Why I Told Wired That Linden Lab & High Fidelity Are Gambling Their Companies on VR's Highly Unknown Future

UPDATE, 10/28: Bumped up for weekend discussion!

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I talked with Rowland Manthorpe for his Wired article on Sansar and High Fidelity for over an hour, but he wound up quoting me on just this one point:

"Both Sansar and High Fidelity are operating under a very shaky premise," says Wagner James Au, author of The Making of Second Life. "They're gambling their whole companies' futures on the premise that there's going to be a large market consisting of tens of millions of VR owners.

But that's fine, because if there was one point I wanted to come across in that article, it was that one. Both companies (not to mention Microsoft, Google, Facebook, Sony, and all the other major tech companies creating VR headsets) are now careening toward a very unknown future based on unchecked premises and shaky assumptions. We still don't know how many people in the world actually want to buy and use virtual reality on a regular basis, and so far, signs are not encouraging.

I know what I don't know on this topic -- but I don't know if Philip Rosedale and Ebbe Altberg know what they don't know. A couple years ago, Philip suggested to me that VR adoption would be as rapid as smartphone adoption. Two years later, we're nowhere near that rate. In presentations about Sansar, Altberg has cited Goldman Sachs' forecast that VR has a big and bright future. I'm not sure if Ebbe actually read Goldman's forecast, but I did, and it is rife with questionable assumptions. Both High Fidelity and Sansar are being developed to run with Oculus Rift and HTC-Vive, and as it stands right now, their install base is tiny:

In the best forecast I've seen, Oculus and Vive won't even have a combined install base above 1 million this year. And now both are competing against at least four cheaper alternatives: Google Daydream, Samsung Gear VR, Playstation VR, and Microsoft's just-announced headset line. For the industry as a whole, the excess of competing headsets pretty much insures none will predominate, risking market cannibalization. For Sansar and High Fidelity, we are talking about two platforms struggling to compete amid a sea of competitors for a tiny consumer base. For Sansar to justify its $20 million-plus development budget, the company likely needs at least several hundred thousand heavily monetized players. And it will be nigh impossible to attract those numbers next year, or even the year after that. 

And yes, both Sansar and High Fidelity are accessible via PC. But when I tried High Fidelity for Mac earlier this year, it was clear the user experience is not optimized for that platform. I haven't tried Sansar's PC, Mac, or mobile options, but my fear is the same thing will be true for them. What is definitely true is that High Fidelity and Sansar have spent little time promoting their non-VR options, and from the general public's perspective, they're all about VR -- which will also hurt adoption of their non-VR alternatives.

The irony in all this? Sansar is being developed from the revenue earned by Second Life, while High Fidelity is also partly financed by SL revenue. (Since Linden Lab is an investor in the company.) So the next wave of virtual worlds is gambling that this time, virtual reality hype will generate actual consumer interest -- even though everyone involved knows that Second Life itself couldn't meet those inflated expectations. 

Or to put it another way: Sansar and High Fidelity are being built on the back of Second Life and its dedicated users without any clear proof that there's enough people interested in VR to justify that gamble.

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Comments

[metacam oh]

people will use it, and they will have to because the applications and uses for it are limitless. Think workers in cubicles with VR headsets

[Patchouli Woollahra]

Woah, now... That might be a bit too forward looking! It'll take a while till we feel out exactly what are the good use cases of this new medium. pretty much all the cool stuff atm is games and art, and that may not be enough to get a 'cubicled VR worker' thing going.

[JohnC]

"workers in cubicles with headsets" Sounds like a great idea for a novel set in a futuristic dystopian hell:)

[metacam oh]

because sitting in a regular cubicle with no headset is heaven :)

[cyberserenity]

The other side is that i use my VR headset everyday. In flight simulator and in Second life. Ok framerate is terrible. It squeeks and stomps but to go into SL and really see all those fantastic places people have built is great.

The small spaces in AltspaceVR and High fidelity and soon Sansar is just soo boring. I visit sometime and then it takes weeks until next time.

[Judas]

I find using a VR headset a magical experience.Few gadgets have this kind of potential to change how we do so many things.Its still early days for VR but I think if anythings worth a gamble this is.

