May be Linden Lab is not recession proof. New World Notes has an article, now confirmed, about Linden Lab laying off 30% of staff.

Looking into Linden Lab Layoff Rumors

For some time I’ve wondered if we would see a slow down in SL and cutback. I used to see currently logged on numbers in the 50K to 80k range. I know see numbers in the 30K to 60K range. I also know several friends that have given up their regions in SL because of their economic situations. They have moved to OpenSim and some are self hosting.

It seems odd that SL is losing market share and games at Facebook are adding millions. I’m spending less time on all services as I have business projects taking up my time. It pays, I need the money. Not having the money means I see an SL region as ridiculously expensive.

I’m not curious what it costs to get a game on Facebook. The idea of all those 2D games made in Flash is just amazing.

SL in a Browser

I have several articles here about 3D worlds moving toward having their world available in a standard browser rather than a special viewer. It looks like LL is going to go that direction. LL may leave viewer development to those building the Third Party Viewers to handle the high end graphics.

One has to wonder what they are thinking. I suppose they are hoping to get more people in if they do not have to download software. Well… they have something like 10,000 new people a day looking at SL and only a few percent staying for longer than a few hours. I can’t see the download being a significant problem. Still, I suppose I would test that idea if I were the LL boss.

There are all sorts of blog articles about what is wrong with SL and why it does not retain new players. I’ll skip boring you with a repetition of my thoughts.

SL Future

Linden Lab is getting some serous competition. Blue Mars is taking some of the venture capital and the professional modelers. The freedom to develop with Maya and 3DMax is attractive to professional modelers.

Then there is OpenSim. The folks developing on the cheap can’t pass it up. Being able to self host and connect via donation only servers looks real good compared to $300/month for a Second Life or Blue Mars region.

An economy turning down and the European nations looking at where they are going to cut back is likely to have an impact on SL. America is looking at a civil rebellion at the polls that may displace the traditional political system. With 99 weeks of unemployment available and paying more than many jobs a ton of people are using up the 99 and playing online. Eventually that runs out and people return to work or have no money. At some point this all impacts LL and SL. My in games sales are down.

The recent advertising has brought a lot of traffic to the web site, per Massively’s information (see: Linden Lab laying off staff, closing Singapore office) While I think it is still early, we have not seen a big rise in signups or retention with the release of SL Viewer 2.0 and the new welcome areas.

Massively has inside lines and is talking with people coming out of LL and looking at who is being kept and who is being laid off. I expect to hear more soon.

SL Improvements

What is to happen to things like the new meshes? Well, it is hard to know. Linden Lab states they are in ‘solid’ financial shape. See: A Restructuring For Linden Lab

My experience in the corporate world is most companies put off layoffs until the last possible moment. They are usually pressured into it. So, while there is likely no imminent financial problem I suspect they are feeling a crunch. Massively points out that new players buying Linden Dollars is a high profit item for LL. That is flat just now, so that has to be hitting the bottom line at LL hard.

In April 5% of LL staff was laid off. The Singapore office is being or has been closed. Now this round of layoffs. As Massively points out, this is starting to look like a trend.

When money becomes an issue… a serious issue… serious enough a company ‘restructures’… it likely means they are looking at moving development effort to those thing that will produce an immediate return on investment. If you read the press release (Linden Lab Restructures to Generate Efficiencies and Support Investment in New Platforms), you’ll get a better idea of their spin and I suspect there are sands of truth in it.

Direction

Linden Lab is saying they are restructuring to improve other platforms… “through browser-based and mobile applications.” Well… we know what the iPhone and other smart phones are doing to the world. In the browser based world we are looking at Facebook like social network kinds of things. Those worlds are mostly 2D. However, one can play Farmville on a cell phone (search on the Skyfire browser).

However making things easier for residents to market virual goods is an interesting point. Marketing our clothes and other 3D items in a virtual world that runs in browsers and smart phones? I suppose this means that effort is going into how to get our 3D SL world into those mediums. There has been recent buzz about server side cloud based rendering. If that is the idea, browser based rendering of HD quality is a whole new direction leaving viewers behind. Whether one uses a desktop, iPad or smartphone high quality 3D would be possible. Since rendering is where most of the computer effort is spent, it seems likely cloud based rendering would make SL very playable on smartphones.

Adding to the idea that this is a direction LL is headed is their statement about bring 3D to the web. Quoting Mark Kingdon, “It will also enable us to invest in bringing 3D to the web and will strengthen our profitability.” I am left wondering if the profitability is from more people in SL or sales of technology to provide 3D on the web. I know in my business circles we are looking at how to use 3D with our customers.

If they are planning to make money from technology sales then one has to wonder why most of the Second Life Enterprise development team was laid off. Also, THERE.com went the way of technology sales, that worked out so well…

I’ve read about Wang Computers and Osborn Computers and their business screw ups that cost them their companies. It is too soon to know but this development at LL is starting to read like Wang Computers.

Summary

We really have no idea what this will mean for SL. I get my best answers here.

Will they deliver meshes on time? I serious doubt it, but I doubted it before I heard about layoffs. I expect to see meshes eventually, hopefully this year. Blue Mars pressure is still there. So, I expect to see most of the improvements they spoke about last quarter.

Linden Lab should be around for some time. So, certainly not time to panic. In the next few days we will hear more from others with an inside line.