LL diversifying? What does that mean?

LL CEO Rod Humble

Potentially the most interesting comments to come out of Rod Humble’s presentation at SLCC 2011 were related to the fact that Linden Lab may be diversifying. These started early on when he announced:

“You are going to see Linden Lab working on new products as well as Second Life”.

While he refused to delve into specifics, it has led to speculation that he may be referring to what Hamlet Au refers to as a new “SL Light experience” that will utilise “the web and tablets”.

Hamlet was certainly in a position to ask Rod questions on the matter after the presentation, given he’s at SLCC; and so may have a greater insight than I; certainly, there is no denying Rod indicated that Linden Lab is eyeing-up the tablet marker where Second Life is concerned. However, I cannot help but speculate that Linden Lab is going after something a lot broader than just introducing a “light” version of SL when Rod refers to the growing tablet / mobile market.

Look at his comment, quoted above, for example. It clearly differentiates between Second Life and a product and whatever else Linden Lab has planned. This seems an odd statement to make if whatever is coming down the line is simply aimed at enhancing Second Life’s reach. It’s also a differentiation that came up again during the extensive Q&A session. Here’s what he said:

“The other massive opportunity and massive threat to on-line games and everyone in this room is the rise of tablet and mobile devices; and right now we don’t participate on those devices. So you will see us address for Second Life, but also for at least one new product, the area of tablets in particular and some mobile stuff as well.[my emphasis]

Again, if Linden Lab are simply looking towards opportunities to extend Second Life’s reach, it seems odd that he clearly differentiates between Second Life and the “new products” in this comment.

So what else could he be referring to? Here’s where the speculation begins.

A recurring theme during the 45 minutes Rod was on stage was what I’m going to refer to “social involvement”, so much so that it is hard not to link them with his comments relating “new products”.To bullet-point some of the references:

  • He was at pains to emphasis the importance of people being able to define their own persona on-line and to be able to set their own barriers as to how much they reveal about themselves and how they establish divides or barriers between what the reveal / how they interact with others according to the environment / situation they are in
  • He also emphasised twice that Linden Lab believes that customer privacy is paramount, and that they will not do anything that betrays this
  • A number of his comments were around LL’s perception that people’s habits are changing with regards to Second Life, people are spending less time engaged in-world, but more time engaging socially about Second Life through various mediums – the new web profiles, Twitter, etc.

In this last point, he specifically points out, “By the way, I mentioned that Second Life was growing earlier…there’s a really interesting dynamic as well, is that many of the new users of Second Life are a very, er, very younger demographic…sort-of a mid-twenties, college age. And they also…they are generally spending less time in-world but more time socialising within Second Life social circles…and I think that’s really interesting.” He goes on to note that this is common in other on-line games and suggests that the onus for LL is to enhance this capability, “for our customers”.

Wen profiles: precursor to LL’s move towards wider on-line social involvement?

This would all seem to point towards Linden Lab moving more into the realm on on-line social involvement. It’s something they’ve tried, albeit on a very limited basis through the acquisition of Avatars United a couple of years back, which was ultimately discarded – which is not to say they ever gave up on the idea.

In many respects, it makes sense for the company to move into social involvement in a more premeditated manner, as a) this is clearly a growing market; b) through Second Life, they have been developing capabilities and knowledge ideally suited to the environment (i.e. through my.secondlife.com). What’s more, they are willing to step away from the likes of Facebook and Google+ and uphold the principles of pseudonymity and privacy, which could make such a move attractive to a broad audience.

Of course, it would be ridiculous to suggest that Linden Lab could in any way take-on the likes of Google or Facebook in the broadest sense; and I’m certainly not suggesting that.

But then, they don’t have to. By providing a set of social media tools that enable gamers, Second Life users and others to remain connected, to “meet” and discuss their interests, passions, plans, swap ideas, link-up with others and so on, they could potentially tap into a huge market, and offer them the ability to leverage technology and capability already developed that would not necessarily impact on their focus of “fixing” core issues and services within the Second Life platform itself.

There’s also the matter of diversification and revenue. Hamlet himself (rightly or wrongly, depending upon one’s standpoint) makes much of the current revenue stream enjoyed by Linden Lab (the “sale” of SL “land”) as being somewhat unsustainable – and over time, he may well be right. Ergo, it would make sense for LL to look at other opportunities and markets in which to generate new income. Although precisely how this might be achieved is harder to define, and worthy of a separate debated in and of itself.

It’s going to be interesting to see what is announced in the coming months and, equally, how Second Life users respond to whatever comes out of the Lab – particularly if it is seen as “taking effort away” from supporting Second Life. In this latter regard, assuming the new products are divorced from Second Life, LL will doubtless have a fine balancing act to perform where user happiness is concerned.

