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Behind Linden Lab's surprise entry into the digital distribution space Exclusive
Behind Linden Lab's surprise entry into the digital distribution space
July 18, 2013 | By Kris Ligman

July 18, 2013 | By Kris Ligman
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More: Console/PC, Social/Online, Indie, Business/Marketing, Exclusive



Last week, Linden Lab acquired digital distribution service Desura -- its second acquisition in 2013 and the latest of the company's efforts to grow its business beyond its flagship game, Second Life.

The acquisition struck many as strange, so what was Linden's goal with moving into the digital distribution space?

"[We want] to make it the most open, developer- and user-friendly distribution service for all kinds of digital goods, starting out with games and mods and going from there," CEO Rod Humble tells Gamasutra. "For us it's a natural step... We're about user-to-user transactions and empowering people's creativity."

One note of difference some might observe between Desura's front page and that of, say, Steam, is how it mainlines community contributions, such as front-and-center advertising for mod support on particular titles. For a company like Linden Lab, which draws a great deal of its revenue from Second Life users buying and selling community-made creations, the appeal of taking that one step further with monetization of mods and other user-gen content starts to look obvious.

Healthy competition

Of course, Steam supports plenty of user-gen options as well, such as through Steam Workshop -- but to hear Humble tell it, that's the whole point.

"When the market is so narrow, competitors are a good thing. They will bring different people into the space," says Humble. He's speaking particularly of Second Life's lack of a real counterpart in the virtual world genre, but the subtext is quite clear. He continues pointedly, "The same with digital distribution... It's certainly not saturated, right, when you have one very significant player dominating a lot of it."

For his part, Humble says he "would welcome" competition -- surely in the digital distribution space with Linden's foray with Desura, but also for Linden's flagship Second Life, which despite years of getting slagged off in the press is still chugging along with 400,000 new registrations a month and a 20 percent retention rate. Not bad at all for a free title.

"The reason we don't retain [more] people is, very simply, if they don't find something that fits with their vision, they're gone," says Humble. "[For years] there was a belief that it would be big companies coming in and setting up shops, and in fact what happened was this user-generated economy of millions of people coming in and making small things. That's a pattern that you've seen throughout many industries, the games business being one of them."

In facilitating that, Linden has rolled out (and continues to roll out) some pretty significant overhauls to Second Life, including to the servers. "As I'm sure you've heard from a lot of MMO developers, the one thing you never want to do is go in and try to refactor the server code. It's just a nightmare. Well, we did that," Humble chuckles anxiously. "We thought it was going to take us a year and it took us 18 months... [But] I think a lot of people will be seeing performance improvements now."

A challenger appears

Propping up the company's mainstay is of chief import, obviously, and certainly a developer couldn't be blamed for sticking to just that. The fact that Linden is instead capitalizing on Second Life's cashflow to expand into what could turn it into a solid rival for Valve's Steam service is unique, risky, and potentially something to watch out for.

"We're always on the look-out for key partners to further our strategy," Humble says candidly. "We're a very profitable company, we're cash-rich, and if we can find potential partners, we will. That said, the strategy going forward is quite clear: to take all of our creative platforms, make them more and more open, and hopefully allow people to share and, if they want, sell their creations."

"In Desura's case, that means it's going to be getting a lot of resources, so Scott [Reismanis] and his team can actually work a normal day for a change, and making sure that we can invest in infrastructure, hardware, and hopefully bring in new partners as well to grow the business. And, hopefully, help people sell more of their games and enjoy more games."

Large image source: Cyberloom.


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Comments


Wizard Gynoid
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If competition is such a great thing, why did Linden Lab abandon their "Gridnaut" effort? Linden Lab was a partner with IBM to develop the technology that would allow the user to hyper jump from Second Life to any of the myriad of other Open Sim virtual worlds (who now outnumber Second Life in total number of land regions). It's true that Second Life dominates the playing field of this game that many players argue isn't a game at all. But to say there is no real competition betrays an ignorance of the existence of Open Sim and virtual worlds like InWorldz (which is growing at a faster rate than Second Life is declining). Yes I said Second Life is declining, or is at least stagnant. You quote Rod's recent pronouncement of 400,000 new signups a month with 20% retention. Unfortunately you don't mention that total Second Life sim counts is slowly declining as is concurrency. For concurrency to be declining with those kinds of new signups, then older users must be leaving. Interestingly, Philip Rosedale (the founder and Chairman of Linden Lab) is championing a startup that might evolve into a competitor, that is to say High Fidelity - http://highfidelity.io/

Wagner James Au
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"Open Sim and virtual worlds like InWorldz"

Neither have grown significantly in the last few years and only have a tiny fraction of Second Life's 600,000 user base: about 16,000 TOTAL, which is about what OpenSim worlds had in 2009:

http://nwn.blogs.com/nwn/2013/06/opensim-user-growth.html

Wizard Gynoid
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Secondlife private sim count drops below 20,000 for the first time since 2008: http://www.sluniverse.com/php/vb/virtual-business/8523-new-sl-sim
s-past-week-84.html


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