Virtual Reality Bombshell: Philip Rosedale Says Social VR Not Sustainable With Slow HMD Sales, Drastically Scales Back High Fidelity Hosted Content, Moves Focus to PC/Mac Clients

Last week at High Fidelity's regular community meeting, Philip Rosedale stood before dozens of assembled robots, anime girls, and other assorted avatars, and dropped a couple fairly large bombs that are likely to have an industry-wide impact: The company is closing down nearly all its own hosted domains (users can still host their own), and devoting much more attention to supporting its desktop clients -- both PC and Mac. (Watch above.)

"Social VR in HMDs won’t really work until we can do everything in them, including work and messaging," Philip explains to me by e-mail. "We can’t multi-task in VR yet, and that’s a real challenge."

 

Until then, says Philip, desktop will dominate High Fidelity's future: "[W]e are going to improve desktop PC and Mac performance, look for that over next quarter."

 

As for no longer hosting most High Fidelity domains: "[I]t is time for everyone to take over from us, if we are to have a decentralized Metaverse," he tells me. "We can’t be regulating the community if it is going to get big.  We are building something a lot bigger than a social VR chat experience."

His reasoning won't be surprising to anyone who follows social VR Steam stats or VR sales figures:

There's simply not enough active users in VR-centric social worlds, and VR headsets are not selling fast enough to create an audience for them. Metaverse blogger Ryan Schultz has done a great job transcribing the most salient passages on these points in video above, which include Philip saying:

[I]n the prior year, not only have [we] failed to get 1,000 concurrency, but so has everybody else. Now, VRChat has 1,000 concurrency… But I don’t think that the experience you have in VRChat is yet my vision of a real virtual world...

[VR HMDs] are not selling enough to create a general-purpose community that is both interesting and profitable... This model is not working right now. The flat world that is an open building environment, is not compelling enough as it stands right now, for the number of HMDs that are out there, to get lift off.

While this news is not surprising, I can't emphasize enough how huge a blow this is to social VR and consumer-facing VR in general: Philip Rosedale is easily among the very most well-known executives working in Silicon Valley in this space, and with $70 million+ in funding, High Fidelity is among the most venture-backed.  

I've reached out to Rosedale for comments, and will update this post if I get any. One point I asked him is why he doesn't apparently have confidence that sales of the standalone Oculus Quest will boost the market for VR. [Update, 3:35pm: "I think "The Quest and [Vive] Focus are the future," Philip Rosedale tells me, " but it is still going to take a few years, so we have to plan for that."]

I do think he's under-emphasizing the success of VRChat. It may not be the full-fledged metaverse he envisions, but it's getting a lot more concurrency than 1000 -- it's peaking at 6,000-10,000 every day, and by a conservative estimate, has around 100,000 monthly users, a reported third of them of whom are in VR. But Philip's larger point is sobering, and true: Unless you're an extremely small development team (as with Beat Saber), or your support for non-VR is robust (as in VRChat), the market for a metaverse as yet simply doesn't exist.

Update, 3:37pm: Edited this post to incorporate Philip's comments by e-mail.

Comments

[Roland Legrand]

Zero comments on this quite shocking story. I guess that says enough about the interest the project generates, even among an audience specialized in virtual worlds.

Maybe the future of the metaverse is not High Fidelity, Sansar or even VRChat, but Fortnite and even - if Linden Lab would focus on it - Second Life.

[Dirk]

Been saying this for years. There is no real uptake for the general population (gamers excepted.) How do we use social media? We 'dip' on our phones as we go about our day. Wearing a VR headset everywhere is not feasible, to access a system where many of our social circle may not even be. Add to this the issue of "VR sickness" (akin to motion sickness) that can affect up to 10% of the population, and may have a genetic link (as does motion sickness), there will always be a portion of the population that never engages with this. We keep trying but flat screens continue to win the game.

[John_Westra]

Although "Imagination is more important than knowledge." Einstein
Mankind would never have progressed without learning how to build a fire!

High Fidelity is an amazing next-gen Virtual World platform, designed and built by some of the most creative and experienced Metaversians on the planet. Unfortunately, lacking frictionless onboarding and ubiquitous access (VR/2D/Desktop/Mobile) or a compelling commercial value proposition, it's hard to get people (including myself) engaged.

Those who enjoy Social 'VR' experiences like those offered by the 2D VR Virtual World of Second Life won't flock to platforms like High Fidelity or Sansar, until there are an equal or greater number of content options and user (Avatar) customization tools and a Desktop/Mobile client and/or a robust Wireless 3DOF/6DOF 'entry-level' (Go/Quest) VR option.

