Second Life Slows Down

Virtual Worlds News reports that Second Life is slowing down in usage statistics. Actual in-world usage is decreasing.

This is what any rational investor should expect.

1. Yes, they now have competitors. See the history of Las Vegas for analogies. At some point, certain parts of SL will be 'blown up' to make way for new construction. Should be a great event if properly exploited.

2. As the positive hype curve loses power, the trendiness diminishes proportionally. The most noticeable decrease will be wherever the most attention has been focused and for all LL's success, IBM turned a huge spotlight on them and kept it on. Now IBM is retreating as they wise up to the market and focus on the piece they want to service. Keep in mind, companies like IBM are to market attractors what black holes are to star systems; they take a lot of information in but give very little back that is actually original because they aren't developers; they are service sellers and resellers. Thus they absorb the market from the systems that circle them even as they speed up their orbits.

3. Negative hype amplifies a little more strongly than positive hype. Mammals evolved to give an edge to avoidance in the basic approach/avoid behavior. When in doubt, lay out. There is plenty of negative hype and that is healthy. Note the Xivio announcement. The kid is the user but the parent is the customer and they responded accordingly.

4. As predicted two years ago, the business applications are moving into private worlds or hosted worlds with closure and confidentiality guaranteed. The markets are bifurcating around the strategic mission statements. Totally predictable. As they learn, they specialize.

What industry wants to know is if the overall usage statistics across the worlds are increasing? IOW, even if there is a slight sag, is there a core of the bubble that is now a solid market that will continue to grow? What market segments are growing? Kids for sure, but what else?