Market Researcher Responds to Second Life Usage Decline Reports

Mary Ellen Gordon, president of research company Market Truths stopped by here today to comment on my post about the public radio report on Second Life's economy yesterday.  Although I did not address it in my post, the Marketplace reporter, Janet Babin, quoted in her story the widely repeated 5% decline in Second Life usage during November.

Mary Ellen's researcher's insight shared in her comment is well worth pulling out here in case you don't tend to dig through comments:

"I agree with all of the eloquently expressed comments in the post about avatars, but what really drives me crazy is how irresponsible people are about reporting that 5% drop figure (in the story, not the post).

This isn't the only news story I've seen it in, yet no one seems to consider the simple fact that months have different numbers of days in them and takes the obvious and easy step of adjusting for that. When you do, that shocking drop was actually 2%. While it's true that month-on-month drops have been rare in SL's history (there was a 1% drop once you adjust for days in the month in August of 2007, and an 8% drop in March 2005), the reason is that up until about the middle of 2007, SL was enjoying double digit growth (most months) in monthly hours of use. That's enough growth to mask a lot of pesky details such as variation in days in the month and vacation and holiday periods when a lot of people are not near a SL compatible computer.

But the thing is, no form of media (including those reporting this story) enjoys monthly double digit growth in hours of exposure forever. Even if you look at the second half of the year during the period of "slowdown" hours of usage increased (after adjusting for the number of days) by 14%. Most traditional media outlets would be jumping for joy if their own hours of viewing increased by 14% in six months, so I'm not sure why they're so quick to interpret it as a sign of doom when it comes to Second Life."

Personally, I've been fascinated by the fact that the Second Life usage statistics are watched and reported as if it were the stock market.  That in itself speaks volumes to the obvious importance of SL has as an indicator of something bigger than SL alone. 

January 23, 2008

 

Comments

[Prokofy Neva]

I do think a new metric to analyze open-ended virtual worlds has to be developed, that goes beyond subscriptions and concurrency. And usage hours are very important.

They are a good indicator of a service's growth in use, but I'm not certain they are also a valid indicator of the health of the inworld economy. When times are tougher and businesses face huge challenges, like the direct or indirect effects of the bank collapse and ban, people tend to stay inworld longer hours doing customer service, rearranging content and land holdings, or making new content, holding meetings etc -- their longer hours of labour aren't necessarily a sign of prosperity.