[JohnC]

Metacam
No it is a shit place to be, but imposing some cyberpunk wet dream onto those already suffering workers is a crap idea.
The vast majority of humanity at this moment in time has no real knowledge of VR. As of now it is an elitist fantasy. The only way it could ever become mainstream is if it is force fed to the masses by making it the only option available in established areas of life. What kind of society would do that. I know, the shit one we live in already. :)

[Carlos Loff]

They are not risking anything, they are making some cool bucks at the expenses of folks that are hyped and pay those bucks, they are all being realky smart, the dumbs are the ones that pay a lot to shove thoses gears into home shelves a few weeks layet

[Orca Flotta]

VR right now is nothing but a circlejerk ...

https://orcaflotta.wordpress.com/2016/10/28/congratz-hamlet/

[Better then Ezra]

@ Orca
"What I’m also saying since years already is that Hamlet has lost contact with SL and lives in the dreamworld of SL’s past, like 2003 or so. "

I totally disagree. you can log in daily-monthly or even yearly- not to much will change!!!

No.1 Most of the landmark places are gone.
No.2 Mesh has replaced most things.
No.3 What regions are have never changed.
No.4 How people interact has never changed.
No.4 No game changing features in years.
No.6 You can log in from a 10year old PC still.
No.7 Many people still claim it to be laggy when they log in from a 10year old PC.
No.8 Pimping out the looks of your avatar now costs 10x more with mesh bodies.
No.9 Linden Lab is still LL {NEW BOSS IS THE SAME OLD BOSS}
No.10 Many of the great roleplaying communies are gone {Many closed down two years ago on the then fake info regarding sansar and 'SL But Better' promise that turned out to be another garbage lie leading to the place having even less to offer new residents.
No.10 --> {1 million things insert here}

[sirhc deSantis]

Where is Hamlet Au and what have you kidnappers done with him :)

Been far too much dealing with reality here lately..

I am waiting to see if xmas (or I guess consumer madness day in the US) makes any difference.

Although I am glad to see a few thar blowing but - what happened to the turkey vulture :)

(Caveat - any thing referencing Rosedale as anything other than a wide boy gets my heckles up - Brit Red Dwarf ref)

[Joey1058]

I have to agree with Hamlet this time. All I see is a bubble growing, and if it pops, I see billions flushing down the pipes. It's been nothing but insider tech companies expounding on this stuff, just like "web 2.0". The 'meat and potatoes' corporations all got burned on VR the first time and are all watching and biding their time. As for VR cubicles? I won't even consider that. Many companies STILL are using windows XP for employees machines. Unless the tech giants get this stuff affordably to consumers "as promised", there's a pin on the horizon waiting for the bubble to expand to it.

[Pussycat Catnap]

"Think workers in cubicles with VR headsets"
- Isn't that what we said a decade ago about Second Life?

I don't think these things will succeed until they get social.

The companies keep trying to remake Web 1.0 in VR.

Web 1.0 was an enterprise business sandbox.
Web 2.0 is social.

Second Life was built to be a Sandbox, but the users took it over and made it social - so its founders got fed up and left. They don't get 'social'.

Even companies that make money hand over fist on Social Media keep trying to recreate the Web 1.0 Sandbox in VR...

Until one of them gets social. Until one of them gives us an actual Second Life 2.0...

Until then this stuff won't succeed.

AR might succeed though - because it will leave you in the real-world, and will thus let you remain socially connected.

But workers in VR cubicles... that's actually counter-directional to where work is actually going. Increasingly workplaces are getting rid of the cubicle, going open office, and driving up the social...

- Even at companies making anti-social VR platforms...

[Gunther OMeara]

Clearly Sandra and High Fidelity do not know their customer base. Second Life users are too poor, lazy, shy, or Leary about these kinds of things. I mentioned HF can put facial features from webcams onto your avatar and they all freaked out and said they would hate that. The idea that they can be who and what ever they want to be is what they've been sold on. Anything that connects their real life to their virtual life is a no go, even the tiniest things. The VR for these platforms will fail if they are counting on second Life players.

[Boyd Doghouse]

@ Catnap

FIXED it for you.

"Think wankers in cubicles with VR headsets"
- Isn't that what we said a decade ago about Second Life?

[Connie Arida]

Thing is,with Sansar etc, you don't need it ( a VR headset) to run it. Therefore, stating that they are betting the company on the takeup of a specific technology is at best, drawing a rather long bow.

[Mac]

The only thing I can say is that I've used a VR headset (son-in-law's), and I truly dislike having something that bulky and awkward encompassing my eyes and my head, especially since I use glasses. It is extremely uncomfortable, it is laborious to put on and off and adjust (with my glasses), and, in my case, a little uneasy and claustrophobic, since it cuts me off from the room and I cannot see or hear anyone creeping up on me. For me, unless the makers of VR headsets reduce the contraption to something very small and non-helmet-like, I will not be buying or using one.

[A dose of reality]

Sit in your masks eating your shitty food masturbating to an endless stream of 20 something models while the world is poisoned around you and your politicians wage war across the globe. Occasionally surface for some virtue signaling on forums, because 'you care'.

