Last Friday, AltspaceVR announced that it would be shutting down its virtual environment in March.
AltspaceVR was a consumer-focused immersive space accessible via desktop or virtual reality headset. Since launching in 2016, the platform has hosted celebrities and quickly become a popular platform for virtual concerts, stand-up specials, and other metaverse events. This has been my recommended platform for people looking to socialize in virtual reality. The biggest drawback for me was that you couldn’t really use it to build your own world. Additionally, it was a proprietary system owned by Microsoft and did not play well with other metaverse platforms.
The company said in a blog post that it will focus on other Metaverse-related efforts, including the launch of Microsoft Mesh, an enterprise-focused Metaverse platform.
Except.
In a filing with the SEC on Wednesday, Microsoft said it would lay off 10,000 employees. According to media reports, the layoffs include the entire Mixed Reality Toolkit group and the AltspaceVR team, effectively halting Microsoft’s own Hololens project.
That’s not really surprising. No one has been able to make money with the Metaverse yet.
In fact, last week Congress rejected the U.S. Army’s request for $400 million to purchase additional HoloLens headsets. reason? More than 80% of soldiers reported not liking using the headset, including “mission-impacting physical impairments” such as headaches, eyestrain and nausea.
In a report last spring, the Office of the Inspector General of the Department of Defense said purchasing augmented reality systems without user approval “could result in wasting up to $21.88 billion in taxpayer funds to deploy systems that soldiers may not or may not want to use as intended.” “There is,” he warned. .”
Instead of continuing to invest heavily in AR, VR, and Metaverse, Microsoft appears to be going all-in on artificial intelligence.
The rise of AI
On Monday, Microsoft announced “multi-billion dollar” investments in OpenAI, ChatGPT, and Dall-E 2. Microsoft did not give an exact figure, but news reports from the New York Times and Bloomberg put it at $10 billion.
Satya Nadella, CEO of Microsoft (MS), said at an earnings conference with investors yesterday, “The AI era has arrived.”
And it’s making money. He said Microsoft’s AI platform, Azure ML, has more than doubled its revenue for five consecutive quarters.
Last week, Microsoft made its Azure OpenAI service broadly available, he added.
“More than 200 customers, from KPMG to Al Jazeera, are already using this product,” he said. “We will soon be adding support for ChatGPT, allowing customers to use it in their applications for the first time.”
Microsoft will become the exclusive cloud provider for OpenAI, deploying the model across Microsoft’s consumer and enterprise products.
Microsoft also supports GitHub Copilot, an AI-powered coding assistant.
“More than a million people have used Copilot to date,” Nadella said. “This quarter, we brought Copilot into the enterprise and saw strong interest and early adoption from companies including Duolingo, Lemonade, and Volkswagen’s CARIAD software group.”
“As I said, we fundamentally believe that the next wave of platforms will be AI,” Nadella added.
What about Meta, Google and Apple?
Meanwhile, Meta continues to shed money through investments in the Metaverse. CFO Dave Wehner said in its most recent October earnings call that Reality Labs revenue fell 49% due to lower Quest 2 sales. And costs increased by 24%.
As a result, Reality Labs’ revenue was only $285 million on expenses of $4 billion.
This is a loss of $3.7 billion. In just 3 months. This amounts to a loss of over $1 billion per month.
As of last October, Meta had lost a total of $30.7 billion in Metaverse betting. And that number will continue to grow.
“We continue to expect Reality Labs’ operating losses to increase significantly in 2023 compared to the prior year,” the company said in a Nov. 9 filing with the SEC.
Meta’s Metaverse, and specifically its Horizons platform, “clearly has a long way to go before it’s where we hope it will be,” Meta CEO Mark Zuckerberg said in an October earnings call.
Google scaled back its VR ambitions a few years ago, ending support for its Daydream platform in 2020. Apple has yet to release its long-awaited AR headset.
Overall, global sales of virtual and augmented reality headsets will decline 12% in 2022, from 11 million units in 2021 to 9.6 million units in 2022, according to research by CCS Insights.
Aside from the long-awaited Apple headsets set to launch this year, another upcoming bright spot is Sony’s Playstation VR, a closed, proprietary gaming system that isn’t actually a virtual reality metaverse play.
The company plans to launch the new headset in February, and Omdia expects to sell 1.6 million units in the first year. By comparison, the original Playstation VR headset sold 1.9 million units in its first year in 2017.
What does this mean for OpenSim?
I think this is both good and bad news for OpenSim, a free and open source platform for immersive environments.
Today, OpenSim operates over 300 public worlds and thousands of private worlds.
However, most users access OpenSim through desktop software. Supports virtual reality to a very limited extent. The server software is optimized for the desktop. This means that it favors graphics rendering as much as possible, even if the frame rate is slightly lower.
For users, this means seeing more of the world, faster. But for virtual headset wearers, this means the images they see don’t keep up when they turn their head.
When your vision does not match your physical activity, the natural body reaction is to think something is wrong with your brain. Maybe you ate something poisonous. You may need to vomit before things get worse.
The disconnect between the physical movements of your body and what your eyes are telling you can cause nausea. It’s difficult to grow your user base if your product literally causes customers to abandon you.
So what’s the good news?
The good news is that companies continue to invest in hardware. Apple, Sony, Meta — they’re still hemorrhaging cash.
But with AltspaceVR shutting down and Meta continuing to struggle to gain some kind of traction for its virtual world platform, this creates a window of opportunity for OpenSim.
I don’t know if any developers are reading this, but I believe that open source, interconnected platforms will be the future of the metaverse in the long term.
And OpenSim is a great test bed for how it works. That’s because almost the entire OpenSim world is interconnected. Your avatar can teleport from one world to another along with your appearance, belongings, and friend list. This is true even if those worlds are hosted on different servers and operated by different companies. It’s an amazing piece of engineering that more people should know about.
Additionally, OpenSim has a pool of companies, virtual world operators, content creators, and users dedicated to the open metaverse.
Can the software itself be adapted to run on a virtual reality headset? maybe. If so, that would be really cool and I would really like to see it.