Editorial: Rough Waters

Photo by Dmitry Bayer on Unsplash

I’ve been up since 5:00 a.m. and I can’t sleep. I’ve been thinking about the most recent two blogposts I’ve written about High Fidelity (here and here). I have been harsh and direct, and while some readers have congratulated me for my frankness, others have expressed their dislike of what I have written. I feel somehow as if I am contributing to the general sense of malaise in social VR just by writing those two articles.

It brings me zero joy to watch HiFi struggle to reinvent itself, and it brings me zero joy to watch HiFi’s userbase as they feel confused, upset, angry, and betrayed by a platform they have invested so much into over so many years.

But (as the tagline of my blog states) this blog is about “news and views” (viewpoints). What is going on with High Fidelity is newsworthy, and I do want to continue to share what I really think and feel about what I am reporting on. Otherwise, I am just a corporate shill, a PR parrot. I want to have the freedom to report on news and events in the evolving metaverse, to praise and criticize the various companies as I see fit.

A commenter on my last blogpost said:

Second Life must have been a strange anomaly, that neither its founders nor the current Linden Lab appear able to replicate.

And I would agree. Even the visionary Philip Rosedale is having trouble making lightning strike twice.

I predict that the social VR/virtual worlds/metaverse industry overall is going to go through some pretty rough waters. The initial honeymoon period (if there ever was one) is OVER. The idealism of the many metaverse company builders is coming face-to-face with an ugly, stark reality: that it is going to take more persistence, more creativity, and more innovation to build products which more than a handful of early adopters will use on a regular basis.

All I can do is to continue to cover everything that happens, as best I can.

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High Fidelity: Some Thoughts on the Morning After

First, a disclaimer: I’m a librarian and a blogger, and I don’t really know what it takes to run a successful software company. I’m sure the only people who really know how Philip Rosedale is feeling right now are Ebbe Altberg and other software company CEOs who often have to make difficult decisions, including letting people go. It’s a tough job, and one that I wouldn’t want.

And I must confess that, from my admittedly outsider perspective on High Fidelity, that I was absolutely gobsmacked by the swiftness of this recent turn of fortune. One minute, High Fidelity was merrily cruising along and planning big splashy events; the next, they were slashing server costs by abruptly shutting down public spaces. It was, and still is, a rather stunning reversal that most observers didn’t see coming.

There are a lot of factors that led to this point. Let’s take a look at a few of them. 

First, almost all of the rosy predictions made when the first consumer VR headsets appeared have turned out to be flat-out wrong. As Philip himself has said, he expected millions of people to be in VR headsets at this point. He was mistaken. But then, so were a lot of other people. It’s just unfortunate that it took this set of circumstances to force High Fidelity to pay more attention to the users they should have been paying attention to all along: non-VR users who are looking at virtual worlds through their flat computer monitors. Catering almost exclusively to VR users, and treating desktop users as almost an afterthought, is one of the reasons that High Fidelity finds itself struggling today. For example, there is still no default, built-in text chat system in High Fidelity (although there are third-party solutions on the Marketplace).

Second, High Fidelity has struggled to set up something that was key to the early, resounding success of Second Life: creating and encouraging a space where content creators could make money selling their products to other users. Compared to the nearly 22,000 items now available for sale on the Sansar Store, The HiFi Marketplace is struggling to attract content. The process involved in creating a sales listing is still too geeky and cumbersome, and High Fidelity has created an unnecessary bottleneck by insisting that they review every single item placed on the Marketplace. It’s small wonder that there are only 1,200 items for sale so far, about a twentieth of what is on the Sansar Store. Many potential content creators have simply given up on High Fidelity and walked away after encountering these and several other obstacles. 

Third, there was a strange overemphasis on company-hosted events, which gave High Fidelity some much-needed press and a reason to boast about avatar concurrency records being set, but which also took up valuable company resources which, perhaps, could have been better placed somewhere else. They say hindsight is 20/20, and it’s now clear to me that High Fidelity probably spent a lot of money on setting up and running powerful servers to handle such big events with large crowds. And, in the end, it was probably something that was not sustainable long-term. (Then again, server costs are much cheaper than programmer salaries.)

Also, there were many people who showed up at HiFi’s events because they were getting some sort of financial inducement to do so (like the US$20 gift cards given out at the first couple of stress testing events). High Fidelity was literally paying all the contest entrants in their most recent Avatar Cosplay Contest! Somebody (not me) has said that High Fidelity was essentially bribing people to use their platform, and when the inducements were no longer there, people stayed away.

Take a look at High Fidelity’s new website homepage:

How many companies do you know that would continue to throw resources into a project if, after six years of hard work, their product only has 2,573 users? The writing has been on the wall for quite some time now; it’s just that people haven’t wanted to admit it. Sometimes when you build it, people will not come.

Despite a few modest successes here and there (notably VRChat and Rec Room), social VR as a whole is struggling to attract users. Some companies can rely on venture capital (High Fidelity) or profits from other products (Linden Lab) to get them through the lean times, but that money won’t be there forever. Eventually, social VR has to stand on its own. And sadly, I think we are going to see other companies in this market founder, struggle, restructure, and even close their doors.

