What s up guys! It s Jason here and welcome to my YouTube channel, Second Life Insight.
Imagine you had the opportunity to live the life you ve always wanted in the body and
with the face you ve always wanted. You get to experience day-to-day life, but in a much
more controlled way, almost as if it s a game, but not quite. Well, there s a way to do that.
You might ve already experienced it in fact, through a virtual reality platform called
Second Life, that really reached its peak in the early to mid-2000s.
Second Life has often been described as either a virtual world, or a multiplayer role-playing
game. Or both. Yet is it really a game? Afterall, Second Life doesn t have any predetermined
objectives that users can unlock level by level by showing their mastery of the game.
In that way, Second Life seems as real as real life in the sense that there is no way
to win, just things that you want to do and places to see as your avatar.
As the spokesperson of Linden Lab, the company that created Second Life puts it, There is
no manufactured conflict, no set objective. It s an entirely open-ended experience. In
a marketplace increasingly crowded with options for entertainment, Second Life is certainly
niche and part of the goal-less sandbox genre. Yet even in that genre, it s lost its monopoly
to inroads made by competitors such as The Sims. While in 2013, Second Life reported
more than a million monthly active users, in 2018, that number dropped to about half
a million. How and why did it become such a cultural force and why has it flatlined
with both players and the businesses who became part of Second Life s ecosystem? Why did second
life fail? What will happen to the future of Second Life? Let s take a look back in
time to find out.
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on with the Rise and Fall of Second Life.
A Promising Beginning
Who created Second Life and when did Second Life start? Second Life launched in 2003,
founded by Philip Rosedale, an entrepreneur and ex-CTO of RealNetworks, an AI and computer
based software company. So for how old is second life, that makes second life almost
10 years old in a couple years, which is a dinosaur in today s internet world Given the
out-of-the-box thinking that Second Life demonstrated, it shouldn t come as a surprise that Rosedale
began to create the platform after attending Burning Man, an annual festival that tends
to attract individuals drawn to creative and artistic pursuits. Perhaps as another stellar
vote of confidence, early investors in Second Life included Amazon founder Jeff Bezos and
eBay founder, Pierre Omidyar. Though Second Life has been protective of its stats since
its inception, in 2006 it did reveal that money transactions on the platform had reached
half a million a day with growth at 15% monthly. There were about a million users that same
year with about 35% of Second Life residents being between the ages of 25-34.
Second Life captured many users imaginations because of intuitiveness: since most of us
complete chores and recreational activities on a daily basis, the premise of the platform
is intuitive. Users choose an avatar that does or does not look like them, chooses their
own names, and are able to travel the Second Life world by searching for keywords, topics,
and places that most interest them. In that way, it s like a self-contained search engine.
Users can roam about Second Life s world for free. Yet, just as in real life, we can exist
for next to nothing, while upgrading our lives costs money, so it goes in Second Life.
To get more choices about how they live in Second Life, users need to upgrade to a Premium
Membership Plan that charges $9.95 monthly to receive a weekly stipend of 300 Linden
Dollars, the currency specific to the platform. Sounds like Second Life was way ahead of the
crypto currency game looking back right? Premium Membership also allows users to gain Linden
Dollars in several real-life ways, such as using the virtual money exchange, LindenX,
working for other users doing a task such as fixing a roof or mowing a loan, or even
becoming business owners themselves. Linden Dollars lets users buy cars, homes, and subscribe
to magazines written by other Second Life users. Considering that one real life dollar
translates into 250 Linden Dollars, one of the appealing traits of Second Life is easy
to understand---it s easier to get the highlife on the platform than in real life.
One stand-out case of someone making it big from Second Life is Ailin Graef, known online
as Anshe Chung. She s the first user who has converted a million real life dollars from
Linden Dollars. Since June 2004, Chung has slowly built a real estate empire by building
and developing land, with her space now known as Dreamland. Essentially Chung has made money
by zoning different areas of Dreamland and functioning as a de facto Department of Housing
for her areas. While she is a rare case of someone truly earning enough money to live
on from Second Life, she has nonetheless become a true entrepreneur, employing a team of 80
plus programmers and graphic designers to continue developing and expanding Second Life.
As a real estate developer, she s even helped organizations such as LifeChurch.tv build
their Second Life presence. That s pretty amazing and proves when there s a will, there
s a way!
Appeal to Individual Players and Companies
For individual players, the appeal of Second Life ranges from entertainment and companionship
to actually making money that can be used in real life. At its peak, Second Life saw
a million active users, partially because of that one-stop shop convenience of being
able to sit in front of your computer and chat with any of the 10,000 users on at the
same time as you and generally be as unconventional as you wish. For instance, Wagner James Au,
who heads a blog about Second Life, notes that it also appeals to users because of the
liberal nature of its user generated content. In particular, its sexual content ranks highly
as, half of the most popular locations in Second Life are adult-rated, most of them
advertising what they offer in the actual location names such as Chained Desires. Like
most entertainment then, Second Life offers a bit of escapism for individuals who enjoy
the anonymity and total control that the platform provides.