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14 thoughts on “LL diversifying? What does that mean?

  1. Gwyneth Llewelyn

    Hmmmmmmmmmmmmmmmmmmmmmm.

    Sorry, just meditating on what you’ve suggesting. Here is what I have come up with: starting a social networking site from scratch these days is not hard. You can go the stupid route (ie. develop it all from scratch) or just pick up any type of existing tools and tweak it to your tastes, which will be 90% design and 10% additional coding. To prove a point, in my occasional spare time, I was doing that until conflicting schedules in my time stopped me from doing so :) But to be honest, it’s something you can set up with rather good-looking results in less than a week or so.

    The big question is not the technology. It’s what will appeal users to register for it, and how it gets promoted. Avatars United had an interesting vision: joining all users from all online virtual worlds in the same network. There appeared to be a need for it, specially because it meant that all those conversations would happen under pseudonymity — meaning that workers, colleagues, friends, or even family wouldn’t need to know about your hobby ;) So there might still be a market for that.

    The second question is perhaps more problematic for Linden Lab. They were always terrible in promoting Second Life (contrast SL’s presence to the massive, aggressive ads for IMVU!). They relied upon SL fans and evangelists and a few key tech reporters/journalists to keep fresh news popping up on the blogosphere and media. In spite of their bad promotion, SL still gets almost 20,000 new registrations per day (one wonders where they all come from!…).

    A new social networking site will need tons of promotion: right now, Google+ gets all the media’s attention. They can capitalise on the privacy and pseudonymity issues, and this might catch the attention of some media sharks, but… not long term. The question is, how many millions of users will it need in order to have enough ads to pay for its support and continued development? Even with 300 or 400 million users, Facebook didn’t make enough from ads to support their infrastructure; they had to surpass the half-a-billion-users mark to start making some money from ads. Granted, they can start with what they have now (the SL population), add their own ad-serving engine (the one for SL Marketplace and in-world classifieds), and start capitalising on the potential 20 million registered SL users, right from Day One. It’s a good start; better than what Google+ had when they started! (But Google+ doesn’t need to survive from ads — not yet!)

    So I’m intrigued. As usual, I discard my dot-com optimism (“build and they will use it”), which we have proven over and over again that it doesn’t really work, and put on my realistic hat, which tells me to “follow the money”. What will be LL’s business model for their social networking site? How will they attract users? What will be the value of that social networking site as opposed to Facebook, Google+, Twitter, Plurk, and others — in other words, how will they differentiate themselves from all of those networking sites? Sure, mobile thingies are popular, and while I won’t be holding my breath for a mobile version of SL, I can understand that doing a mobile applet for a social networking site is much, much easier. But will this app be sold or given away? If given away, it will have to generate revenue via ads. And this means that LL will need to start selling ads like crazy, and not just “passively” as they do in SL.

    My own realistic stance on looking at businesses is just to observe what companies do when launching new services. As a very old geek, I’m not impressed with “technology”, and I’m too cynical to believe that “numbers are great” — number of users is only important for journalists. The only thing that matters is the business model. So, to recap:

    - It’s not the technology. Any kid with spare time can set up a professional-looking social networking site with all the bells and whistles in about a week. It might not be able to manage “millions of users” — that will require a lot of infrastructure and tricks to handle the load well — but it should be more than enough to launch a “beta version”. So technology will not impress me much.
    - It’s not about the number of users. Potentially, all registered SL users might be subscribed to this new social networking site, and thus LL might claim that they have “20 million registered users” from the start. That’s fine, but more users means more infrastructure costs — not more revenue.
    - It’s about a business model. LL has a fantastic business model for SL, which they stumbled upon by chance and some quick adaptation to users’ real needs. Many business models are done that way, it’s not as if all require “perfect” planning (even though it helps!). But the one for SL is unique and cannot be replicated on a Web page. After almost a decade (well, 8 years) LL has not shown to be able to devise new business models for their existing services. Why should they be able to create a new business model for a new service?
    - It might mean selling ads. LL is totally passive in that.
    - It definitely means promoting a service aggressively, specially because the industry giants — the holy trinity of Twitter, Facebook, and Google+ — dominate the market and the media. LL was never good at doing any kind of promotion. Why should they suddenly learn something that they never bothered to do so in the past 12 years?
    - There might not be a market for a social networking service for pseudonymous users. Just because we’re very vocal about that “need”, that doesn’t mean we’re the majority. I’m sure that Facebook and Google+ do market studies and get journalists to influence the public that “privacy is bad” and know that they can safely ignore the pseudonymous/privacy advocates, because, well, they’re a minority, and minorities can be ostracised. So… if LL (or Rod) thinks differently… they have to back that claim with some data! “Extraordinary claims require extraordinary proof”, as scientists are so fond of saying. This means doing a market analysis to see that the idea has potential.