[Flashing Merlin]

I agree with Hamlet. I've said this before, but it's worth repeating: A good analogy is video conferencing. When the technology was first shown at a Worlds Fair, people thought it would become the next big thing, once the technology became widely available.

Today countless people have smart phones which allow video calls, but texting is way more popular. There will be a niche market for VR, but it's being over estimated now.

[metacam oh]

i see a lot of closed mindedness here. Also people acting like the VR headsets are going to be bulky forever, lol

[JohnC]

I see a lot of starry eyed, rose tinted, over optimistic, open mindedness coming from the developers, which is of course not surprising considering the amounts of money they have invested in it. What bothers me most though is that this is a totally investor, developer lead project. In many cases we are being told that this is what we need, that this is going to be a big part of our future. You WILL all be using VR in your every day life in the near future, not because some people have found it to be helpful, or because it will enhance life in any great way, but because we see it as a way of making heaps of money in a whole new undeveloped area, when we were beginning to hit a repetitive wall as far as new innovative technology goes.

[JohnC]

Sansar is being developed for people who wish to create VR headset experiences. the fact that you can go view what is there without one means very little. the experiences are about the feeling you get when being strapped into a headset. You can sit there staring at the PC screen imagining that you are getting the same experience as someone wearing a headset but there is not the remotest comparison. All you will get is just a plain old vanilla 3D environment that has no where near functionality of SL or OS or any other 3d game. Why would you go there for that, Why would anyone spend time developing none VR related content for VR based platform.

[Iggy]

Pussycat wrote:

"Think workers in cubicles with VR headsets"
- Isn't that what we said a decade ago about Second Life?

Exactly. And when the millions of potential customers, who have little enough discretionary spending as it is, do not buy these rigs we'll dip right into the Trough of Disillusionment.

VR will have some valid uses some day, but whenever the Silicon Valley glitterati start getting all utopian on us, I hear a familiar refrain from 2003-6.

[Clara Seller]

Hamlet and most everyone here is right. This forum, of all places, should be super excited with this new technology, but our gut instincts are telling us something else. We should trust those instincts that are telling us that something is wrong with this picture. When you see players like Microsoft, Google, Facebook, and Sony peddling "fake reality" it just throws down some subconscious red flags. Maybe because we're in the process of learning that we can't even trust the "real reality" being peddled from these corporations. The thought of using one of their "brain tools" just makes you want to take a shower.

[JohnC]

Exactly, here of all places should at least have a majority of happy campers. But then are they really even after people like us who have spent insane amounts of time building and living in virtual environments. The fact that face book got involved early makes me doubt that. It is the unsuspecting mass media, playstation, xbox users who are addicted to some chat platform or another, who if the producers decided to slowly make that platform VR, will naturally slip into using it without a great deal of fuss or choice. Even LL's Sansar is not really trying hard to please what you would have thought was it's natural user base from SL, and is quite happy to dump it in favor of, how did Ebbe put it, "Then you will have the vast majority of users that obviously don't give a shit - because how many billions of them are on Facebook every day?

[Billy Goats Gruff]

AGREEING WITH CLARAS COMMENT!!
AS MUCH AS I WOULD LOVE TO PUNISH EVERYONE FOR CROSSING MY BRIDGE WITHOUT PAYING THE TOLL THE TRUTH IS THE TRUTH
SECOND LIFE WILL BE AROUND ANOTHER 10 YEARS WITH NOTHING TO REPLACE IT
HIGH FIDELITY SANSAR OPEN SIM ARE ALL CRACK NUT PIPE DREAMS
I MADE TENS OF THOUSANDS OF DOLLARS LAST YEAR JUST AS A CREAOR USING FULL PERM CONTENT WITH A SMALL INWORLD STORE A FEW HOURS A DAY SECOND LIFE PROFIT FOR MOST HAS NEVER BEEN BETTER FOR MOST CREATORS

ONCE SANSAR FAILS THEY WILL HAVE TO DOUBLE BACK TO MAKE SURE THE REAL CASH COW IS HAPPY AND WELL FEED UNTIL THE NEXT PROJECT TO FLUSH MONEY DOWN THE DRAIN COMES ALONG AFTER THE NEW CEO TAKES OVER WHEN BIG E GET THE BOOT

MAYBE THE NEXT CEO NAME STARTS WITH A T ?

[Iggy]

Another thought here about The VR Hype Cycle. In 2007 a professor of Marketing asked me about how to set up an avatar and go into SL. She worked hard to have a realistic looking avatar, given the constraints of the time, and she began interviewing in-world merchants from whom she purchased clothing, hair, and shoes. She also contacted firms with outposts in SL, such as American Apparel and Pontiac.