In 2006, about 30 companies were active on Second Life, going where consumers seemed
to be flocking by making their brand visible on the island. Companies like Nissan or partnering
advertising agencies could buy a branded island for $195 monthly and a one-time upfront fee
of $1,250. In the case of Nissan, for example, the company would have its programmers feature
products of its choosing on its island, as well as create billboards and other promotional
materials that could help the brand gain brand recognition. Other companies that advertised
on Second Life during its heyday included Nike, Amazon, and Reebok. Companies like IBM
and hotels like Starwood Hotels and Resorts got even more creative with the former having
a Second Life reunion, while the hotel chain had indie musician Ben Folds perform on Second
Life to announce the opening of Aloft, the digital prototype of its latest hotel. Even
news outlets were getting in on the action, with both CNET and Reuters having Second Life
reporter avatars providing updates on the latest virtual current events. Though returns
on investment might be difficult to quantify for brands buying islands on Second Life,
that virtual real estate cost is significantly smaller than the media budget typically required
for billboards and TV spots, with billboards in New York City for instance, ranging in
the hundreds of thousands in 2006. Some might consider this the rise and fall of virtual
reality retailing.
Slowing Growth
Is Second Life still popular? While it was all the rage from its inception to about 2013,
Second Life s monthly active users have just about halved, having devolved to about half
a million to 600,000 monthly active users, depending on your source, and about 300,000
who register and try it only once. The slowing growth could be attributed primarily to having
more and more competitors, not only in the gaming space but with the rise of social media
as well. Most notably, the sandbox genre became more heated with the continued popularity
of The Sims, a virtual platform where individuals could build and continuously decorate their
homes. It became so popular that it was the best-selling PC game from 2001-2003, until
its sequel, The Sims took over that spot. Other multiplayer, more traditional games,
such as World of Warcraft, also came out in 2004. In comparison, while Second Life reached
its peak of registered users at one million, by 2014 War of World of Warcraft reached its
peak of registered users at 14 million and by 2017, its revenue exceeded $9 billion.
Second Life is thought to have reached its peak of revenue around 2011 at $100 million.
As this is mostly a digital platform with huge margins, you can only imagine how much
cash they were printing at the time!
The advent of social media essentially allowed individuals to create online personas that-fortunately
or unfortunately-had to be more realistic than Second Life avatars, but didn t have
to reflect their in-person personas to the T. Facebook launched in 2004 and quickly became
the go-to middle ground between the all-out fantasy world of Second Life and meeting and
befriending people in person. From 2004 to 2007, Facebook grew from 1 million to about
350 million users. More millennials were either splitting time between Second Life and Facebook
and other platforms, where they could easily chat with quasi-friends and check on classmates,
long lost acquaintances, and anyone else of interest.
Possibly most significantly though, Second Life might have been too ahead of its time
in its entirely user-generated meets video game concept. Its novelty, especially among
millennials, helped it scale quickly but not securely. Controversially, in 2018, one of
Linden Lab s employees claimed in a lawsuit that customers payment information was not
securely stored, and more alarmingly, users were engaged in bad illegal behaviors of users
avatars that resembled children. The lawsuit accused Linden Lab of unfairly dismissing
the employee who raised the concerns. Though the incident wasn t as widely publicized as
Twitter and Facebook s fake news and privacy issues, it was one sign of Second Life s inability
to patch up issues that have finished off other companies.
COVID-19: Slight Pick-Up
So what s going on with Second Life in 2021? Not surprisingly, the quarantine that the
height of COVID-19 required, actually gave Second Life...well, a second life. Since April
of last year, Second Life s CEO reported that they saw a 60% increase in user registrations
and even a 10% lift in recurring users, with an easily visible correlation between user
activity upticks and countries that imposed stricter lockdowns. The renewed interest in
Second Life spurred an intracompany push to introduce new features, such as virtual world
book tours. Whether or not Second Life managed to attract higher acquisition and engagement
because of those world book tours and other novelties, has been left to the imagination
as the virtual world hasn t hit the headlines recently. It may be a sign that Second Life
is perhaps still most attractive to its hardcore users, with more casual users being more attracted
to it when they re most interested in escaping the day-to-day grind for virtual fantasies.
Lessons to be Learned/Recap
If there are any lessons to be learned from Second Life, it s based on the assumption
that you believe a niche product can be scalable. Possibly one reason that Second Life never
took off to the extent of World of Warcraft is that it s too meta. If so, how could the
success of its most similar competitor, The Sims, be explained? Rather than Second Life
being too niche, maybe it s that Linden Labs hasn t been able to strike the balance between
keeping the platform freewheeling enough to retain its most loyal users, and reining in
the risque and sometimes illegal fringe users. Linden Labs inability to do so led to Second
Life gaining a reputation for having a lot of virtual sexual content, much of which can
be considered niche. At the moment, Second Life has about 118 Adults Only areas that
can be explored. They range from The Keyhole Club and Motel for your inner voyeur and Temptations
Adult Resort. The number and easy accessibility of the adult areas makes Second Life seem
like a shady place to tell your friends and family that you log onto. Its management s
unwillingness to do damage control and remedy the complaints that its former employee leveraged
probably didn t help the platform as well. It s possibly one of several reasons that
these days, many millennials would probably recall The Sims when asked about a virtual
reality game; but truth be told, they may not be playing either. Second Life had a meteoric
rise, plateau and then a fall. What s the future of Second Life? Is this the end of
Second Life? I doubt it. Let s see what happens to Second Life as the world begins its long
recovery from COVID.
So with that said, thank you so much for watching my video. There was a significant amount of
research and production that went into making this video possible. As this is a brand-new
YouTube channel I just started this year - if you enjoy videos like this, please click the
subscribe button and hit that notification bell! If you haven t seen already, check out
my video on The Rise of Only Fans or the Rise and Fall of Philadelphia. As always, stay
happy and healthy and stay tuned for another episode of Company Insight next week.