X. Case Study: Second Life

Report
A case study of Second Life was the final topic taken up in the course. Launched in 2003, Second Life is an internet-based virtual world developed by Linden Research, Inc. (commonly referred to as Linden Lab). In this world, motional avatars, called “residents,” are enabled to interact with each other, create in-world appearances and identities, participate in individual or group activities, and create and trade items and services, i.e. virtual property, with one another. A virtual currency, the Linden Dollar, used as the medium of exchange, has been exchangeable for real world currencies since 2004. As of February 2007, its rate is reasonably stable at around L$ 266 to US$1. A small percentage of Second Life’s residents draw net incomes from this economy, equivalent to between a few hundred and several thousand US$ per month.

More than 11.5 million accounts have been registered to date. Since many accounts are inactive and some residents have multiple accounts, there are no reliable figures for actual consistent usage. Second Life users tend to be professional males, between the ages of 25 and 55. Their profiles similar to gamers, they have ample time to invest their energies in this virtual world.

Businesses have also begun to use Second Life as a space through which to reach consumers. In all, about 100 businesses already are represented (Sky Network and HSBC, for example) paying real money to Linden Lab for the opportunity to establish themselves in-world and expose their brands. There is high involvement in the Second Life market, and the user who wants his/her avatar to look cool, wear fashionable clothing and own a nice home pays to do so.

Teachers and educational institutions are also availing of virtual classrooms on Second Life, hosting projects and lectures online, and bridging the distance gap between students and teachers through avatar interaction. Corporations such as IBM, too, have been able to hold international meetings without burning aviation fuel.

Second Life’s revenue model is based on subscription fees. Basic accounts have low and no recurring fees, but have little access to Second Life’s more sophisticated features. Premium accounts pay US$9.95 per month which includes a tier fee for a small amount of land, purchased either from another player or from Linden Labs by land auction method; the tier fee for land increases as more land is owned. These accounts receive a weekly stipend of L$300 per week. Since residents can exchange L$ for real world currencies, taxation has become a subject of economic debate.

While Second Life started off as a dot-com earning no income to speak of, it has become a successful business. It has established a platform of considerable size with global coverage, and the creation of its in-world content has, uniquely, been outsourced to its residents, such that Linden Lab has only to focus on the maintenance and development of its technology.

As gaming online is expected to grow exponentially, Second Life can expect to face increasing competitor rivalry, particularly from Japan and China. At this point in time, however, it has achieved a popularity greater than that of Facebook, Myspace, and Youtube, as well as that of director competitors, such as There and Active Worlds. One of Second Life's drawbacks is that its system is unable to handle large volumes of traffic, and the transaction lag time is presenting difficulties. Security of resident information is also an issue.

Reflection
I must admit I was surprised, even startled at first, by our discussion on this topic. While in-class mention had been made before about Second Life, I had no idea of the scope of its current audience or of the connections it makes between virtual and real worlds.

While i was amazed, my reactions, at first, were also somewhat negative. What does it mean when human beings start to project their consciousness into one or even several avatars? If one can escape so easily from one’s limited reality to another where any lifestyle, activity or appearance is possible – given the finances, that is – how will individuals reconcile the disparity between the different worlds they inhabit? Will a kind of schizophrenic existence be the result?

As i continued to reflect, however, i wondered if there might, in time, be some positive implications. Does Second Life, in fact, give individuals new scope for latent creativities? Could the connections forged in virtual realms lead to a more unified world? If underdeveloped countries, such as the Philippines, had better internet access, would its people be able to find new avenues for small business development? And, if so much “living” can be done online, will that not have positive implications for the earth as it faces climate change?

No doubt, as Linden Lab continues to iron out hiccups and improve on its technologies, the virtual population there will expand quite rapidly.

Maybe i should open an account on Second Life!!