the elephants in the room

[Lizard Howl]

reposted from my blog:

There has been a lot speculation recently about what I call the elephants in the room.  Specifically, a couple of the largest Estate Owners have been renting out sims for well below cost.  By cost, I'm referring to the current Linden Lab price of $295 USD per month for a full sim, and $125 USD per month for a homestead region.

As an established (or growing) Estate it can be difficult, if not impossible, to compete with cut rate prices.  If all or part of your business is renting out  sims you could be in real trouble.  What's an Estate owner to do?

Well, the first thing you need to do, if you haven't done it already, is shift your focus out of full regions!  Create parceled sims, themed sims, zoned sims: buy by the pie and sell by the slice!

If you need to bring in $295 per month just to break even, and the elephants are flooding the market with sims at $275, you're not going to be renting out a bunch of full sims.  Period.

Concentrate on your strengths.  Customers love the personal touch, smaller parcels, and great service.  Give them what they love!

If you are brand new to the Second Life land game these lower prices offer an opportunity.  You can rent a sim for below cost, re-rent it for cost, and still make a profit!

The downside is this: when you sublease sims you take on additional risks.  If something happens to the Estate Owner, or you have a falling out with them for whatever reason, you could lose your entire business.  You have to consider the risks, weigh them out, and make your choices.

At the end of the day, there are only a handful of things an Estate Owner can do that an Estate Manager can't.  They can buy and sell transfer sims, upload and download RAWs, and get faster response from Linden Lab for service concerns.  That's about it.

Don't get me wrong, I'm not encouraging anyone to sublease sims from the cut-rate Estates, but business is business.

For me, at this point in my business, subleasing sims doesn't make any sense.  Does it make sense to you, at this point in your business?  Consider the question carefully, and decide what makes the most sense for you, your customers, and your business.

If you are willing to give up the control of being an Estate Owner, subleasing sims can be very profitable.  If you decide to do it, grow slowly and carefully.  Identify an Estate with a good reputation, and start by renting a single sim.  See how quickly they respond if you need help.  See if their tier systems are reliable and dependable.  After a few weeks, if everything is going well, go ahead and expand.

If you don't want to take on the additional risk, concentrate on your strengths as an Estate Owner.  Develop a niche and focus on it.  Above all else, take very good care of your core customers.

The elephants ain't leaving the room folks.

Ride them if you can, or stay out of their way so you don't get stomped!

Have fun, and good luck!

Lizard Howl

Segarra Estates Owner