Editorial: The State of Current Social VR—Has Linking Newer Virtual Worlds to Virtual Reality Been a Tactical Mistake?

Are all the social VR companies going the wrong way?
(Photo by NeONBRAND on Unsplash)

So, I’m sitting here in front of my computer on an overcast, chilly Sunday morning up here in Winnipeg, with my cup of coffee rapidly cooling beside me, my dirty dishes piling up in the kitchen, dust bunnies gathering in the corners of my apartment, and my wet laundry needing to be moved from the washer to the dryer, and it just seems as good a time as any to pause and ponder the state of current social VR. (Anything to avoid housework!)

And if you’ve been paying attention, like I have, it would seem that social VR is, indeed, in quite the state. And not a good one. Let’s do a quick recap:

First, everybody from Mark Zuckerberg to Philip Rosedale has said the same thing: that consumer uptake of virtual reality is taking much, much longer than originally estimated. It’s making some inroads (Facebook is apparently selling the Oculus Quest wireless VR headsets as fast as they can make them), but we’re not there yet.

Second, there are the metaverse platforms on which companies have spent years of time and toil to build, expecting that influx of consumers in VR headsets, and which, still, sit largely unvisited in spite of their best promotional efforts. In most cases, these companies are now having to make some pretty severe adjustments (a.k.a “pivots”) to their software development roadmaps in an attempt to become profitable, and make their boards and shareholders happy:

  • High Fidelity (which is burning through all that venture capital, and is now trying to re-position itself as a remote workteams platform);
  • Linden Lab’s Sansar (which is relying on the reliable cash cow of Second Life, and has just announced a new focus on live events, at the expense of other features);
  • Sinespace (although nobody really knows how profitable the company is, the platform still seems to be having similar trouble attracting large numbers of users, from what I can tell from my admittedly infrequent visits).

Third, there have been a few early success stories in social VR, but they, too, have some storm clouds on the horizon:

  • VRChat is still the most popular social VR platform, thanks to the livestreamers, and it is coasting along in merry pandemonium, but how long will the company keep throwing money into the platform if they can’t make some sort of profit from it? VRChat is a business, and they face a potentially rocky road in their plans to move to an in-world economy with user-generated content and an in-world currency. Any misstep, and its young, fickle userbase, who are accustomed to everything being “for free”, will abandon it just as quickly as they picked it up in the first place.
  • Rec Room, the second most popular social VR platform, has found a comfortable niche. But is it profitable in the long term? Again, how do they plan to make money off it? It’s a bit of a mystery to me.

So, it would appear that those social VR platforms that do have in-world economies can’t attract large numbers of users, and the ones that don’t have in-world economies might be popular, but obviously can’t keep running indefinitely without a means of generating profit. It seems like a Catch 22, a rather hopeless situation at this present point in time.

Add to this the fact that the 900-lb. gorilla in the room, Facebook, is planning to launch their own social VR platform in 2020, and you’ve got a situation that must be keeping the CEOs of these various companies up at night, pacing the floor, wondering how, when and where it all went wrong.

The fact is, nobody seems to have yet found the perfect mix of features and promotion to snatch the mantle of Second Life. The venerable virtual world, at 16 years old, is still is the most popular platform around, with approximately half a million unique monthly users according to recent statistics provided by Firestorm.

But again, Second Life doesn’t support VR. And, in actual fact, VR users in almost all of the social VR platforms to date are still the minority, compared to flat-screen desktop users (yes, even in VRChat). So perhaps, have all of us made the wrong bet: that virtual reality was going to be key to the success of the next generation of virtual worlds?

It’s certainly not playing out that way, at least not yet. Facebook might succeed with Facebook Horizon, given its almost endless resources, but it hasn’t had a particularly good track record so far (witness the recently-shut-down Facebook Spaces and Oculus Rooms as examples).

If Facebook fails (or fumbles) with Facebook Horizon next year, then that will be the strongest signal yet that linking virtual worlds and virtual reality is, perhaps, a tactical mistake. And if Apple, who has so far stayed away from VR, launches augmented-reality glasses (as some confidently predict), could that be what finally catches fire in the public imagination, instead of virtual reality? Have we made the wrong bet?

So, is the news all doom and gloom? Hardly. There are a few bright spots, metaverse-building companies which are already making a profit:

  • ENGAGE has been able to carve out a profitable niche for itself in the educational market
  • NeosVR is profitable, largely due to its passionate Patreon supporters, and also by offering commercial licenses for businesses and schools (of course, it helps that it has a small, nimble development team!)
  • Cryptovoxels is already earning enough money via the sale of blockchain-based virtual land to support its full-time software developer, Ben Nolan

But even I must admit, these are the exceptions that prove the point: social VR is, by and large, not yet profitable. And the bigger the company, the more trouble it seems to be in. It seems to be the smaller firms that are able to cut costs and find niche markets to excel in and generate profit. Which doesn’t look especially good for Linden Lab and High Fidelity, with their large staffs and all the associated overhead.

