind of funny, I've been ignoring all the PRs so far because they've been total fluff, but I didn't see this one was the same thing. Been doing that a lot lately--I gotta read these things more carefully.
Comment posted by Urizenus
November 29, 2006 @ 12:19 am
Well you may also recall that Jacobs had some sort of relation with Entropia too. Someone said he was their US marketing guy, and then Entropia said, no Jacobs was just doing a shout out for us. Whatever the relation it is clear he did do PR of some form for them before he dropped 100K on the space station -- assuming he really did spend that much.
Comment posted by Tony Walsh
November 29, 2006 @ 9:14 am
Yeah, I mentioned that with a link up here. Numerous sites reported about "Jon Jacobs of MindArk" appearing on a podcast. This is actually the second piece of evidence linking him to the maker of Entropia, the other one I'm aware of is a conference panel description or bio page (I've got a link to it somewhere...)
Comment posted by Urizenus
November 29, 2006 @ 9:52 am
Correct me if I'm wrong, but I once heard Castronova say that there is no real market in Entropia dollars -- they are just bought and sold by the company at a pegged rate. I didn't try hard, but for example, I couldn't find any entropia dollars for sale on eBay. Lack of an independent market for entropia dollars made Castronova a bit suspicious of claims about the value of assets in PE. It does me too.
Comment posted by ReverendJeffy
November 30, 2006 @ 12:25 pm
That's totally right. EU has a fixed exchange rate with the U.S. dollar, something which I've always found to be a little like cheating. At the very minimum, it totally kills third-party markets for currency... provided that there isn't great demand, I guess (See the Iowa Electronic Markets)

But, yeah.
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