Wednesday, 21 March 2007

The Builders, Can They Do It?

And with the earworm that is the theme from Bob The Builder still rattling around in my head, I thought I'd look at the building community in SecondLife. This has been prompted by a recent entry on the Official Linden Blog - and I confess to have robbed freely from it. However, there is some original content too!

In February, 2007, the SecondLife developer community was surveyed by Linden Labs. At the time the Developer Directory listed some 90 developers: 50 full-service and 40 consultants - double the number that existed 3 months earlier.

Linden noted that only about 1/3 of the developers responded to the survey so the numbers presented represent only a slice of the total Developer community.

The first point of note is that the Developer community has a large number of small companies, and a small number of fairly large companies (D'OH! No excreta, Sherlock!). The largest number of employees was 175, while 3 companies listed over 50 employees.

In my conversations with builders it is clear that within the Developer community there is an unofficial tier system at work - with Tier 1 equating to the small number of larger companies, such as Electric Sheep, Millionsofus and Rivers Run Red. Snapping at their heels are the up-and-coming Tier 2 companies, expanding to take advantage of the massive increase in demand, but still of middling size, such as Metaversality and Beta Technologies. In Tier 3 are the small companies, like my friends at Virtuool, and contractors. This last group face some interesting choices:
Do they go for growth and aim for Tier 2?
Or should they look to be absorbed by a Tier 1, as happened to the excellent Rezzust last year.
Or simply stay as they are, taking direct commissions and subcontract work?

With the SL resident population now standing in excess of 4.8million, forecasts at the start of the year of 6million residents in June/July now look like underestimates. Current predictions of 13-15million by the end of 2007 certainly look feasible. Businesses are already salivating over the prospect of so many potential clients/recruits/informants/reviewers. And they're going to need builders to help them realise their SL objectives. The future for builders is looking very promising.

But right now, let's look at some of the results of the Survey:
1) Number of full-time equivalent employees and contractors
Total: 559 Average: 19 Median: 5
I noted above that the largest company has around 175 employees. Many companies employ people outside the immediate area, and indeed, outside the home country.

2) Where do you recruit employees?
Mostly Second Life: 41%
Mostly real life: 19%
Both: 41%

3) Projects in the current pipeline
Total: 380 Average: 12 Median: 4
With the large companies averaging 15 projects, while the smallest average 4 projects. The growth in project numbers parallels the growth in developer numbers.

4) What is your estimated revenue (in US$) from SecondLife projects for Q1/ 2007?
Total: US$ 6,700,000 Average: US$ 161,500 Median: US$ 31,500
The revenue per company ranged from $45 - $2M, with the largest 10 companies forecasting incomes about 35x the smallest 10 companies.

1 comment:

Joshua Culdesac said...

At Virtuool, we're definitely aiming for Tier 2 (at least) !

I don't think staying as is would be a good bet anyway. There's no escape except growing. If we don't, how are we going to play on this market once it'll be organized with strong competitors ?

I believe (but shouldn't shout it out loud) that this is the period when the growing costs are as low as they will never be. Let's take advantage of it !

Excellent post as always ;)

See you in-World