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Linden Lab, the company behind the virtual world of Second Life, issued a release today stating that they will be restructuring their company in order to become more efficient and to allow them to delve into new platforms including the social and mobile web.

The release reads:

SAN FRANCISCO, June 9 /PRNewswire/ — Linden Lab®, creator of 3D virtual world Second Life®, announced today a strategic restructuring to increase focus on the company’s consumer business including investments intended to enhance ease of use and participation in its virtual goods marketplace through browser-based and mobile applications.

As part of the restructuring, Linden Lab will also improve its geographic and cost efficiencies. The company’s product and engineering divisions will be combined.  The software development teams will be consolidated in North America and customer support will be reconfigured to provide more scalable services.  As a result, Linden Lab anticipates staff reductions of approximately 30 percent.

“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, chief executive officer of Linden Lab.

According to Kingdon, the restructuring also better aligns Linden Lab with its two longer-term goals.  First, the company aims to create a browser-based virtual world experience, eliminating the need to download software. Secondly, Linden Lab will look to extend the Second Life experience into popular social networks. “Ultimately, we want to make Second Life more accessible and relevant to a wider population,” he said.

About Second Life and Linden Lab

Developed and launched by Linden Lab in 2003, Second Life is the world’s leading 3D virtual world environment. It enables its Residents to create content, interact with others, launch businesses, collaborate, educate, and more. Since its inception, Second Life Residents have logged more than one billion user hours and generated more than $1 billion in user-to-user transactions. With a broad user base that includes everyone from consumers and educators to medical researchers and large enterprises, Second Life has become one of the largest repositories of user-generated content and the largest user-generated virtual goods economy in the world.

Privately held Linden Lab, founded in 1999 by Chairman of the Board Philip Rosedale and headquartered in San Francisco, develops revolutionary technologies that change the way people communicate, interact, transact, learn and create. For more information, visit www.secondlife.com.

SOURCE Linden Lab

UPDATE – M Linden (aka Mark Kingdon) posted on the official Second Life blog that he intends the changes to move Second Life forward.  He writes,

Dear Residents of Second Life,

Earlier today, we announced the undertaking of a significant restructuring of Linden Lab. (Read the press release for details.) Though the company remains in a solid financial position, it has become clear that we need to make some hard decisions in order to bring current and future Residents the kind of product and experience we feel they deserve. After three years of intensive hiring, we’ve come to a place where it’s important that we reorganize our teams and find a renewed level of discipline and momentum as we move forward.

Our restructuring plan has three main goals:

• to improve our focus as a company on the projects that matter most to Residents
• to simplify our organizational structure and operate more efficiently
• to achieve cost savings so that we can invest in platform improvements, new products, and new lines of business.

Reorganization in a company the size of Linden Lab is never easy, and this restructuring will result in the loss of a number of jobs, at all levels of the organization. None of these cuts are easy for us to make. I am extremely proud of the team we’ve assembled in recent years, and am not happy to have to say goodbye to any of them. But as an organization, we need to become more focused and more efficient, and this is the path we’ve chosen to meet those goals.

Linden Lab remains a great business. We have a strong balance sheet, and our revenue will reach record levels this year. The inworld economy continues its solid growth as Resident creators of great content and experiences do what they do best, and new Residents continue to join the phenomenon we know as Second Life. Here at the Lab, I’m concentrating on our reorganization. In coming weeks, I’ll blog more about our focus for the remainder of the year. For today, I’m sorry to have to bid farewell to some great employees, but I’m also looking forward to what the newly streamlined company will be able to bring to our Residents in the months ahead.

Thank you,

M Linden

The restructuring comes as no surprise to most SL residents as rumors have been flying for weeks when the Lab began making changes.  While the announcements are exciting (and overdue), it will certainly be sad to see the departure of approximately 30 percent of Lindens we love and who have helped build this amazing platform.  While a report from Analyst firm Next Up Research valued the company between $658 million and 700 million about a year ago, these changes will obviously not come cheap, and investors are certainly hungry and eager for a larger payback.

I will discuss my thoughts on these transitions shortly, but I wanted to give you the news first.