So, for the various companies engaged in building the next generation of metaverse platforms, it becomes a waiting game: trying to find some way to survive until such time as social VR is profitable—or just giving up on VR. But I rather doubt that the companies that have already made such a huge investment in virtual reality will pull out now.

Linden Lab has decided to pin Sansar’s future on live events. High Fidelity is hoping that remote teamwork use will keep it going. Every company is going to have to come up with its own strategy to make it through these leaner-than-expected years.

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I Am This Week’s Guest on The Drax Files Radio Hour, Talking About Douglas Rushkoff’s Article and Social VR

On Saturday I was a guest of Bernhard Drax (a.k.a. Draxtor Despres in Second Life and Sansar) on his long-running weekly podcast, The Drax Files Radio Hour.

We talk about Douglas Rushkoff’s provocative article, Most VR is Total Bullshit. But Drax and I also discussed many other topics in social VR, including mentions of Sansar, High Fidelity, AltspaceVR, VRChat, Rec Room, Decentraland, and the forthcoming Facebook Horizon. We also talk a fair bit about Facebook in general—and Drax takes me to task for rejoining the Facebook social network!

Here’s a link to the podcast. It’s about an hour long. Enjoy!

Dr. Fran Hosts Her Weekly Salon on the Topic: Is High Fidelity a Cult?

Dr. Fran hosts a weekly salon on the social VR platform High Fidelity, where various topics relating to technology, science, art and philosophy are discussed and debated.

And this Sunday’s topic seems, well, particularly pertinent, given all the recent travails that High Fidelity has been going through:

A few weeks ago, the topic was: Why are you still here?

Is it possible that you are here because of cult-ish leanings? What makes a cult, and what would cause YOU to be part of a cult?

IN ADDITION: This discussion can touch a bit on confirmation bias, as in: I made a choice to be a member of High Fidelity, and to admit that it is a losing proposition would mean that I am wrong about my choice.

So, am I holding on because I believe in HOLY HiFi, or maybe, I don’t want to admit that I put my hopes and dreams on the wrong virtual world? Or, is it the wrong virtual world?

The salon takes place on Sunday, October 20th, at 2:00 p.m. High Fidelity time/Pacific time, at Franny. (Unfortunately, I have a real-life event happening at the same time, so I cannot join the discussion.)

Franny — the site of Dr. Fran’s weekly salon

By the way, when I popped in-world to take this picture, I was one of a grand total of six avatars in High Fidelity on this Saturday afternoon, according to the GoTo section of their user interface tablet. Now, there might be a few more who are in unpublished domains, but you have to admit, that’s a pretty depressing figure.

Editorial: Why Second Life Is the Perfect Model of a Mature, Fully Evolved Virtual World for Newer Social VR Platforms to Emulate

You might have noticed that recently, even with all the different social VR platforms and virtual worlds I could choose from, I am still visiting—and blogging about—Second Life a lot lately.

There’s a good reason for that. I still love Second Life, and I still find lots to bring me back, time and again. For all the bells and whistles of the newer social VR platforms, I find myself coming back to SL for more.

Some people speculate that the evolving metaverse is going to look a lot like popular games like Fortnite. But I think that successful social VR/AR/XR platforms of the future are going to resemble Second Life.

In fact, I am going to make the argument that Second Life, at sixteen years old, is the perfect model of a mature, fully-evolved virtual world. Whether through design, luck, or accident (and really, it’s a combination of all three), founding CEO Philip Rosedale and his team at Linden Lab created something that hundreds of thousands of users still use regularly, despite Second Life routinely being ignored or derided by the mainstream media.

In fact, just a couple of days ago, Philip tweeted:

He said:

Looking right now at the live Steam concurrency stats, if Second Life were listed there it would be in the top 10 games, between Rocket League and TF2. And we’ve been at that concurrency level for more than 10 years.

Much credit lies both with Philip Rosedale for his original, pioneering vision of what a virtual world could be (and some very smart early decisions, such as allowing people to create and sell their own content to other users). Much credit must also go to the current CEO of Linden Lab, Ebbe Altberg, who has capably and competently led his team through many changes in recent years, building on Philip’s foundation. (There were a few CEOs in between, too, but we don’t talk about those. 😉 )

We can take a look at where Second Life is now, today, for a glimpse at the future of social VR/AR/XR platforms and virtual worlds.

What lessons can we take from SL? I can list four off the top of my head.

