Second Life profitable?
Linden Lab is a privatelly held company and this makes it difficult to answer if they succeeded to make Second Life profitable yet. We explored in the past the Second Life economics but it’s time to have an update on Linden Lab and Second Life 2008 financial situation.
Linden Lab original funding
Linden Lab is almost 10 years old, being funded in 1999 by Philip Rosedale. Second Life opened to the public in 2003. It had 4 rounds of funding with the most recent one being $19m USD in March 2006, while the current syndicate consists of 6 investors. Linden Lab has Amazon.com’s founder and CEO, Jeff Bezos, as a secondround investor.
Second Life Issues
ginko financial – Second Life’s best-known bank Ginko has received so much press lately, the bank, as well as others, will inevitably become an issue that Linden Lab will have to tackle. That either means self-regulation or more federal intervention.
In the virtual world as much as the real one, the past months have been filled with bleak economic news. Following a federal investigation, Second Life’s parent company, Linden Lab, banned all gambling in the virtual world–a major source of its business. A month later, the collapse of an in-world bank led to a crackdown on all of Second Life’s unregulated financial institutions. Most worryingly, Linden Lab’s sales of Linden Dollars–the world’s currency–trickled off during the second half of 2007, and in February 2008 still stood just below where it did the same time a year before, about $720,000 a month, compared with $800,000 in February 2007.
Employees are leaving, too. Last December, Linden Lab’ chief technology officer and one of its first hires, Cory Ondrejka, walked away from the company. So when Philip Rosedale, the company’s chief executive, announced in mid-March that he’d also be stepping down, a Second Lifer could be forgiven for thinking it was time to pack up and move on.
Not long ago all the world wanted in on virtual worlds – particularly the industry leader Second Life. Firms were piling in to the 3-D universe, setting up stores, opening hotels and offering “free” cars to promote brands. Now, not so much. In reality, Second Life doesn’t work. As the firm itself admits, the system crashes constantly and the steep learning curve for anyone entering Second Life puts off all but the hardcore.
Linden Lab Profitable
Have the 250 Linden Lab employees managed to make Second Life profitable? Well, yes! Linden Labs managed to make Second Life profitable in 2008, something that couldn’t be predicted even in 2006.
We saw a bubble in early 2007. Part of it was an enormous amount of media: We’d routinely have hundreds articles written about us around the world every day.
People were trying to do things that aren’t yet possible in a virtual world, and one was marketing products. In Second Life, it’s not usually possible to pull together a very significant body of eyeballs in any one place.
the number of unique users and the size of the economy continue to grow by between 5% and 10% a month.
Linden Lab future?
The next step for Linden Lab is rather obvious. The venture capitals that supported the business all this years are probably looking for an exit strategy and the change of CEO is a good indication of the intention to take Linden Lab public. The Financial Times agree as well. The paper reported that Linden Lab “is moving closer towards a listing and life as a public company with the replacement of its founder with a new chief executive.” . During an interview, Philip Rosedale said that while there was ”no particular rush” to go for an IPO in the next year, he cited Bill Gurley, venture capitalist and board member, as saying the company would be able to go public on its current financial numbers
The founder denies this.
Virtual Worlds future
Cockrill and Morrison are working with the University of Wales on a 3-D world that will mirror the real one and, they believe, offer scope for distance learning, virtual meetings and other services that could bring a fourth dimension to the internet – touch.
They seem to be on to something. Companies are increasingly turning to virtual worlds not just for brand building, but also to hold meetings and train staff.
Rosedale is stepping down as chief executive of Linden Labs. Competition for Second Life is increasing as media and tech firm rivals build more structured 3-D worlds – so a new chief will have to get more people past those 8ft trannies. If he doesn’t, somebody else will.
Disney CEO Bob Iger is predicting that the company will see $1 billion in online revenue from Virtual worlds this coming year, up from a predicted $700 million for fiscal 2007. The sources include ads, downloads and subscriptions to online games and e-commerce that’s unrelated to the physical parks. Disney has a host of virtual worlds and online games supported by advertising or subscriptions, and it’s looking for more, while Hasbro, considers a site as non revenue generating if it only drives the purchase of toys.
Executive Management
Philip Rosedale | Founder and CEO
Robin Harper | VP Marketing & Community Development
Joe Miller | VP Platform & Technology Development
Marty Roberts | General Counsel
Cyn Skyberg | VP Customer Relations
Ginsu Yoon | VP Business Affairs
John Zdanowski | Chief Financial Officer
Board of Directors
Mitch Kapor | Kapor Enterprises, Inc.
Jed Smith | Managing Partner, Catamount Ventures
Bill Gurley | Partner, Benchmark Capital
James Currier | Founder and President, Tickle, Inc.
Investors of Note:
* Venture Capital: Benchmark Capital; Globespan Capital Partners; Catamount Ventrues
* Individuals: Jeff Bezos; Mitch Kapor
* Corporate: Omidyar Network
* Known Other Equity Holders: Rosedale Phillip, Harper Robin, Miller Joe, Zdanowski John, Yoon Ginsu, Ondrejka Cory, Fleck David, Currier James, Jacobsen Bruce, Yi Gideon, Smith Jed, Laskey Mitch, Lanier Jaron, Traeger Don, Gurley Bill
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