We've come a long way since 2006, when commercial brands flocked to Second Life as the 'Next 3D Web.' Unfortunately, many of these brands still have that taste in their mouth, when it comes to today's VR platforms.

I remain optimistic and hopeful, that a true #Metaverse, based on a distributed platform like High Fidelity, can/will evolve and become a 'Reality.' Perhaps the best way to make this happen, is to try what I have suggested since the early days of SL; create a VAR Partner channel and focus on using platforms like High Fidelity for 'Real World' Training & Simulation solutions, not just Social VR.

When I can sit or stand at my desk, wearing a comfortable HMD and my Avatar can move effortlessly (teleport) from one VR experience to another, collaborating with colleagues and customers, who themselves have limited VR experience, while working on any 2D application, without eye strain, the line to BUY High Fidelity/Sansar/Etc. platform-based solutions will be equal to to today's demand for Office 365!

[Arkenar]

Read the demographics before projecting castles in the sand that will never materialize no matter how hard you work on the illusion. You don't need a genius, or Phil Rosedale for the matter, to see how devoid of fundamentals the VR scene is. Second Life really thought you nothing? The prevalence of portable and cheap cloud computing thought you nothing?

[Fred Beckhusen]

Never saw any use in 3D glasses.But I am cross-eyed, as is about 3% of the population. It's not a handicap, except one time when I bumped a curb while parking. Leave more room up there to visualize 3D objects in Blender and Solidworks.

Meanwhile, I'll just keep working on the next 100,000 regions in Opensim.

[Vivian Dexter-Magee]

It seemed like things were going so well at High Fidelity. Philip Rosedale was the last person I would have imagined to abandon his project so abruptly. This is truly puzzling and shocking. I'm speechless.

[JohnC]

Philip and Ebbe are my Heros!
History will prove they were both gifts from god that we should all bow down to!

[Held Hand from GayWorldz]

I can't believe they dare try this daft idea again. Serious adults with important agendas do not piss about with childish avatars in virtual worlds. If someone cannot make a meeting you set up video conferencing in some form. The idea that everyone in the meeting is going to put on headsets and meet in a plastic world would be funny if it was not so pathetic. VR is at the moment best fitted for entertainment and virtual tourism. All other uses I see at the moment are crutches for the healthy.

[Minethere Always]

all the cool kids hangout in Sansar, I for one find it much better then Inworldz ever was, Btw.. Inworldz is still holding my inventory hostage.

[Ryan Schultz]

Thanks Wagner!

[TonyVT Skarredghost]

A cold shower, but a needed one. Anyway, successful VR projects exist... but Sansar and High Fidelity never took off. They are too ahead of times in my opinion, and I agree with everything he says.
VR will come, but slowly.

[FlameSoulis]

Wow, uh... some of this is a bit misleading, so let me fill in the gaps: Improving performance on desktop for PC and Mac is in reference to the client itself, in where any improvements affect both VR and standard desktop mode. At this time, there are now 4 flavors: Desktop (HMD and 2D mode), Android/Day Dream, Oculus Quest, and Vive Focus. It's been heavily requested to improve performance on the Desktop app (which powers both 2D and VR modes) as it doesn't result in a smooth experience no matter how you try it. On top of the approaching mobile devices, most worlds aren't ready to cater to them due to lack of LOD controls.

In addition, Philip does mention improving the overall experience when in 2D mode, like the reintroduction of facial tracking (you can hear me stating "Called it" in the video, as I have been pushing for overall improvements to the user experience, especially to desktop mode since that's considered the baseline experience). I do think this is the step in the right direction to help give enticement for people to stick around, as with any social experience, VR or otherwise.

And as mentioned before, High Fidelity's reputation wasn't helping itself either. The fact that some people have had no idea they can log in without a VR headset illustrates a major issue: failure to communicate that it does work fine without an HMD. This is just a single example out of many where things aren't communicated as well, and honestly that heavily lead to the downfall in the video.

Overall, the conclusion is spot on and can be backed up by many posts on Reddit and just the community in general: people who have gone to VRChat enjoyed their experiences so much, they wanted to enhance it further. People who didn't have an HMD got one to run around with their friends. People who already had an HMD often also got the trackers to enhance their experiences further. If your presentation is strong and is backed by good experiences, people will often want to make them better (dare I talk about people who deck our their areas for Elite Dangerous, Flight Simulator, and the varying driving simulators?).

