Wednesday, July 2, 2008

This Is Considered Good News Analysis?

Reuters makes some interesting conclusions from Linden Lab's economic statistics. I just happen to think that the analyst didn't think it through enough to give reasonable causes, or rather they preferred to reach conclusions that were sensational and would sell more newspapers rather than boring and reasonable ones that people wouldn't get worked up about.

Here's a relevant excerpt:

Second Life had 88,585 of the subscription-paying accounts at the end of May, down from 89,845 a year earlier.

The overwhelming majority of avatars use basic accounts, which are free. Premium accounts, which cost US$10 a month, come with additional privileges including enhanced support and the right to own virtual property on Second Life’s mainland.

Even as Linden Lab’s base of paying customers shrinks over the past year, the total hours spent by avatars inside Second Life has increased dramatically. In May of 2007 total usage of Linden Lab’s virtual world was about 20.8 million hours. A year later the number spiked to almost 32 million hours, a gain of 54 percent.

With hours up but premium accounts down, the data suggests that while Second Life is failing to attract to new users, existing customers find the virtual world more engaging than ever, spending ever-greater amounts of time there.

The facts of a 50% increase in hours spent in SL and the falling number of premium accounts led the analyst to conclude that the increased number of hours spent in Second Life is due to the old users using it more? Huh?

Did the analyst bother to read their own paragraph talking about the vast majority of users being basic not premium? Linden Lab states there are over 14,000,000 accounts in Second Life and growing at the rate of over 1,000,000 per month. Did the analyst not even bother to think that many of the new sign-ups over the last year actually used the system? Nope, they'd rather conclude that SecondLife is atrophying.

Following that dubious conclusion, Reuters, goes on to talk about OpenSim.
A wild card that Linden’s statistics cannot account for is the rapid development of open-source Second Life variant OpenSim. The zero growth among premium accounts may represent a shift in the most die-hard avatars.

Avatars unable to find a home within Second Life including banking institutions and ageplayers have already migrated to OpenSim.

Doom! Gloom! The sky is falling and I'm selling more newspapers because people want to read about the non-existent rock about to hit their head.

I think a simpler explanation for the drop in premium accounts is that there are few benefits for having a premium account. First land is gone and the stipend no longer covers the cost of the membership. Two big benefits have disappeared.

Mainland/Sim ownership and access to better support are the only benefits left. Could it be that people are realizing they can buy/rent on the non-mainland sims and have parcels that look the way they want instead of being next to ad-farms? As people flee the mainland for the private sims, the benefits of being premium go away and now they can use that US$10 per month to pay the tier on their new parcel.

Sounds pretty reasonable to me. I think the dramatic growth in private sim land-size and the current freeze in new mainland (or is that over already), are far better indicators of where people are spending their money. Not that they are going to OpenSim.

And why on earth would the bankers go to OpenSim? There aren't very many people on it to make banking a viable business.

As usual, simple use of logic shows that most "news" is actually "hype" designed to sell more "news".


dandellion Kimban said...

That is really weird logic. As much as Reuters is good in the meatspace, it is crap in th second life. It doesn't take much to see that fall in premium accounts is consequence of cheaper land on private estates (and it is cheaper, for 10$ you can rent more than 512sqm of nice looking land with decent neighbours). I am not sure about support but I doubt it is worth the money in most cases.
Beside that, Reuters is most of the times awfully slow in presenting news. As we all know, news are not news three days after something happened. And Reuters reports with the speed of a lazy blogger.

Peter Stindberg said...

/me nods to Tiessa and dandellion

Banking in OpenSim? They don't have a convertible currency. So where's the point?