Friday, February 24, 2012

My Take on Why Linden Lab is Investing in New Products Instead of Second Life

Why would Linden Lab invest in multiple new products unrelated to Second Life when endemic problems with scalability, performance and reliability are still far from solved? A recent employee review of Linden Lab provides some insights. Factors mentioned include:
  • Management scared to try and tackle big engineering challenges, sticking to tiny iterative changes and expecting to "move the needle" with tiny often silly "improvements" 
  • Inability to address engineering technical debt - management is simply scared of it
Second Life was created more like a cutting-edge research and development project than a traditional commercial product. The delivery of visionary capabilities took precedence over long-term scalability, performance, usability and reliability. Given their inability over the past decade to resolve foundational technical limitations (lag, crashing, etc.) the root causes are probably woven so tightly into the legacy code and architecture that they can't be unwound.

My guess is that Linden Lab calculated that even if they solved all current issues by investing a million or two on reengineering legacy systems, revenue would still decline over time. OpenSim and other emerging platforms are offering land at a tenth the price of Second Life. As the competition's communities, economies and capabilities mature, Linden Lab's customer base will continue to erode. A dramatic cut in land pricing isn't an answer because that would create a corresponding cut in revenue. There is no sign that the market for sandbox worlds like Second Life will significantly increase in the foreseeable future. So there's really not a lot of upside for them. It's no wonder that they made the decision to take advantage of their current cash-rich situation to invest in new products that offer, at least potentially, a much higher return on investment. 

If my analysis is correct, what does the future hold? I think we'll see a continuation of incremental improvements to the client, small fixes for issues that don't require a large investment and new features to encourage the use of Second Life as a gaming platform.  But a few years down the road, unless Linden Lab can pull a magic new feature-set out of their hat, a declining Second Life and an emerging OpenSim will tilt the balance and we'll see a fast decline in both land ownership and active users. 

12 comments:

Marianne McCann said...

I think this is especially true with the friends/groups/blocking architecture. It's a very creaky system, prone to many difficulties, and in need of a lot of modernization to bring it in line with more modern implementations -- but with little to show if you did put the work needed into it. A shame, really, because, IMO, it is some of those very limitations that drive people away. It gets frustration to see the same problems, time and again.

Monerda said...

It's been my suspicion for a while now that LL has set their sights elsewhere as you point out here so well. One needs look no further than their woeful inability to release a stable viewer of their own while volunteer developers run circles around them providing better stability and functionality. And now they wish to cripple the TPVs by forcing them to abandon the very stuff that makes them better alternatives?

I think we are seeing the twilight times.

Khannea Suntzu said...

And finally, when we see SL pop, the userbase that still gives a damn should push for transferability of full SL inventories to alternative providers. In fact - we should start prepare for this contingency and slowly get users organized

Then again we might also ask users to PAY LL to make improvements. If 200.000 users each pay 10$ they could make LL an offer "...we want this and this and this upgraded.."

They would be hard-pressed to refuse..

Now *thinks* what charismatic and colorful SL celebrity could we ask to act as elected representative towards LL..?

YES! Botgirl!

BG for president!

Unknown said...

Yes, maybe so. Rumors of Second Life's death are always grossly underestimated. I suspect they are tending to several eggs in several baskets. Let's continue to watch them.

sororNishi said...

Well, this is why my money goes to InWorldz. They are prepared to re-engineer where necessary to make sure the foundations are sound and that bodes very well for the future.

CronoCloud said...

I don't agree at all.

1. I've seen nothing that matches the stability of LL's Snowstorm builds Why more people don't use it is beyond me. I find it hypocritical that people complain about bugs and then NOT run the viewer designed to catch them and prevent them from reaching main release in the first place. One of the reasons that people jumped to TPV's in the first place was that LL was focusing so much on the behind the scenes work on 2.0 (and not talking about it) that the 1.2x code languished and people thought they weren't doing anything at all. LL knew the 1.2x code base was creaky and needed a reboot. Viewer 2 was it. Viewer 2 wasn't designed with oldbies in mind, we aren't SL's core market and there aren't that many of us comparatively. It was designed with the idea of SL for the masses which is why the interface changed to be more web browserlike. And of course, certain people don't adapt to new UI all that well, especially when it's not quite done yet. It was pretty obvious to me that 2.x was designed with web profiles in mind, but they weren't ready yet when 2.0 was released. They had to release when they weren't really finished because all of the complaints.

2. SL has one thing OpenSim doesn't... people. By people I don't just mean the aspie furry builder/scripter types that have always gone gaga for opensim because they can get a cheap vanity sandbox sim to build in. Those people aren't really LL's core userbase. LL's core userbase is 25 - 45 year old women, and they will not be going to opensim.