    I don’t think that not even Rod is going to spend a lot of LL’s money in a product without doing some serious thinking and studying. Well, and who knows, after all, M Linden did exactly that…

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    1. Inara Pey Post author

      Yeah, I freely admit that I’m putting two & two together and very probably reaching five with this one, hence why I throw it out as total speculation :).

      In some ways, given the experience he’s brought into LL since joining, it is more likely that we’ll be seeing products that are more games oriented, as well as the “SL light” approach.

      But it’s interesting to speculate, given the apparent (again allowing for my personal subjectivity in listing to the presentation) strong element of social interaction Rod mentioned as going on far more around SL – and other platforms – than may previously have been the case.

      I agree that the launching of any social network requires a structured campaign and expenditure – even if not competing with the likes of GoogleBook; and in that regard I tend to fall against my idea. Also aware of the infrastructure question (I cogitated a lot on these prior to opting to push out this article anyway).

      As to people not wanting a pseudonymous network, I’m not so sure; I think this is more a case of whether LL are in a position to service that market – and again, I’d have to come down on the side of them really not occupying that space.

      But within the gaming community? Offering a broader-based platform for gamers and the like to engage? Perhaps; but as you say, the question become whether the audience is interested & if they are, how to reach them. Certainly, Rod appears to find the fact that SL now seems to be hitting a demographic that is in its 20s and spending time socialising about SL, fascinating. And if they are doing so for SL, what other games are they involved in where they’re doing the same?

      I also agree with your view that Rod is not about to throw money at something in the hope it’ll stick. There’s possibly been a little too much of that in the 2-3 years prior to his arrival, and I’d say he’s far to level-headed to let that happen. He did reference that LL will be entering into a lot of PR activity ahead – a lot of it in reference to SL, and that money is going to be spent as well (again, most probably in the context of SL, given the framework in which the comment was made), but it will be interesting to see what comes out of it.

      In the meantime, it’s fun to throw this out there and see what, if anything comes back :)

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      1. Gwyneth Llewelyn

        Well, if he does a “Blue Mars”-like app for iPhone and Android, where you can see your own avatar (and even wear some clothes) and IM people in SL, that might not be a huge success in terms of innovative technology, but would appeal to youngsters always with their thumbs texting each other — and thus being able to text their friends in SL — and certainly would draw the attention of the media…

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        1. Inara Pey Post author

          Or a mobile tool that allows players with multiple presences on different platforms maintain contact with friends / fellow gamers on said platforms? Monetising something like that would be bumpy, tho.

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  4. rodvik humble (@rodvik)

    ” I cannot help but speculate that Linden Lab is going after something a lot broader than just introducing a “light” version of SL when Rod refers to the growing tablet / mobile market.”

    You are insightful as always :) Yes I never said a lite version. I said and I mean new products which are in the area of shared creative spaces. or social creative tools or user created virtual worlds/places if you prefer. Expect the new products to be very different but containing a clear link to the DNA of the company. In many ways this is similar to Maxis which has The Sims and SImcity for example. Different products but very similar DNA.

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    1. Inara Pey Post author

      Hi, Rodvik!

      So you’re keeping within the (dare I use the word alongside SL?) “gaming” / VW environment? :)

      TBH, it wasn’t hard to pick-up on the fact you’re painting on a broader canvas than simple SL “lite”, so I’m not sure I’d use the word “insightful” on my picking up on it. You yourself were very clear on the division between SL and new products :).

      I also should admit that as a non-games player (the closest I get to “gaming” on a computer is playing mah jong occasionally, or the even more occasional round or two of backgammon), I have no idea of the differences between The Sims and SimCity, so am quite agog at what is coming down the line.

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      1. rodvik humble (@rodvik)

        Heya Inara! No I wouldnt use the word gaming or game (although I think you should be able to make games within our products).

        Shared creative space I think thats a good signpost for my thinking. I wanted to give our customers a heads up in our general direction as a company rather than a detailed product announcement. (I also mumbled a lot and have a weird accent so I totally get I was difficult to understand).

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        1. Inara Pey Post author

          You most certainly do not have a weird accent! :). And you weren’t difficult to understand. I’m just trying to tease details out of you with my reply above :).

          *Nods* on the shared creative spaces. I’ve always found the term appropriate to SL since you first started using it (and blogged as much :)). Good to hear that we’re going to be seeing more in that sphere.

          But… does this mean I have to now go out and buy a tablet? ;-).

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