'Second Life' Owner Linden Lab to Lay Off 30% of Its Workers

Second Life owner Linden Lab announced Wednesday it would cut 30% of its workforce, as it seeks to restructure operations and devise a way to attract more consumers to its site.

Linden Lab, a virtual world pioneer, garnered a horde of attention as average Joes and Janes created a cottage industry selling virtual goods inside Second Life's cyberspace borders. But in recent years, the once high-flying company that had Wall Street eagerly waiting to see an IPO is now struggling to increase its base of customers and retain them once they're there.

"We've emerged from a two-year investment period during which, among other things, we've spent a considerable amount of time improving reliability and the overall user experience. Today's announcement about our reorganization will help us make Second Life even simpler, more enjoyable, relevant and engaging for consumers starting with their first experience. It will also enable us to invest in bringing 3D to the Web and will strengthen our profitability," said Mark Kingdon, Linden Lab CEO, in a statement.

But halfway into that investment period, the company suffered a blow when it launched a major overhaul of its client viewer -- software that resides on a user's computer -- to make it easier for them to engage with the site. Rather than seeing a huge uptick in users coming to the site and staying, the shores of Second Life remained rather quiet, says one source.

No Software Needed?

Linden Lab now says its workforce cut of about 300 is part of its restructuring. The company's product and engineering divisions will be combined, and all software development teams will be consolidated in North America. In addition, it plans to retool to develop a customer-service operation that can rapidly increase as its customer base grows.

The company says it hopes to eliminate the need for software downloads and create a site where users can enter via their Web browser and ultimately hook up with their social networks. Linden Lab plans to continue to invest in ways to make it easier for consumers to use the site, especially its virtual-goods marketplace, where consumers spend real money to enhance their avatar's appearance, virtual home, business or island.