3. LL can't win no matter what they do. If they do one thing, one part of the userbase complains, if they do the opposite another part complains. Support the arts with discounted sims, folks like Prok complain that LL are being techno-commies. If they don't, nerds complain about their obscure ancient rocket museums having to pay too much tier...they can't win.

Botgirl Questi said...

Marianne: That's a great example of a capability that could be harder to fix than is apparent. There are two challenges to growing Second Life. The first is attracting and retaining new paying users. The second is retention of current customers and turning around the downturn in tier.

Monderda: They have been putting a lot of effort into the new viewer with mixed results. I'm confused about why a company of their size can't compete very well with a few small, unfunded development teams. The UX has been improving in the last few go-arounds, but the've got a long way to go. Trying to keep innovative features of TPVs seems like another bad policy. It won't impact nubes (because they're going to use the official viewer). It will only alienate veterans and hasten their exodus.

Khannea: I agree. I've been encouraging people to get their inventories out of SL for years. I think "illegally" duplicating the inventory you've purchased in order to move out of SL is no different than ripping a music collection you purchased.

Sad thing is, if was running LL at this stage of the game, I'd be diversifying my portfolio too.

Soror: Good point. Inworldz and a few other committed start ups are going to be a lot more responsive. For one, they don't have what is surely a nightmarish decade old code base to deal with. So their cost of change is lower. Second, they don't enjoy the barriers to exit Second Life has (inventory, huge economy, established communities) so they must be response of they will be out of business quickly.

CronoCloud: I agree that their recent browser initiative is finally showing promise. It's an example of changes they can have a relatively big bang for the bug, without opening of the server-side can of worms.

I also agree that OpenSim is a few years away from offering a compelling alternative to newcomers, although more and more veteran users, especially in arts and education are making the switch.

Finally, I'm not being critical of their decisions, simply trying to figure out WTF is going on. If I'm correct in my assumption that fixing the endemic problems I mentioned aren't economically feasible, then diversifying into new promising ventures is the smart thing to do.

Tateru Nino said...

Can we perhaps stop using 'aspie' as a sort of an insult. It isn't but you're being quite insulting when you use it as one anyway.

I swear, hardly anyone who uses the word seems to have any idea what it even means.

Joey1058 said...

My personal opinion is that SL has reached a maturation point. To maintain sustainability the Lindens have optimized everything they possibly can. They have "X" number of newbies, "X" number of regulars, and "X" number of landowners. Part of their sustainability is the speculation and trading of the Linden Dollar. They really don't need to concern themselves with a major overhaul of the codebase. It probably falls under a blanket policy of "If it ain't broke, don't fix it".

Like Microsoft, the business is "profitable", but not growing for it's investors. That is the primary reason for the diversification. There are probably numerous reasons as well, but this is what my gut tells me.

Peter Miller said...

Let's remember that OpenSim is a tech, not a grid. Last count there were something like 118 public OpenSim grids. That's both a strength and a weakness. The fact that Kitely just launched their Twitter-verified service with a free sim + 2 hrs per month should increase uptake and awareness.

Pep said...

Unless one of LL's new products is an Android reimplementation SL is the bicycle industry in a motorcar markt. Android is the future platform for social interactive applications (RIM is in its death throes, Apple is doing its King Canute impression in the courts) and has the ability to micromonetise participation. The VW apps are beginning to appear already, and LL should have bought one of those as a springboard rather than a text adventure creator. Pep (thinks it is LL which is in a small building in the woods.)

Pussycat Catnap said...

"2. SL has one thing OpenSim doesn't... people. By people I don't just mean the aspie furry builder/scripter types that have always gone gaga for opensim because they can get a cheap vanity sandbox sim to build in. Those people aren't really LL's core userbase."

What is aspie anyway?

And you might not like furries, but I could place pretty good odds that a large amount of your inventory was made by them. You as in any random SL-user.

Furries make a lot of content, and a lot of builder kit content. And they've got a lot of both free and commercial goods in SL.

I always find it funny how people who hate items being for sale in SL slam shop owners as 'furry extremists extorting people' and people who hate free stuff in SL slam freebie makers as 'technocommunist furries out to destroy the free market.'

- Both are right and wrong... Furries... well... are just SL users... But they -are- more represented among builders simply because to look like a furry, someone has to make the darned thing, and it takes a -LOT- of both technical and artistic skill to make all of those pieces.

As for LLs core market;
Everytime LLs caters to builder or merchants or people who like to buy stuff or people who like to hang out in SL - they're catering to furries.