Q3 closed on a high note with an unusually strong September. Talk 11/12 w/Zee Linden

Linden Lab is pleased to announce results for the 3rd quarter of 2008.

The charts and details below indicate that Q3 was a very strong quarter in Second Life with significant growth in land, user hours and the inworld economy. The inworld economy was unusually strong in September, with users spending 10% more per hour than the year to date average. Inworld transactions in October declined to levels more consistent with the year to date averages.

October results indicate that we should expect land growth to slow in Q4 as Residents reconfigure their land holdings to accommodate the change in pricing and addition of the “Homestead” island type.

[Note, Forum readers please see the blog to view the charts;
http://blog.secondlife.com/2008/11/12/q3-closed-on-a-high-note-with-an-unusually-strong-september/.]

- User Hours Top 100 Million During Q3. In Q3, Residents spent 102.8 million hours in Second Life, up 8% from Q2 and 45% from the same quarter last year. Peak concurrent users of 71,000 grew 7% over Q2 and approximately 31% over Q3 of last year. In October user hours climbed to a record 37 million hours up 11.4% from the prior month.


- Residents Own Nearly 2 Billion Square Meters of Land. Land mass in Second Life grew 23% in Q3 to just under 2 billion square meters. This is an increase of 124% year-over-year. The surge in land growth is partially attributable to the launch of lower-priced Openspace regions earlier this year. October results indicate that we should expect land growth to slow in Q4 as Residents reconfigure their land holdings to accommodate the change in pricing and addition of the “Homestead” island type. We expect to see some Residents consolidate their holdings to adjust to the new pricing and product types.


- Resident-to-Resident Transactions Top $100 Million. Total Resident-to-Resident transactions, a measure of the gross domestic product in Second Life, grew 21% from the prior quarter to $102M - or just under $1.00 per user hour. The Q3 total translates to an annualized rate of $408 million. By breaking $100M for the first time since Q2 2007, the Second Life economy has now fully recovered from the restriction placed on games of chance in Second Life in mid-2007.

In August and September, Residents spent an average of $0.91 and $0.96 per user hour compared to a year-to-date average of $0.87 per user hour. In October, however, spend per user hour was more in line with the YTD average. As a result, the economy shrunk 11% from L$9.9 billion in September to L$8.8 billion in October. The economy appears to have returned in November to the historical average rate of spend per user hour.


- LindeX Grew 4.0%. Volume on the LindeX, our virtual currency exchange where users can buy and sell our inworld micro-payment currency, grew 4.0% over Q2 to $28 million. The amount of all the Linden Dollars in circulation grew 4.5% over Q2 to $5.5 billion Linden dollars or just over $20 million USD. The exchange rate remained steady against the USD at 267 Linden Dollars to one USD.

LindeX volume remained flat at $9.1 million in October, up 28% from October of 2007.


* * *
Other highlights.

Over 357 auctions have closed in the new Nautilus region where property is selling at L$60 per meter or 12x the average cost of mainland property, indicating that some users have a high demand for a more structured experience.

Finally, premium subscriptions continued to decline in Q3, as they have nearly every month since we reduced the stipend we pay out to account holders. The revenue we generate from premium subscriptions is largely offset by the stipends we pay out to these account holders, so this decline doesn’t have a material impact on our business.

An important point of clarification is warranted here because this figure is often
misinterpreted. Premium subscriptions are required to own mainland, but they are not required to own islands. Additionally, we have many premium subscribers who are not land owners. As such, a decline in premium subscriptions does not mean we have a reduction in the number of land owners. Therefore it should not be used as a measure of the health of the land market, of the Second Life economy or the health of Linden Lab. We are currently in the process of evaluating ways to make premium subscriptions more valuable to Residents and less dependent on Linden dollar stipends.

-- Zee Linden

Please join Zee Linden today, November 12th, 2008, in discussion of this topic in the Second Life Forums.

Zee Linden will be reading comments in this thread and will post replies today.

Enjoy!

Please do keep your comments on topic.

Thanks!
-- Katt

How about you start leaving bots out of the calculation for reasons of honesty? Who cares if peak concurrent users are 71k, if 10-15k+ of them are bots. It makes everything else a sham.

Sigh....i feel so grumpy today.

I know a person that has 93 bots running at one time lol I wonder if these bots were included in this analysis lol

Is there an estimation for L$ spent minus estate tiers? How about a chart for square meters of mainland auctioned, by price per m2? Both before and after ad sign policy change?

Since there is no reliable way to tell what avatar is a bot and what is not, of course the bots are included. And with so many bots logged in 24/7 except when kicked by a region restart, these user hours are meaningless.