So now High Fidelity is pinning its hopes on becoming a workplace teams platform, squarely aimed at the business market. (In fact, they won’t even let you sign up for a sneak peek at the new service with a Gmail email address, which is frankly insulting to those businesses who choose to use Gmail.) There’s no guarantee that this endeavour will succeed, but I do wish Philip and his team the best of luck. They’re going to need it.

Another Bombshell Announcement: High Fidelity Lays Off a Quarter of Their Staff

High Fidelity, which recently announced that they were shutting down almost all of their public spaces and discontinuing General Assembly meetings, laid down yet another bombshell announcement today.

In an official blogpost titled Toward a Digital World, High Fidelity CEO Philip Rosedale said:

We’ve been working as a company for six years now, writing open-source software and creating test events and experiences to enable this imagined place to come into existence…We’ve done a ton with a small and passionate team.

But as of today, 2019, we probably still have a few years to wait. VR headsets, even the latest ones, are still not comfortable enough to wear for very long, and still cannot be used to read and write messages, take notes, or do most kinds of work…

If you had asked me when we started the company in 2014, I’d have said that by now there would be several million people using HMDs daily, and we’d be competing with both big and small companies to provide the best platform—but I was wrong.

Philip goes on to state that the company is changing direction, to refocus on a creating a platform for work teams to collaborate, and that as a part of this pivot, they are letting go of a quarter of their staff:

To refocus on this new project, we have made the very hard decision today to reduce our team by 25%, meaning that 20 people will be leaving us who have made great contributions to High Fidelity, and whom we will greatly miss.

I’ve heard from an inside source that some very talented software engineers have been let go, instead of (and I quote) “the Bingo Extremo people and the people who put on the disastrous events”. I am hoping that Linden Lab will swoop in and pick up a few good people to help them continue to build Sansar, but who knows what will happen now.

Emily, HiFi’s Community Manager (who appears to have survived the layoffs), helpfully provided some follow-up questions and answers to Philip’s announcement today in a FAQ posted to the High Fidelity Community Forums:

Will you still be accepting feature requests, and what will happen to requests already made?

Unfortunately, no, we do not have the resources to work on broad-based feature requests from users. As such, will be closing the feature request list down as of June 1st. We will no longer triage feature requests; however, leaving it up for a few weeks allows our community to review it in the event it inspires open-source project proposal ideas. Unfortunately, there’s no way to make the feature request board read only.

Will you continue to offer experiences like Nefertari’s Tomb and Remembering D-Day?

We’ll discontinue these experiences after the events currently scheduled to allow us to focus on our new direction.

Do you still plan to add support for the Quest, Focus, and other new HMDs?

Yes, that’s still very much on the roadmap. We don’t have timing of the availability on specific devices at this time.

Does this mean that you are going to improve the High Fidelity experience for desktop users?

Yes. Since many people will use their laptop or desktop PC to access High Fidelity, broadening access is a key part of our strategy. As noted in Philip’s blog post, we simply feel that mass-market adoption of VR hardware is a few years away still.

(I haven’t quoted the entire FAQ; you can read it for yourself here.)

Well, as I had expected, it’s now clear that High Fidelity will not be launching on the Oculus Quest anytime soon. Philip Rosedale has bigger problems on his hands.

And the current user base on High Fidelity, many of whom are long-time committed users, are going to face a stark choice: stay or jump ship? No doubt some will consider Sansar or VRChat or another platform for their creative and development work. The fact that the company will no longer be accepting any broad-based feature requests from end users is very troubling, and it could force some people to switch platforms.

Does this mean that VR is in trouble? No, I still believe that the Oculus Quest and other new standalone and PC-based VR headsets will bring an ever-increasing audience into virtual reality. But it is now very clear that this uptake of technology will take a lot longer than most people originally estimated. The VR platform companies that will survive are those that acknowledge this fact and plan accordingly.

Also, it’s clear that the something has gone slightly awry with the more freeform software development model which had been used by High Fidelity to date, as opposed to the much more structured monthly software updates being issued by companies such as Linden Lab for Sansar. (And yes, I have confirmed from many longstanding HiFi users at the first, well-attended Federated Users Group meeting that this sort of loosey-goosey software development has been a long-standing issue at High Fidelity.)

Frankly, High Fidelity is burning through venture capital and they need to smarten up. Philip Rosedale recognizes this, and it’s not too late (despite what some people may say). High Fidelity is taking a gamble by moving to a workplace team platform, but it’s a calculated risk. (Then again, Second Life tried this too, and it failed miserably. Anybody remember Second Life Enterprise?)

What happens next? Who knows. But it will, as always, be fascinating to watch (and blog about). Stay tuned!

New Podcast Interview with Philip Rosedale

Philip Rosedale

The Stayin’ Alive in Technology podcast’s most recent episode is a detailed, wide-ranging, hour-long interview with the virtual world visionary and Second Life and High Fidelity founder Philip Rosedale. The topics which Philip and his interviewer, former Linden Lab staffer Melinda Byerley, cover range from the very earliest days of Linden Lab to his thoughts about the so-called “3D web”. Have a listen: