Amid the banking problems currently occurring in second life, businesses are making decisions to exit the virtual world. The banking issues are being related to the current sub-prime crisis (on a much smaller scale, of course). Because businesses are having trouble turning their lindens into real money, real businesses are finding it difficult staying in second life.
Companies such as Starwood hotels, AOL, and Wells Fargo have been leaving their digital outposts in recent months. They are doing this because what they thought to be a good market to penetrate for growth is turning out to be nothing but a disfunctional world for the purposes of business. My feeling is that if the large, recognizable companies leave and do not continue to operate in second life, who do entrepreneurs and small business owners look to for guidance.
If something is not done to fix the current banking problems, there will not be enough credibility in the system to encourage business operations in second life. Linden labs must find a solution to this problem before they lose a huge amount of potential users for good.
2 comments:
Hey, Mark.
I found your post interesting, and I'd like to hear from people who have financial experience because the economics of SL is something I don't know enough about.
You wrote: "Amid the banking problems currently occurring in second life, businesses are making decisions to exit the virtual world."
Do you have some references you can post for this? I'd like to read them. According to posted economic numbers the economy seems to be on the rise. This is from Linden, however, so I'd like to read a different view.
Regarding banks, you said: "If something is not done to fix the current banking problems, there will not be enough credibility in the system to encourage business operations in second life."
My understanding was that Linden Lab has just completely changed their banking policy. They wrote in the blog:
"As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter."
That seems like a pretty big step to me. What more beyond this do you think Linden Lab should do?
Aside from banking problems (the US has a huge banking problem, billions are lost and people jump out windows...the world goes on) the answer to your question "who do entrepreneurs and small business owners look to for guidance?" has to be split in two: first come the entrepreneurs, they, and NOT big companies like Wells Fargo, will find a way to make things happen and find the applications or solutions that big business by its very nature can't do.
Think about it, if it depended on the likes of IBM, Big Media, transnationals and such we would not have personal computers, internet, Google, Skype etc. etc.
None of these things was even a glint in the corporate eye.
It was people like you and me, thinking, researching and specially taking chances that lead the way. Then and only then small business come in and slowly the rest follows.
What happens in today's climate is that big corporations are scared and pressured by the stockholders to move into perceived opportunities so that they are not left so way behind as has happened in the recent past.And so they jump into quagmires and come out soiled and embarrassed and cry to the 4 winds that there is no gold to be found in that mine, until a little guy comes and realizes that there is no gold, but diamonds.
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