January 9, 2007: 10 years ago today, virtual worlds were enjoying peak interest and attention from the high tech industry and beyond, fueled by this April 2006 cover story in Business Week, not to mention Reuters' opening a bureau in Second Life, in October 2006, and major companies like Nissan launching a Second Life presence around that time. But on that day, this happened:
And the virtual world industry was never the same. Because by and large, virtual worlds were being developed as a PC-centric platform -- much the same way that high-end VR devices Oculus and Vive are developed for high-end PCs today. But year by year, as interest and investment in iPhones grew (soon joined by iPads, and then Android phones/tablets), the PC's centrality waned:
"As sales of iPads, iPhones, and Android devices exploded," as Extreme Tech notes, "the PC market began to shrink rapidly." As more people used their smartphones for their Internet needs more often, their need for a new PC began to fade. To be sure, many consumers still own, use, and even sometimes buy PC/laptops -- it's just that the smartphone market is far larger, and shapes the market far more. (What the industry calls "mobile first".) More than that, there's no likely replacement for smartphones on the horizon, certainly not any time soon. Personally I think that won't ever change, because frankly, no other computing form factor is as easy and enjoyable to use while commuting, or curled up in bed -- or, frankly, while in the bathroom.
By and large, virtual world developers missed this shift when it happened, insisting that iPhones would be a passing fad, or that consumers would still prefer PCs for the better graphics and immersive displays they provided. Linden Lab, for instance, could have (and should have) immediately created an official Second Life app for the iPhone which enabled cross-platform use, but missed that boat entirely. (Pocket Metaverse, a third party app for iOS which did just that, enjoyed impressive success for an indie app, but without a marketing budget or official support, only grew so much.)
I see the same thing happening now with today's VR industry. Despite the fact that mobile-based VR headsets have a far larger consumer base, most VR developers maintain a focus on PCs (or Sony PS4) as their core market. Some of them, like John Carmack, understand that mobile must be preeminent, but most seem to follow Tim Sweeney's thinking:
So far, the market share numbers would suggest that mobile VR is winning by a landslide. You have several times more Samsung Gear VR units out in the market than Oculus Rifts. But if you look at software sales, they tell the opposite story. Software revenue per user is at least 10 times higher on the PC platforms than on the smartphone platforms. It's so much higher that even though the mobile user base is so much larger, there's still more money to be made in the PC and console business. I think that squares with our view that VR will be a high-end platform: higher fidelity, higher immersion than any platform before it, and so it will be dominated by high-quality games with high-end graphics. Which is the opposite of mobile.
I'm not sure where Sweeney's getting his figures, because last year, mobile games started making more money than PC games. It also misses the fact that there's only a niche audience for high-end graphics (on PC or console) which hasn't really grown, making it inevitable that only a handful of developers can make most of that money from them. Not to mention the fact that this logic relegates VR to a market of just 100-200 million hardcore PC/console gamers in the world, versus the billions on their smartphones.
So 10 years after smartphones sealed the fate of virtual worlds, we see the same pattern happening again. I'm fairly sure 10 years from now, I'll be writing a similar post. (Assuming, of course, reality hasn't by then been reduced to rubble.)