New World Notes has an article up regarding the rebirth of the Devokan Trust regions being reborn on OpenSim after high tier cost drove them to close down in Second Life. This is not an isolated incident. As the developers of other, competing grids build their online communities and work out more bugs, less expensive alternatives to SL are becoming more attractive. Small wonder that Linden Lab has chosen not to throw itself a huge birthday bash this year — and I don't think the reason is limited to the drama-fests or the poorly implemented events that resulted in entire regions lagging out and crashing.
The main reason has to do with declining revenues stemming from the ongoing collapse of the U.S. economy. With more and more people losing jobs and wages declining, spending hundreds of dollars a month on SL just isn't viable anymore for most people. It doesn't help that Linden Lab maintains its unreasonably higher price for virtual land in-world.
Region tier for private, full-sized estates, which provides up to 15,000 prims over 65,536 square meters, runs as high as $295 USD a month. Linden Lab charges a full one thousand dollars USD just to buy a new full-prim private estate, with the additional $295 a month rental fee. That's a shit-ton of money to spend in a depressed economy. Competing grid InWorldz, on the other hand, offers up to 45,000 prims for building at a monthly cost of only $75 USD a month and an initial setup fee of $75, according to the FAQ section. In OpenSim, pricing is comparable to that of InWorldz (a good read from a year ago may be found here).
Simply put, ridiculously high prices in a depressed economy are driving many landowners in Second Life to lower-priced grids. The people who stay in SL struggle to maintain their regions, as New London's recent financial troubles can attest.
If the Lab wants to reverse the decline in users, it will have to take a short term loss for long term gain. Region prices should be lowered so as to be competitive with up-and-coming grids such as InWorldz and OpenSim, and customer support must be improved. Once land prices drop, more people will be able to afford to buy, compensating for short term monetary losses, eventually leading to a gradual rise in revenue.
In addition, prim-allowances should be similarly raised to compete with other grids that offer three times what the Lab does for their regions. 45,000 prims and 65,536 square meters, with individual prims that can be sized up to 128 meters in diameter, for $75 a month will always look much more attractive compared to one that offers literally half to two thirds fewer prims for much much more.
If Linden Lab doesn't do this, it will continue to lose members to the competition.