Wednesday, 3 September 2008

New World Notes

New World Notes

In-World Economy Tanks? Part 1

Wednesday, August 20, 2008 Wednesday, August 20, 2008

It has been a strange time for many in-world businesses in recent weeks. Specifically, it’s lack of sales. I thought it was just me, but evidence seems to be growing that in-world sales are being hit, and hit badly.

Sales at my shop have grown in a more or less predictable manner since the shop opened in spring 2007. However, ever since April/May 2008 sales (and corresponding traffic) have leveled off. Worse, my sales have dropped off precipitously in this month of August, sometimes to only 50% of “normal” levels.

And it’s not just me. Damien Fate of Loco Pocos complained on Plurk of having only a very small percentage of normal sales on one particular day, and Jacek Antonelli reported not selling her wonderful Squidograms at the expected rate as well. I know of several friends who have closed their operations in the past few months as they are unable to make tier, even though they had in some cases been successful for years. Word from the virtual grapevine indicates similar issues at many in-world businesses. There are no doubt some businesses running just fine and a few could even be growing. But I suspect they are the exception.

I posed the question to SL Plurkers and found that several had also experienced a downturn, although some attributed the change to “seasonal” effects. A few indicated their business was up – but it appears the wedding industry has a seasonal upturn at this time of year.

What’s going on? I’m not totally sure, but I have a few theories:

  • Seasonal Effects. The Northern Hemisphere’s summer often sees many residents limit their virtual time to enable more RL time, and fewer online means lowered sales. However, as mentioned above there are certain industries that can see upturns during this period: weddings and related operations, such as jewelry.
  • Windlight. Perhaps it’s just a coincidence, but my revenue issues seemed to coincide with the introduction of the Windlight viewer. How could this affect sales? Well, for one thing the SL population growth leveled off at about the same time. Even today I constantly encounter people who are afraid of Windlight, avoid Windlight, don’t have a PC that can run Windlight, etc. Did Windlight scare off a big chunk of customers? Does its hardware requirement cause some users to leave or others to not bother signing up?
  • RL Recession. In the US specifically, it’s a bad RL economic moment. People lose homes, jobs and generally don’t have as much disposable income. Lack of disposable income means less in-world spending, thus lowered sales.
  • Pseudo-Grid Issues. I’ve written about this before, but my always-logged-in spies tell me that on some days Linden-issued warnings appear, asking residents to avoid making transactions, building or manipulating inventory. Bingo, sales stop. They stall for days until people gain the confidence that things actually work. A related effect might also be occurring: as people can get on the grid to chat but not to transact, they may be getting accustomed to that mode and their buying habits could diminish forevermore.
  • Population. Or lack of population growth, specifically. We’ve heard of horrifying persistence stats from new SL signups, and thus older residents increasingly populate our virtual world. And guess what? They already have most of the products they want and don’t need to buy as much as a newbie might.
  • In-world Competition. I’m mentioning this as a possibility, but I don’t believe it is the cause. And who else makes Squidograms or Loco Pocos tiny avatars, anyway?
  • Chain Reaction. I’ve heard tales of sims being more or less given away by owners who can no longer afford the tier. It’s my impression that quite a few landowners are operating only at a break-in level and any economic disturbance could easily put them under, such as any of the phenomenon above. As these “former” owners drop off, their purchases also disappear, as do the purchases by their customers of items required to participate in the closing sim (like specialized outfits or equipment.)

Do you operate an in-world business? How has your revenue fared in recent weeks?

It’s bad times for some; that is certain. Will it change? I am not sure, but it seems to me that there are some steps that could be taken to recover the in-world economy. Let’s examine that in an upcoming post. 
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