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  The State of Third Party ‘Second Life’ Development  
Posted 2007-03-20 by Tony Walsh
Linden Lab has released results from a survey conducted last month among members of the official Second Life Developer Directory, finding that the developer community at large has "almost tripled in employees and income related to Second Life during the last 3 months." About 30% of the 90 official developers (comprising 50 full-service and 40 consultants) responded.

Based on my experiences talking with third party developers at SXSW, there's an explosion in business underway reminiscent of the dot com boom. It's great to see so much money flowing into virtual worlds, but as I've written before, I hope we don't repeat history here.

Following are some stats from the survey, provided by Linden Lab...

Number of full-time equivalent employees and contractors
Total: 559
Average: 19
Median: 5

Number of these that are in a different country than your main office
Total: 134 (24% of total employees)
Average: 4
Median: 0

Where do you recruit employees?
Mostly Second Life: 41%
Mostly real life: 19%
Both: 41%

Projects in the current pipeline
Total: 380
Average: 12
Median: 4

What is your estimated revenue (in US$) from Second Life projects for Q1 of 2007?
Total: US$ 6,700,000
Average: US$ 161,500
Median: US$ 31,500

How many regions did you purchase in January 2007? How many regions do you expect to purchase during February 2007?
January Total: 38 / Average 1 / Median 0
February Total: 93 / Average 3 / Median 1
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Comment posted by Prokofy Neva
March 21, 2007 @ 2:04 am
An interesting thing that Glenn Linden tagged on to this blog about the developers is that their purchases represented 15 percent of regions sold:

"In many cases, developers work on regions that have been purchased by a business, so this number only represents the regions they directly have purchased. In January Linden Lab delivered 799 regions. If this survey represents 1/3 of developers, they directly purchased 114, or 15% of regions."

This is an odd locution, of course, and you wish they'd just come clean and give the straight numbers, but they'd probably have to do too much tabulation.

Although Glenn says it is "in many cases," if you look around, you can see that it's not always companies that buy their own islands, the developers buy them. This figure of "15 percent" sounds a little bit like the old virtual worlds' theory "10 percent of the players make the concent for 90 percent of the people" except...they don't.

Those other 85 percent of the people buying the regions, filling up LL's bottom line, are making content, too, but not for an outside company, for outside purposes such as media rollouts or training or education related to RL, but content/programming for the world itself. Their content may range from amateur to professional; some of it intersects.

When you make a statement like, "It's great to see so much money flowing into virtual worlds," it's really not that the money flows *into* virtual worlds and sustains the worlds inhabited by those 85 percent *other* island buyers (even allowing for businesses buying up a lot, you have to figure that at this juncture, while it may not always be the case, there are more individuals and inworld businesses buying the islands than outside businesses").

Rather, the money flows *through* virtual worlds into the corporations, and that makes sense for them. The fairgrounds and trade shows that they build as islands in SL don't make up "a world" for most of the people in SL -- the traffic figures bear that out.

Of course, the boundaries shift. Is CNET "in the world" and immersive, if your avatar goes there to listen to a Yahoo executive? Or are they "in real life, merely being augmented"?

Most of the people who spend time of any significance in SL, however, don't spend it hopping from one corporate press conference to another. They are trying to create, or socialize, or explore or do something in the world itself.

So yes, it is like the dot.coms, or like the flashes in the pan that happen in suddenly popular third-world tourist destinations or countries where oils or gas is discovered, a tide of world wealth washes in, but doesn't stick and sustain the country itself.

$6.7 million is a lot of money, in SL terms especially. The tier each month on the new class 5 islands is $195. At what point will these corporations be able to support something other than themselves and behave like latter-day Rockefellers? (I.e. are they still in the robber-baron stage?) And while the metaversal development companies make a whopping profit, given what they do, what is the business model for their corporate clients to make a profit?
Comment posted by Tony Walsh
March 21, 2007 @ 5:16 pm
Great response, Prok. I should have been more specific about what I meant by "into" virtual worlds--I should have written "into the virtual world industry."
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