Philip Rosedale Announces Major Changes to the High Fidelity Platform: “This model is not working right now”

Despite large investments of venture capital over the years (at least 35 million dollars since 2013, plus another 35 million announced just last year), High Fidelity is burning through that cash quickly.

Last Friday, at the weekly General Assembly meeting, Philip Rosedale made two major announcements:

  1. High Fidelity was immediately (i.e. within the next 24 hours) closing down all its public domains, with the exception of a small Welcome domain for new users; and
  2. In response to complaints from users that the company was not sufficiently supporting open source development of the High Fidelity platform, the weekly General Assembly meetings were to be discontinued, and replaced with a biweekly developers’ meetup.

Here is an hour-long livestream of that meeting, which you might want to watch in full to understand what is going on:

Philip Rosedale explains the abrupt change in direction (these quotes are taken directly from the YouTube livestream of last Friday’s meeting):

We are going to close down all our public spaces. We’re gonna do that after this meeting, before the end of the week… First of all, we are not a social VR game… This is not a chat application where we get people together and hanging around in a room talking to each other. High Fidelity is designed to be a platform anticipating the very broad use of VR across the internet for things like this.. going to work, going to school, doing all kinds or different things.

And we’re certainly doing our very best to get that started, but we sort of feel lately… a couple of things have happened that make us feel we are making a mistake by running the biggest servers… We feel like we are actively doing a disservice to everyone by running these public spaces. Instead, what we ought to have is you guys running your own spaces…

At least as an experiment, but hopefully, as a good call, and we’re going to do it in the next day or so, is we’re going to shut everything down, except for a help space for new users… but it will be a tiny space, and we aren’t going to let anybody hang out there.

Some users at the meeting were understandably quite upset about this change. Philip went on to respond:

One of the problems that VR has right now… the most popular VR app in the world is Beat Saber… the number [of concurrent users] is going to be about 700. So one important thing is that in the prior year, not only have we failed to get 1,000 [user] concurrency, but so has everybody else. Now, VRChat has 1,000 concurrency… but I don’t hang out there a lot… But I don’t think that the experience you have in VRChat is yet my vision of a real virtual world.

Second, by shutting down our public servers, I actually make the prediction that there will be… more people concurrent across the servers that you guys run than us. So I’m not saying that we’re giving up on the servers, I’m saying that I want you to run them.

Philip added that nobody is really making any money from social VR right now:

Given the number of people that we have…let’s add to it Anyland and Neos[VR], and for that matter even Rec Room, even though that’s much more of a game. Let’s actually add all those people together into one product. That company will not survive. There’s not enough revenue… Everybody here that’s having such a good time…you guys need to pay us US$10,000 a month for us to keep the company going, indefinitely into the future, for us to basically be a positive cash-flow company, as we say here in the Valley. And everybody else in VR right now is faced by that.

Now there’s two ways to think about that. This is one of these ego-threatening things so that it’s hard to see clearly, to look at it objectively. Way number one is to say, it’s just that there’s too many bugs in this High Fidelity thing. If they just fix the bugs, why, people would fall out of the sky like cats and dogs into here. If that were true, you’d see them falling into somewhere else. And what’s happening is that the open-platform system we have here isn’t attracting very many people in this day and age. And so we’ve gotta ponder what to do about that.

One thing to do, which all the companies have been doing… is better support for desktop users. Because any assessment of the rate of progress on HMDs is a sobering one… they are not selling enough to create a general-purpose community that is both interesting and profitable… So, it’s really important to recognize, that through no fault of our collective selves… it’s not working. 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. And so we’ve gotta think hard about that.

It is going to work, believe me. I’ve worked my whole life on this and I’m quite certain, I know it’s ultimately going to happen. I’m just saying to your guys, just fixing the bugs we have… is not likely to get us or any other company to cash-flow break even…It’s also got to be enough to move you guys to make great content. There should be 15, 20, 50 people around the table right now making a living in here. And we’re not there yet. So we gotta figure that out.

Philip also compared his experiences with Second Life and High Fidelity:

You guys, this is not Second Life in 2004. Second Life actually took off like a rocket, once it got working. Even though it had tons and tons of problems… but it took off like an absolute rocket. And the reason that it did, I think, was that this experience of bringing a lot of people together and letting them build things together live, well, in the time frame when we built Second Life, it had never, ever been seen by anyone. It was the most exceptional, jaw-dropping thing that anybody had ever seen except in science fiction.

The problem we have today is that that’s just not true. The internet affords us many, many, many, many different ways to be together as people, for example, or just to chat. And so one of the things we are up against here is that there is not as much of a genesis moment with something Like High Fidelity or, for that matter, something like VRChat. Coming online you just don’t have the kind of meme in the sense of a grand or cultural meme kind of written out there like Second Life did. That doesn’t mean that we’re not going to make it. It simply means that we have to be more clever and the strategy that we use to get people in here has to be somewhat different.

I have checked and all of the previously popular domains hosted by High Fidelity are indeed gone:

  • Avatar Island (which was supposed to be a showcase for in-world shopping)
  • The Spot (a beautifully designed central meeting place used for many monthly stress testing events)
  • Maker
  • Playa
  • Mexico (one of my High Fidelity Picks of the Day)
  • Zaru
  • and dozens and dozens more, all gone.

The problem I have with this abrupt switch is that these domains were all shut down within 24 hours of the announcement, which left High Fidelity users scrambling to set up alternative places to meet (and the GOTO option on the tablet UI does not make it easy to find new places). I really do believe that High Fidelity could have handled this transition more smoothly.

Caitlyn Meeks, who until recently was a Strategic Evangelist and Director of Content at High Fidelity, told me:

High Fidelity is rightly getting out of the content business, and instead focusing on developing software. Consider this like Netscape focusing on browser development, not hosting web sites. The future lies with the individuals, companies and organizations who will create the Craigslists and Yahoos and Penny Arcades of the VR WWW. I think personally it’s a good move, because software engineering is what they do well. And rather than having users circling around a handful of company hosted domains, and saying “huh this is boring”, the onus of content creation is shifted to the individuals and organizations out in the wild. It’s actually quite exciting. It’s ours. High Fidelity made the technology and has given it to us. It’s ours to develop. We can drop it and ignore it and let it peter out. Or make something as truly wild and decentralized as the World Wide Web. It’s abrupt and shocking, but it’s for the better. And we’re going to see a lot of innovation.

We’re going to have our first Federated Users group meeting on Thursday at hifi://makerbox at 2:00 p.m. PST, you’re welcome to come and join in. It’s an extremely exciting time.

In a private conversation later, she added:

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.

The decision to stop the community meetings, to stop hosting High Fidelity served domains like The Spot, and to sunset High Fidelity operated events, are just functions of them winding down this creator-community-centric model, and instead focusing on what will be a new target market. As for me, personally, I intend to help foster ongoing development of the open-source HiFi platform and perhaps even go into business for myself offering some much-needed supplemental services. I’d intend to pick up the opportunities they are dropping.

As I see it, this is just the beginning of a movement, though. I really think there’s an opportunity. I intend to help make it run wild! 🙂

To learn more about the federated HiFi users movement, you can join their Discord server.

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14 thoughts on “Philip Rosedale Announces Major Changes to the High Fidelity Platform: “This model is not working right now””

  1. 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.

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