Bad News Keeps Coming For Second Life

The bad news keeps coming for Second Life. Linden Lab, the company that develops and operates the virtual world, released October and November economic stats yesterday, which show that total user hours in-world actually declined in November, for the second-ever time in Second Life history.

The total number of user hours spent in-world declined 5% in November. On its company blog, Linden Lab attributed the decline to unplanned service outages. There are other possible mitigating factors as well: November is a short month, with a four-day holiday weekend in it (although that last factor is offset by the fact that the holiday is celebrated only in the United States, which accounts for less than half of Second Life user base).

“Overall economic metrics continue to trend slowly upward, including the Lindex exchange figures and resident-to-resident transactions. Premium accounts continue to slowly tick upwards,” Linden Lab said.

Overall growth, measured using the unreliable statistic of new account creation, continued bumpy. It was 25% month-over-month for the first three years of Second Life’s growth, by September it had slowed to 3%. In October, it spiked to 10%, but in November, it dipped back to 5%. Second Life finished November with 11.2 million accounts.

(Total accounts are an unreliable measure of Second Life’s size because they don’t measure how many people are actually engaged with the world. A person who created an account in 2004, logged in once for a half-hour, and never returned counts the same as a person who spends 10 hours a day in-world.)

The dip in user hours is the latest in a series of blows Second Life has taken. The Electric Sheep Company, a leading virtual-worlds content creator, announced it was laying off 25% of its staff Monday. Last week, CTO Cory Ondrejka left Linden Lab, or was fired. At about the same time as Ondrejka’s departure, AOL left Second Life. And Pontiac announced its departure Dec. 8. AOL was one of the most acclaimed real-life corporate presences in Second Life, and Pontiac one of the most acclaimed and most popular.

Second Life is in trouble, but it also has strong fundamentals — strongest of all, a dedicated community of users. The service is losing altitude, after a meteoric climb fueled by unreasonable hype. I think it’s likely Second Life will begin to climb again — but it might go crashing to the ground.

Updated 2 am Eastern Wednesday to add information about Pontiac leaving Second Life.