Q3 closed on a high note with an unusually strong September

Linden Lab is pleased to announce results for the 3rd quarter of 2008.  The charts and details below indicate that Q3 was a very strong quarter in Second Life with significant growth in land, user hours and the inworld economy.   The inworld economy was unusually strong in September, with users spending 10% more per hour than the year to date average.  Inworld transactions in October declined to levels more consistent with the year to date averages.

October results indicate that we should expect land growth to slow in Q4 as Residents reconfigure their land holdings to accommodate the change in pricing and addition of the “Homestead” island type.

User Hours Top 100 Million During Q3.  In Q3, Residents spent 102.8 million hours in Second Life, up 8% from Q2 and 45% from the same quarter last year.  Peak concurrent users of 71,000 grew 7% over Q2 and approximately 31% over Q3 of last year.  In October user hours climbed to a record 37 million hours up 11.4% from the prior month.
User Hours per Quarter

Residents Own Nearly 2 Billion Square Meters of Land.  Land mass in Second Life grew 23% in Q3 to just under 2 billion square meters.  This is an increase of 124% year-over-year.  The surge in land growth is partially attributable to the launch of lower-priced Openspace regions earlier this year. October results indicate that we should expect land growth to slow in Q4 as Residents reconfigure their land holdings to accommodate the change in pricing and addition of the “Homestead” island type.  We expect to see some Residents consolidate their holdings to adjust to the new pricing and product types.

Total Land Owned by Residents

Resident-to-Resident Transactions Top $100 Million.  Total Resident-to-Resident transactions, a measure of the gross domestic product in Second Life, grew 21% from the prior quarter to $102M – or just under $1.00 per user hour.  The Q3 total translates to an annualized rate of $408 million.  By breaking $100M for the first time since Q2 2007, the Second Life economy has now fully recovered from the restriction placed on games of chance in Second Life in mid-2007.

In August and September, Residents spent an average of $0.91 and $0.96 per user hour compared to a year-to-date average of $0.87 per user hour.  In October, however, spend per user hour was more in line with the YTD average.  As a result, the economy shrunk 11% from L$9.9 billion in September to L$8.8 billion in October.  The economy appears to have returned in November to the historical average rate of spend per user hour.
value-of-total-user-to-user-transactions

LindeX Grew 4.0%.  Volume on the LindeX, our virtual currency exchange where users can buy and sell our inworld micro-payment currency, grew 4.0% over Q2 to $28 million.  The amount of all the Linden Dollars in circulation grew 4.5% over Q2 to $5.5 billion Linden dollars or just over $20 million USD.  The exchange rate remained steady against the USD at 267 Linden Dollars to one USD.

LindeX volume remained flat at $9.1 million in October, up 28% from October of 2007.
virtual-currency1

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Other highlights.

Over 357 auctions have closed in the new Nautilus region where property is selling at L$60 per meter or 12x the average cost of mainland property, indicating that some users have a high demand for a more structured experience.

Finally, premium subscriptions continued to decline in Q3, as they have nearly every month since we reduced the stipend we pay out to account holders.  The revenue we generate from premium subscriptions is largely offset by the stipends we pay out to these account holders, so this decline doesn’t have a material impact on our business.

An important point of clarification is warranted here because this figure is often misinterpreted.   Premium subscriptions are required to own mainland, but they are not required to own islands. Additionally, we have many premium subscribers who are not land owners.  As such, a decline in premium subscriptions does not mean we have a reduction in the number of land owners. Therefore it should not be used as a measure of the health of the land market, of the Second Life economy or the health of Linden Lab.  We are currently in the process of evaluating ways to make premium subscriptions more valuable to Residents and less dependent on Linden dollar stipends.

Please join Zee Linden today, November 12th, 2008, in discussion of this topic in the Second Life Forums.

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16 Responses to Q3 closed on a high note with an unusually strong September

  1. Katt Linden says:

    Please join Zee Linden today, November 12th, 2008, in discussion of this topic in the Second Life Forums.

    http://forums.secondlife.com/showthread.php?p=2218646#post2218646

    Zee Linden will be reading comments in this thread and will post replies today.

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