First, having a well functioning in-world economy is CRITICAL. Once people realized that they could actually make money in Second Life by creating and selling content to other users, SL took off like a rocket. And you can bet that the newer platforms like Sansar, High Fidelity, Sinespace, Decentraland, and Somnium Space have all been busily taking notes based on that early success. Even VRChat, which lacks an in-world economy, effectively proves this point, by having a booming off-world economy centered around the making and selling of custom avatars. The lesson here is simple: either build a marketplace and an economy into your virtual world, or your users will build one around it anyway, in spite of you!

We can expect that newer social VR/AR/XR platforms will develop highly detailed working economies and marketplaces for user-generated content (including comprehensive item permissions systems), whether or not they embrace blockchain and cryptocurrencies. Second Life proved that this is a key, vital ingredient to virtual world success.

Second, it’s ALL ABOUT THE PEOPLE. One of the reasons that Second Life has had such extraordinary longevity and success is that people have made an investment in the communities that they belong to. Whatever you are—a Gorean, medieval, steampunk, or science fiction roleplayer; a furry, a tiny, a Na’vi or a Bloodlines vampire—you have likely already found your tribe in Second Life! And that community is what brings people back, time and time again.

Also, Second Life has proven that people will spend a significant amount of time and money on customizing their avatars to their liking. There’s a whole industry built up around avatar customization, as even a brief glance at the SL Marketplace, with its hundreds of thousands of items for sale, will attest.

One of the reasons that OpenSim-based virtual worlds have struggled so much (with so many grids closing unexpectedly, like the rather sad InWorldz saga) is that they attract so few people compared to Second Life. You don’t make too many return visits to a grid when you can’t find anybody else to interact with. And this is where the network effect comes in: the more people who use a platform, the more people it draws in, and the more valuable that network becomes. Often (but not always), these successful growing networks were earlier entrants into a particular marketplace, like Second Life was.

And obviously, Facebook hopes that they can leverage their massive existing social network to give their upcoming social VR platform Horizon an advantage over competitors. If Facebook can get even a tiny percentage of their Facebook, Instagram and WhatsApp users to move to Facebook Horizon and use it regularly, they will be more successful than any other social VR platform to date (even VRChat). Facebook has the resources to dominate markets and crush competitors, and they will not hesitate to use every tool and tactic at their disposal. However, as I have said before, innovative social VR platforms will still be able to survive, if they can offer something that Facebook Horizon cannot.

Third: The early adopters of the various social VR/virtual worlds are the best ambassadors and promoters of the platforms. Engaged, raving fans are a virtual world’s best and most effective advertisement! Savvy metaverse companies court these early adopters with varying levels of success.

And you alienate those raving fans at your peril! High Fidelity is unfortunately learning this lesson the hard way. The current level of ill-will surrounding the project, spread by former users who are highly critical of the various mistakes and failings of the company, is an additional hurdle that the company will have to surmount in order to succeed.

Fourth, don’t be too quick to judge or dismiss a platform based on early impressions! I love to share the following video with people who just assumed that Second Life started off as an instant success. It dates from 2001, two years before SL opened to the public, and before it was even called Second Life (back then, it was called Linden World):

It took Philip Rosedale and his team at Linden Lab years and years and YEARS of hard work to get to the point where it finally took off (around 2006-2007).

And likewise, don’t be too quick to dismiss newer platforms that still might be a bit rough around the edges. (And yes, I am as guilty of this as the next person.) Some platforms might not look like much right now, but they will likely also take several years of concerted effort (by the companies behind them and their early users), before they reach a point where they become successful, profitable products.

I have noticed in covering the social VR/virtual world marketplace on my blog that here is such intense pressure on metaverse-building companies to become “the next Second Life”. Platforms are often judged harshly if they do not immediately get high concurrent users figures right out of the starting gate. That is completely unrealistic. The smarter companies are playing the long game here: building a quality social VR/virtual world slowly and methodically over time, and slowly but steadily attracting an audience. That’s what happened with Second Life!

A perfect example of this strategy at work is NeosVR, which is doing some insanely creative things, like this most recent example: an actual working portal gun! I mean, just how freaking cool is that?

NeosVR is still not on a lot of people’s radar yet, but they are attracting more and more users who are very impressed by what they can achieve on this platform. In many cases, these are features that other social VR platforms are not even close to matching! That’s why I believe that NeosVR will have a bright future. As Ralph Waldo Emerson apparently said, build a better mousetrap, and the world will beat a path to your door.

So these are just a few thoughts. Examine Second Life carefully, and you too will gain valuable clues into what the mature, fully-evolved social VR/AR/XR platforms of the future will look like. You can count on it!

Picture by Yorkie