Does Second Life need a bailout?

12.02.2009
Virtual worlds aren't immune to the real world's economic problems. The operators of the , a supersize cruise ship in the virtual world , have announced that they're going to on March 1. The Galaxy's operators claim Second Life users aren't booking enough cruises to make a profit in the real world. They blame "the effect of the world economic downturn."

Second Life's lets players buy virtual cash with real money from the game's operator, Linden Lab. Some Second Life businesses, such as designers, realtors and the SS Galaxy, get paid in Linden dollars and convert their earnings to real dollars at the current exchange rate of about 250 Lindens to 1 U.S. dollar.

It's easy to blame any business failure on the economy, but the Galaxy's owners may be telling the truth. Wagner James Au, a journalist who covers Second Life in detail (Linden Lab paid him to play a virtual journalist in the game from 2003 to 2006), conducted a poll in which 46 percent of respondents said the real-world recession had led them to cut back on their virtual world activity. "Many are scaling back their expenses and their discretionary income, virtual though they may be," Au wrote on .

Unlike the U.S. government, privately held Linden Lab claims to be a profitable business. That leads Au to propose that Linden re-invest some of its profits as , to keep them from abandoning Second Life. Of course, pumping cash into the system will affect the Linden dollar economy.

But what Au doesn't say outright in his post is this: The Second Life recession is largely psychological, a mirror of real-world problems. A high-profile stimulus package in the game's virtual world would almost certainly boost players' morale and encourage them to keep coming back.