[DrFran]

I've been in High Fidelity since it went alpha (over five years ago), and I am sad about this turn of events. It feels as if people are pulling up stakes although we are still in there every day, the alphas, doing stuff, building stuff, and hanging together. We are a small group who believe in the vision.
Yes, Philip is correct. VR is not happening the way it seemed it might.
Will it? I think when the hardware is easier to use, and less restrictive, a few years away, I bet.

For the present, the real world (or First Life, as I used to call it when I spent inordinate hours in SL) is still more compelling, and offers touch and smell and taste.
I will continue to stay in HF, because I can build and socialize with the small group of diehards. Maybe it will turn around.

[Sonicviz]

Funny they're now pivoting to B2B comms, as I said as much last year;-)
https://twitter.com/sonicviz/status/1062547618805370880

"High Fidelity has a fixed amount of runway left in its budget before it is unable to sustain itself. And Philip believes he can’t get the plane in the air by then with the current business model of serving content creators in the model of his original vision: an open and growing metaverse. The one thing High Fidelity does quite well however is facilitate group communication in virtual spaces, like the town hall meetings they (used) to hold weekly. While there are numerous problems on other aspects of the platform, this particular part has worked well, generally. And has potentially profitable application for group (especially business-to-business) communication. They’ve decided to shift away from community content creator focus, and instead are beginning to do some R&D as they investigate the potential for using the technology in virtual world meeting spaces."
https://ryanschultz.com/2019/04/10/philip-rosedale-announces-major-changes-to-the-high-fidelity-platform-this-model-is-not-working-right-now/

[Peter the pumpkin eater]

Their reasoning for the move is so maddening.

HiFi’s entire problem is that they spent all these years listening to clueless investors instead of the community creators on their platform. The community creators actually used the platform and knew first-hand what was missing and needed to be done so their creative ideas could finally happen. Instead, they were ignored.

Now the company is essentially saying “Our problem before was that we were paying too much attention to the community and its creators – we’re going to move away from that now.” It’s BONKERS. They’ve completely missed the plot. They were NEVER focused on the “creator-community-centric” model to begin with, no matter what they like to tell themselves.

Where are LODs? Why is there still no built-in chat? Why is the lighting in HiFi still worse than Second Life’s? Why are we restricted to 2048×2048 texture sizes (imagine the uproar if Chrome or Firefox tried to restrict PNG/JPG sizes)? People have been pointing out flaws like this for years but instead we were ignored. The company instead chased after features that were “sexy” to investors, like boob physics, but which weren’t necessarily optimal for performance. And now they’re having trouble getting HiFi to run on the Quest – what a freakin surprise. If only they’d *just listened* when creators asked for optimization tools like LOD. That’s been their whole problem from day 0. LISTEN. TO. YOUR. DAMN. USERS.

So incredibly frustrating to watch a software project with so much potential be slowly killed by its own creators. At this point I think the software’s best hope is that it gets forked by the community, because only the community will do what actually needs to get done. The company itself definitely won’t do it. They don’t get it, they never did. And with this recent move, they’ve proven they never will.

[Joe Nickence]

I had half considered watching the video, but then decided that the meat of the article covered it all. There is one phrase that stood out to me from the comments: "Alpha release". HiFi has been in a constant state of 'development'. I don't want to put the team down, especially since I was one to say that Rosedale was leading the charge in the right direction for a change. But I don't see a lot of compelling reason to continue with HiFi if it's not going to progress much past the alpha stages. I stopped running the startup feature when every time I had an update, I was required to go thru the training. while I didn't do much with my locally loaded world, I wanted to put more effort into it when they announced their crypto economy. But unless I'm mistaken, it wasn't too much different than the SL Linden dollar. And it was locked to HiFi. Not tradable on the open crypto exchanges. Now that their focus is PC, and not HMD, there is no compelling reason to switch from Second Life, for me. Sansar was the LL version of competing with HiFi. I never cared for the interface, as it was almost manditory to use an HMD. VRChat is fun, but it's more casual chat than purpose driven. I can stay with IMVU for that. I just find SL more comfortable, which is saying a lot from me!

[Iggy 1.0]

My students chuckle at goggles for VR. As they did in 2011. Ditto “robots and anime girls.” I have nothing against either, those being subcultures among my fellow geeks, but I’d add this: any faculty member who teaches undergrads could tell The Valley more about the mass audience it craves for these apps than, say, fellow pundits and prophets of Silicon Valley.

Only took Philip a decade to see which way the wind was gonna blow.