Inside Social Games

Linden Lab recently released its Q2 report for its popular virtual world Second Life, showing strong growth in the world’s virtual economy.

The title of the report says it all: “Economy grows 94%.” The number refers to the user-to-user transactions occurring within Second Life during the course of the past year. The report says these transactions equate to an impressive $144 million, marking a 20% growth over Q1. In contrast, the US economy decreased 3.9% during the same period. Despite economic hardships, virtual worlds continue to thrive.

Second Life’s virtual currency, called “Linden Dollars” or “L$,” saw its exchange volume grow to approximately $29 million – 8% growth since last year and 4% from last quarter. Furthermore, Xstreet, Second Life’s virtual goods marketplace, had gross sales totaling $1.4 million. That represents a 70% growth over Q2 from last year, with a 13% growth from Q1.

In terms of concurrent player numbers, early on in Q2, Linden Lab reports a plateau of 88,065 concurrent users. Unfortunately, that number gradually dropped during the course of the quarter. This could be due, in part, to recent changes made to combat player bots (programs that automate player actions). This change affected the number of user hours logged, capping them out at 126 million — and slowly dropping over the quarter. Nevertheless, the total still increased 33% over the same quarter in 2008 (2% from Q1).

Voice usage saw significant use as well. The total amount of voice minutes with Second Life reached a staggering 3.14 billion. This marks a 44% increase over last year. It includes all VoIP traffic such as resident-to-resident calls, group voice chats, and local voice. Of the three, the majority of the players utilized local voice in small groups. Many of these are teleconferences, which means that more people are listeners rather than speakers. Nonetheless, because they are connected to a voice channel, Linden Lab has decided to count them towards the total.

Second Life is also profitable. While these numbers might be plateauing from recent quarter to quarter findings, we think these core metrics will be stabilizing in the months ahead. You can view the entire report here.