That expert's verdict? I'll paraphrase: "No return on investment in SL for big firms, and they can reach more customers with traditional marketing in the physical world. In-world merchants can, however, make some real money."

That's the mistake the VR folks keep making. They assume this is going to somehow change human history when, instead, they might craft a profitable niche market for those wanting to create content and sell it to others in the niche.

If Sansar, Hi-Fi, and other projects went that route, I'd be more excited. But there's too much utopian talk around these projects, as if CEOs only read Snow Crash and Ready Player One instead of looking at consumer preferences and the technology folks actually carry around with them.

[JohnC]

I have heard this so many times now, that a few content creators in SL are now making just as much if not more money now than they ever did. It is quite obvious that this would happen though as the competition has thinned out. The thing is, it is the content creators who are making lots of money who make SL what it is and allow LL to ignore it and imagine they can do without it. they make it the "money machine" by being huge cogs in that machine. Why should LL ever change things in SL when they are making lots of money even when it is said to be failing. And who do LL turn to when they need people to feed the new Sansar money machine idea, those same SL content creators. And if there ever were to be a big migration from SL to Sansar who would be driving that move, SL content creators. And if Sansar is a success, and LL laugh all the way to the bank, who will be driving them there in style, SL content creators. Who are the people in Sansar at the moment feathering their nests ready once again to grab as much money as they can from the first time Sansar users, who once again will be SL users, you guessed it. Who could have en masse, years back, or even now, have moved over to that crack nut pipe dream, Open Sim where they would find exactly what they have in SL but at a fraction of the cost. And who by doing so would have created a much better and fairer platform for an on line community and for their supporters, same again. Who is it that has made the big media companies rich enough to force feed us VR. etc,etc

[metacam oh]

Iggy I think you are confusing virtual world hype cycle and virtual reality. There werent 10 big time virtual reality head sets by 10 of the top tech companies 10 years ago, so lets not pretend this is the same thing.

[JohnC]

It's not the same thing, it's much worse. The hype is backed by big money that will not except failure graciously. Although it may have to suffer it anyway. But we should expect a shit storm of high level hard sell for quite some time.

[IntLibber]

You are failing to consider the facts that virality is an exponential function. Small numbers today are huge tomorrow, often exploding when you least expect it (such as 1000% growth in SL in 2006). What is more troubling is that LL insists on its AOL-like walled garden approach, refusing to learn from history, and doubling down on stupid with their gestapo tactics against community members who run afoul of those with more influence. SL was supposed to be about freedom, to become what the user wanted, now it is a fashionable distopia on the decline, losing regions and users at a steady pace, like Cubans rafting to Miami or Germans climbing the Wall. The future is in opensim, and OS is developing hifi faster than Sansar...

[Han Held]

I'm not sure the future is in opensim, either, to be honest. And that's coming from someone who's a fan.

Personally, if I was forced to choose what would be the VW of the future; my money would be on Philip Rosedale's High Fidelity project.

Particularly once it gets to a state that someone can hold a concert that draws 200 to 500 people, and get paid cash money for it.

And that's far more plausible in HiFi than in opensim.

[JohnC]

The difference between Hi fi and Open Sim is that it has paid developers. Of course OS has almost no chance of competing with HiFi or Sansar, it is a mess. But it could have been so much more, Like Blender put's to shame 3ds Max and Maya. Sansar will wipe the floor with HiFi , more is the pity. Because it has the backing of desperate SL users.

[Han Held]

So you think that Sansar will do something other than repeat the same mistakes of Blue Mars and almost immediately fall on its' face?

To each their own, I guess.

[JohnC]

Sansar will fail like SL, which is such a failure that it can fund another failure. There are many companies out there that would be happy to fail in such a way.

[Han Held]

You're right about Sansar's likelyhood of going the way of a previous LL product.

But that product is Patterns, not SL.

[Mac]

@ metacam oh -- the word I used was "unless".

[BloodDragon]

VR headset - ugh. What ugly, bulky, hideously overpriced contraptions - and for what? So you can be even more insular and self-absorbed than usual?

Oh yeah, baby - what a turn-on (not).

As someone else said, video conferencing was supposed to be 'the next big thing' but mobile phone texting has put paid to that hype for the most part.

In any event, I couldn't give a fig for Sansar - not the slightest curiosity whatsoever - so why would I want to throw money away on an overpriced, neck-breaking, migraine-creating, monstrosity of a contraption?

You're kidding, right?