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Second Life monetizing at 5x higher than other casual MMOGs June 10, 2008

Posted by jeremyliew in business models, games, games 2.0, gaming.
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Yesterday I pulled together some analysis of monetization rates for casual MMOGs. In my analysis I estimated that Second Life was making around $1.4m/month in revenue from premium memberships and selling Linden Dollars. A number of people noted in comments that the majority of Second Life’s revenue came from land maintenance fees that I had left out of my analysis, and that Second Life’s revenue was actually far higher.

In fact last month James Au estimated that Second Life’s total revenue is around $8m/month:

There’s currently 14,597 islands, and they make an average of $1200 for the sale of each; they charge $295 per island per month for land use fees. (I say average, as island pricing has fluctuated recently.) So about $17,500,000 for the island sales, but that’s a one-time fee.

Recurring income is around $4 million/month in island land use fees. The Lindens also charge land fees on the cheaper, Linden-controlled mainland continents, and that’s maybe 30-40% of the total land mass, so say $2 million/month more. Add the island sales and commission revenue from L$/US$ transactions, plus the 92,000 Premium account holders paying $10 per month for another $2 million total a month. All that tabulated, $8 million a month gross seems like a safe (if very sloppy) guess.

I’m not a Second Lifer, and James was a long time embedded reporter in Second Life, so I’m inclined to take his estimate over mine. Another estimate from secondlifepros.com comes in to roughly the same place.

Based on this higher revenue number and the 860k residents logged in over the last 30 days, Second Life is monetizing at around $9.30 per user per month, much higher than the other casual worlds I talked about yesterday, but in band for some of the more “hardcore” free to play MMOGs that companies such as Acclaim, Aeria, OutSpark, K2 Networks and IGG are importing.

Comments»

1. Successful MMOGs can see $1-2 in monthly ARPU « Lightspeed Venture Partners Blog - June 10, 2008

[…] UPDATE: Several comments note that I have ignored the bulk of Second Life’s revenue which is derived from land maintenance. An updated analysis is here. […]

2. Orlando - June 10, 2008

There’s typically a much higher cost structure associated with developing and operating hardcore online games however. So, I’m doubtful that a higher top line translates cleanly to a higher bottom line.

3. How many of your MMOG’s monthly users can you get to pay? « Lightspeed Venture Partners Blog - June 11, 2008

[…] How many of your MMOG’s monthly users can you get to pay? June 11, 2008 Posted by jeremyliew in business models, games, games 2.0, gaming, mmorpg, subscription, virtual goods, virtual worlds. trackback I recently concluded that good MMOGs can expect $1-2 per user per month from a free to play model, with Second Life as an outlier at almost $10 per user per month. […]

4. Rightasrain - June 17, 2008

Not sure what your quickie analysis is really showing. I would suggest you split out the Platform revenue from the user revenue for Second Life–so the money that goes directly to Linden Labs versus the money that is associated with casual users. I think it is also a funny number to boil down just to the active users when SL has 14mm registered users and still more than 1.3mm log-ons per month–so really what you are saying is that the hardcore users spend money and the rest don’t. So then the SL hardcore users spend a lot less then in other worlds would be the obvious conclusion.

Anyway, we don’t do anything with land sales (or porno btw) and without getting into scientific analysis from our roughly 100,000 avatar visits to our areas per month–we are getting a lot less than $1USD/user!

5. Softolio » Successful MMOGs can see $1-2 in monthly ARPU - August 7, 2008

[…] UPDATE: Several comments note that I have ignored the bulk of Second Life’s revenue which is derived from land maintenance. An updated analysis is here. […]

6. Laurel Papworth » Blog Archive » Social Networks: Monetizing Social Media - September 29, 2008

[…] a nice earner for Linden Labs who make $4 million per month from Second Life real estate sales ($8m each month altogether). Here’s RocketOn showing how to customers use avatars to throw advertising around your […]

7. Generation YES Blog » Blog Archive » Ten to ask - How to predict the Web 2.0 winners - December 12, 2008

[…] money from Second Life to sustain themselves or they would have gone out of business already. This blog from a venture capital firm estimates their revenue at $8M per month, or nearly $100M per year. This blog does the same […]

8. Laurel Papworth- Social Network Strategy · Social Media Monetization and Revenue - January 5, 2009

[…] a nice earner for Linden Labs who make $4 million per month from Second Life real estate sales ($8m each month altogether). Here’s RocketOn showing how to customers use avatars to throw advertising around your […]

9. social game and virtual world ARPU — giffconstable.com - July 5, 2009

[…] ratio of 3%, and $1.7M monthly revenues from virtual goods).    Second Life (which Jeremy Liew estimated at $9.30) and the more “hardcore” free-to-play MMOGs tend to range between $5.00 and […]

10. Virtual world and social game ARPUs : The Electric Sheep Company Blog - July 11, 2009

[…] ratio of 3%, and $1.7M monthly revenues from virtual goods). Second Life (which Jeremy Liew estimated at $9.30) and the more “hardcore” free-to-play MMOGs tend to range between $5.00 and […]

11. Tim - November 19, 2009

Hi, Im a Second Life participant. I love this environment. However, the current management is the worst marketing team I have ever seen. I look forward to shorting the stock of this company if it ever goes public, or for that matter, telling all my valley friends about the total lack of customer loyalty in this company. What are you thinking?

Tim Logan
Co-Founder
DataCore Software.

12. Second Life - Jayna's INFOSYS 343 Blog - May 16, 2010

[…] L, Jeremy. (2008). Second life monetizing at 5x higher than other casual MMOGs. Retrieved from https://lsvp.wordpress.com/2008/06/10/second-life-monetizing-at-5x-higher-than-other-casual-mmogs/ […]

13. How to Save Second Life in Seven Easy Steps - July 29, 2010

[…] with a Prepaid Card Service While Second Life has some of the highest ARPU rates of any freemium virtual world, it needs many more customers to keep the internal economy of […]

14. Revenue data and other metrics of virtual asset sales market | VERN - September 29, 2011

[…] Second Life monetizing at 5x higher than other casual MMOGs @ Lightspeed Venture Partners […]


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