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Amsterdam gets Second Life

March 10, 2010

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Though the hype around Second Life – the 3-D virtual world – has long passed, it is far from dead. In fact, San Francisco based mother company Linden Lab has opened offices in the heart of Amsterdam this week. With more then half of the Second Life community already hailing from outside of the US, the company now wants to focus on its European expansion. And Amsterdam is just the place to do that.

According to Linden Lab’s CEO Mark Kingdon, Amsterdam is not only a creative and business friendly city, it also bears similarities to a virtual world with the unexpected waiting around every street corner. In addition, the Amsterdam Internet Exchange (AMS-IX) will allow Linden Lab to not only manage its marketing activities from the Dutch capital but to house servers there as well.

Second Life started in 2003 as an online 3-D virtual reality community. Users create an avatar or ‘alter ego’ to connect and socialize with other virtual people. Second Life’s business model is based primarily on the trading of virtual goods like clothes, wigs and even body parts that Second Life residents sell and buy for a couple of dollars (so called Linden dollars) for their avatars. Citizens of the virtual world can also buy land, houses and furniture to decorate their virtual homes.

In 2009 Second Life transactions totaled 567 million dollar, a 65 percent growth from the year before. 55 million dollar of the total sales was joined traders’ revenue. In 2006, the Chinese/German former teacher Anshe Chung became the first real life millionaire by trading in virtual real estate through Second Life.

Financial analysts’ high expectations of Second Life’s early days have tempered somewhat. The belief that 3-D virtual reality would become the future for Internet has not yet proven to be true. For Second Life specifically, the number of active users as a percentage of people who just signed up out of curiosity has been disappointing. The next step in Linden Lab’s strategy is therefore to integrate more of traditional web functionality in Second Life. In the newest version of the company’s software users can watch YouTube videos in Second Life or organize virtual congresses, as IBM did last year when its IBM Academy was held in the virtual world.

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