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.


UPDATED! The Dirty Little Secret of VRChat: Hidden Adult Content

Banner vector created by katemangostar –

You might remember that a while back, I wrote a speculative blogpost about what would happen if one of the more popular social VR platforms were to break from the pack and allow adult/sexual content—only to discover (based on a user tip) that one of them (High Fidelity) already, very quietly, was.

Well, very shortly after writing and updating that particular blogpost, I was informed that a second popular social VR platform, VRChat, also has quietly allowed adult/NSFW content to be served from private worlds, something of which I was also unaware. (Please note that this is not a criticism of VRChat, or High Fidelity for that matter; my personal opinion is that adult content, when properly managed and carefully restricted to consenting users aged 18+, can indeed drive usage of, and business to, certain platforms. It’s one of the things that is currently contributing to Second Life’s longevity, for example.)

My anonymous source tells me:

As someone who plays a lot of VRChat, VRChat for sure allows adult content. They won’t tell you that though. Adult content must be kept to Invite Only or Invite+ worlds, it’s not allowed in public. But the adult worlds are out there.

I’ve seen some interesting art galleries. Also, I’ve seen some really interesting stuff since VRChat allows for custom shaders. A friend of mine made a deformation shader where the mesh would deform to your touch. You can guess what he used it for.

But yeah, VRChat totally allows that stuff, they just pretend it doesn’t exist, but they also don’t do anything about it even when they know it exists. I think it’s a brand thing. They don’t want to become the VR sex place.

Here is a screen capture of one of the rotating messages which appear in the VRChat client as your chosen world is loading:

Please note the curious and very specific wording, differentiating between not-safe-for-work content “in Public worlds (Public, Friends+)” and “streamed or shared from Private worlds (Invite, Invite+, Friends)”.

Invite and Invite+ worlds were introduced back in February 2018:

Invite – Very private. Owner can accept invite requests and send invites. Occupants get notifications that others want into the instance.
Invite+ – Somewhat private. Owner and any occupants can accept invite requests.

Here’s a link to a brief tutorial on Reddit on how to generate invitation links to private worlds in VRChat. So it’s possible to share a private invitation to a world with only those people you want to come in.

Now, I’m not really sure how to parse this strangely-worded ban on streaming and sharing adult content (isn’t that something that has to happen anyway, even if you’ve been invited to a private world?), but it seems to me that, as VRChat is about to gain a whole whack of new users with its impending launch on the Oculus Quest, that Facebook/Oculus is probably going to be taking a really, really hard look at this (if they haven’t already done so).

Also, I have (sadly, but perhaps not too surprisingly) not been invited to view any adult/sexual content in VRChat, so I cannot confirm what my anonymous sources have told me personally.

I’m already somewhat unpopular among a few VRChat users for even daring to bring up intellectual content and copyright issues on the platform before, and that’s probably yet another thing that may get a bit of a shake-up with the upcoming move to the Oculus Quest. (Not to beat a dead horse. But yeah, I am. And I am now going to let that matter rest in peace, before I sound like the grumpy old man that I am rapidly becoming…**Ryan takes another swig of Geritol, yells at the kids to get off his lawn**)

My understanding is that Facebook/Oculus is going to be much more stringent with its curation of content available to users of the Quest ecosystem, at least compared to the relatively open Early Access program for the Rift. What this actually means when the Oculus Quest officially launches and VRChat is made available as an app on the Quest is still somewhat open to speculation. (For that matter, the same applies to High Fidelity, although I have been unable to 100% confirm that it will launch on the Quest. No official announcement has yet been made.)

However, and before I get accused of being a VRChat basher by publicizing this hidden adult content, I will refer you to a quote I made when I was accused of bashing Sansar by criticizing its launch on Steam:

I want to stress that this is only one person’s opinion, not an official Sansar spokesperson’s point of view. I still remain a strong Sansar supporter, but I would be neglecting my duties as an independent social VR/virtual worlds blogger if I simply posted nothing but “good news” about Sansar, as some people want me to do.

And the exact same sentiment applies to VRChat as to Sansar. I like VRChat, I enjoy VRChat, and I have made some great friends and had some wonderful experiences there, but I am not simply going to be a cheerleader for the platform; I want to be able to report both the good and not-so-good sides of all the social VR platforms and virtual worlds I write about in this blog.

What do you think? Please feel free to leave a comment below, thanks!

UPDATE 5:49 p.m.: Well, this just gets even more confusing. I’ve received a link to the VRChat Community Guidelines, which clearly state:

Inappropriate Content

– Live streaming, advertising or publicly sharing content that is sexually explicit in nature or simulates sex acts is not permitted. Doing so may result in moderation action being taken against your account up to (but not limited to) banning of the offending user account depending on the severity of the act in question.
– Pornography & nudity is not allowed.

So, you can technically visit and see adult content in private worlds if you were invited (as shown in the very careful wording of the screen capture above), but pornography and nudity are against the VRChat Community Guidelines, so if the company actually finds out what you’re doing, they can shut you down. Note that this stance differs markedly from that of High Fidelity, which shifts the onus of responsibility entirely onto those who host their own content on their own servers.

High Fidelity Cancels Future Multi-Con VR Events: Has Big Event Fatigue Settled In Already?

Promotional Image for the First Multi-Con VR Festival in High Fidelity

Recently, High Fidelity hosted what was to be the first of three successive “avatar cosplay” themed events, called Multi-Con VR (here are some pictures taken at the event). The company decided to throw some serious cash around to entice people to enter the contest (US$16,000 in total prizes, plus US$300 paid out in High Fidelity Coin for every avatar entry accepted into the contest).

Well, it would appear that High Fidelity found the response to the first Multi-Con to be rather underwhelming, and has decided to cancel the next two events:

Thank you for a wonderful Multi-Con VR: Anime + Animation.
While this experience was groundbreaking and a success in many ways, we’re not seeing sufficient demand for events of this type. As such, we’ve decided to cancel upcoming Multi-Con VR dates.

Translation: We were expecting a big crowd, but we didn’t get one. One thing that I have noticed is that High Fidelity isn’t afraid to switch gears if something isn’t working. For example, they had originally planned six successive monthly stress tests, only to stop after the first three and switch to big monthly events instead (like last November’s FUTVRE LANDS Festival). That event proved to be a raging success, but I have noticed a definite drop-off in user interest and attendance at HiFi events since then (including Multi-Con VR). Obviously, the company has noticed this too, and has decided to try something else instead.

Some on social media have commented that High Fidelity was just throwing money at people to get them to use their platform:

They literally resort to bribing people to get them to log in these days. And even that isn’t working.

And while I am not so harsh as this particular commenter (who shall remain anonymous), I must confess that I myself am not a fan of big showy events, which at best give only temporary spikes in concurrent user figures. In the end it doesn’t come down to how many people you can pack onto a single domain for an event; it’s about how many people you get to stick around and keep coming back.

High Fidelity has decided that they weren’t getting the bang for the buck they were expecting, and they will invest their money elsewhere, perhaps coming up with new and different events in future.

Pictures from the Multi-Con VR Festival in High Fidelity

The producer of my show Metaverse Newscast, Andrew William, was an official photographer at Saturday’s Multi-Con VR Festival in High Fidelity. He kindly let me share some of his photographs with you (please click on each picture to see it in a larger size):

(The final image is me, wearing one of Cedar Librarian’s avatar creations. I popped in and out all day Saturday.)