Virtual world Second Life is out with its Q1 2009 Economic Report and things are looking up. In fact, Second Life economics look much better than the real world.
Users are spending much more time on the site despite a drop in land ownership. In an interview with CNET News, Linden Labs CEO Mark Kingdon estimated "user-to-user monetary transactions in Second Life may hit $450 million in 2009, up from $350 million."
An overall mood of increasing optimism - A number of factors drove the growth in the Second Life economy in Q1 2009: an increase in active users and user hours, a steady influx of new Residents, and continued improvements in grid stability. Anecdotal conversations with large estate owners and merchants point to a renewed optimism about the Second Life economy, while our recent business owner survey (as reported by M Linden on the Offical Second Life Blog), indicated that 68% of business owners are planning on maintaining or increasing their investment in Second Life in the next six months. And 61% of business owners are optimistic that their revenue from Second Life will grow. So despite the real life economic crisis, the Second Life economy continues apace.
Some obligatory statistics for all you numbers people:
- 124 million user hours, an increase of 42 percent from the same quarter last year
- Peak concurrent users of 88,200, an increase of 33 percent from the same quarter last year
- The value of user-to-user transactions was $120 million, up 65 percent from the same quarter last year
- The Island market has stabilized, although overall square meters of resident-owned Land has decreased
- Gross sales on the Xstreet SL marketplace grew 23 percent over Q4 of 2008 and 72 percent over the same quarter last year
What does this all mean? Well, it's a bit hard to tell since Linden Labs is private and doesn't disclose real dollars. It does however prove that there is money to be made in virtual goods, provided you have a user base with enough transaction volume.
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I wrote previously about China's attempt to tax virtual goods and currency, and now the BBC reports that Sweden and South Korea have also moved to clarify the tax rules for virtual money.
In April 2008 Sweden's tax office published a clarification to its tax laws which said that in-game transactions are taxable--in theory. I am sure Ben Franklin was referring to Linden dollars when he wrote, "In this world nothing can be said to be certain, except death and taxes."
The taxation subject seems to be more a case of what happens when virtual money turns into real money than it does a question about virtual transactions. Second Life markets itself as a place to make actual money, whereas World of Warcraft bans trades for real money.
I'm inclined to side with WoW that keeping real and virtual money separate is the right thing to do. And it's a bit hard to fathom that a digital asset does anything but diminish or have a relative value to that specific game.
Besides, what happens if the game company goes out of business? It's not like you get to take your special sword to the Sponge Bob game if WoW suddely disappears.
The transaction volume of digital "assets" reached 9.36 billion yuan ($1.37 billion) in 2007 and is expected to hit 11.12 billion yuan in 2008, according to 5173.com, one of China's major virtual-asset transaction platforms
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