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Second Life was just a fad for businesses

Posted on Sunday, July 15 2007 @ 21:11:46 CEST by

Some months ago you heard a lot about companies who rushed to build up a presence in the virtual world of Second Life but it looks like this was nothing more than a fad. Tech Crunch reports many corporations are already leaving Second Life because there's no compelling reason to stay. It's just way too expensive:
The reasons for the failures are open to debate; from firms not engaging Second Life citizens, through to simply a lack of actual people using Second Life (the LA Times says it peaks at 40,000 users at any one given time).

Wagner James Au at GigaOm has a set of figures worth looking at. In defending Second Life, Au notes that the visitor rate to corporate installations on Second Life is 0.8-2% vs a CTR rate on standard web advertisements on 0.5-1%. Great, but does a higher CTR really matter? The 5 most popular corporate destinations on Second Life have between 1200 to 10,000 visitors per week. An island on Second Life (a popular choice for corporations) costs $1,675 upfront then $295/ month, and that doesn’t include the cost to actually create structures on the island from one of the various Second Life design firms (cost: approx $5-10,000). So lets do the figures: the most popular corporate destination has 10,000 visitors per week; at $295/ mth in maintenance fees that’s a CPM rate of approx $7.40. The bottom destination of the top 5 has a CPM rate of approx $61. If we apportion the upfront costs of design (say $5,000 although it’s probably higher) and setup ($1675) over 12 months the CPM rates become $21.20 (top) and approx $180 (bottom of the top 5). The CTR rate is irrelevant: the CPM cost for businesses on Second Life is insane: simply even for the very best, the figures don’t add up.



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