Thanks, Briana, I hope the day soon turns more cheerful and hopeful for you.

Zee, perhaps you can explain a bit about the numbers for us?

Thanks!
-- Katt

Thanks as always for the figures and graphs, very helpful to get a sense of the big picture.

It's funny how words can be used to say one thing but mean another. Reconfigure. I hear this and I think, oh, they are going to be moving to another option. When in reality a majority are probably dumping their already overpriced holdings due to RL economy.

I'm sure the bots will continue to grow, as they will be the only residents if you continue to raise the costs of playing this game. Ah.. words.. Game. Yes Lindens, this is a game, an outlet to release anxiety, and yet anxiety should not be part of our Second Life. Too bad. Nice idea. But there is always the 3rd life.

Btw: At your last count you were at -367 islands added already in November. What could those words mean?

It could mean that Q4 began on Nov 1 and we'll hear about the effect in January?

When are the Key Metrics graphs gonna be updated? They only go back to August..

edit: thanks for the updated version, Zee!

Wow, I actually didn't know this! I do own some mainland, and I'm still at the L$500/week stipend so it's worth it for me to keep this, but that is good to know, nonetheless.

Holy cow, I had no idea either.

I think Jack Linden recently said of the about 32k sims on the grid, 12k are openspace sims. That's 37%..

Can you break down the change in land-owned by openspace and not-openspace, please?

It would be even nicer if we could actually SEE all of the graphs. On my display, they cut off before Q3 bars are shown.

Yes, bots are included in the user hours. You are correct there's no good way to consistently distinguish bot activity. Our estimates are that about 10 to 15% of the hours do come from bots. We think that's been relatively consistent over time and if so, then while it may increase the numbers, the underlying trend is still valid. Growth of user to user economic activity, LindeX volume and our revenue have been quite consistent with the growth in user hours...

If I could figure out a way to sell more to bots I would!

Here are the detailed key metrics in Google Docs format. The links to this on our website have not yet been updated.

http://spreadsheets.google.com/pub?key=pxbDc4B2FH95uo0x67N5CIw

Also, the number of Openspace sims is now greater than the number of full regions. We're 39% Full regions, 44% Openspace regions and 14% mainland.

We've been hearing this since 1.2 was released in 2004 and it frankly rings completely hollow now. Please at least publish a timeline, some of the ideas that are being "evaluated," or any other information that might make us remotely believe this'll happen in the next five years.

Thanks and Have a Good Day

Funny thing about those transaction numbers..

Let's say, for a moment, that I sell a 399L item in my shop, which I do.

A customer purchases this item from me.
399 from customer to me.

The item is profit shared, so a script then takes money from me, and gives it to my partner(s).
100L to my partner, who wrote the awesome script.
100L to an alt "holding" account, whose job it is to pay for the advertising.
39L (10%) to another holding alt, which serves as a sort of "savings account".

Now.. every day, I check that alt's account, and 9 times out of 10, it has more money in it's pocket, than it needs to pay for the advertsing So, I scrape the overage off..
100L from the alt, to me.

Recently, I've lost a bit of faith in the L$ exchange markets. With the whole openspace thing, I like to get my money out while there's still some demand for it. The "Savings" alt seemed like a great idea at the time.. but nowadays.. I just want my money. So instead of letting it build up in my "savings" alt's pockets, I scrape that 39L back to myself, before cashing it out under my "main".
39L from the alt, to me.

Now of course, I cash out that money. I prefer to cash my lindens out using one of the other third-party exchanges.
so 299 from me to the exchange service.

---

From what I understand, this same 399 being passed around, amounts to 1076 in "user-to-user-transactions."

I would love to see, that you - respective Linden Lab - ban bots from SL. The most bots do nothing more then produce traffic. Traffic is the worse way to say a place is "populare".

It's easy to ban bots from SL, simple allow as maximum 4 logins from one IP only.

Dear Zee,

may we also learn why you are so highly aggressive towards any critical voices? When I read your announcement I sensed a lot of anger and frustration. Is there something you want to tell us between the lines?

Regards
James

Banning bots is a non-starter. It's easy enough to get around an IP->login limit via private proxies.

The answer lies in removing the systems which are giving people incentive to use bots in order to "game" them. IE, Traffic.

I read the same posting and detected zero anger and frustration.

Do me a favor and have that person reported for resource abuse. Thank you.

The answer is: remove the traffic counting and establish the old SL voting boxes for popular places, this will make bots senseless. The best way to increase performance and stability and reduce network overloads.

Sorry James, I'm just a CFO. That's how I talk to my wife too!