High Fidelity Lays Off 25% of Staff, Pivoting Towards the Enterprise Market
High Fidelity, the open-source virtual reality platform and startup is laying off about 25% of its staff this week. That amounts to 20 staffers. In a blog post, the company CEO and Second Life founder Philip Rosedale stated that the company has had to make some “hard choices” and is laying off 20 people to refocus its efforts on its new project on enterprise communications. High Fidelity attributed its to decision to pivot towards its new objective to the lower-than-expected virtual reality adoption which has so far constrained the size of the VR market. Many of the top players are still chasing down that elusive big VR breakthrough that will eventually take virtual reality to the masses.
Rosedale admitted that he had overestimated the expected pace of growth of virtual reality. Back in 2014, High Fidelity had expected daily VR headset use to be in the region of “several million people” in less than five years. However, the reality has been quite different as currently, there are only tens of thousands of people using virtual reality headsets on a daily basis. Most of the uses are currently concentrated around entertainment and media consumption with very little usage in general communications, education and work.
In 2016, High Fidelity launched what was billed as the virtual reality successor to Second Life. The startup marketed the platform as an open and decentralized portal where artists could create their own virtual reality worlds. For a brief period, the company also dabbled on original content production with a season of virtual reality talk show that was exclusively made for High Fidelity.
The company is now refocusing its efforts into a new direction with virtual world meeting spaces for enterprises and teams. According to High Fidelity, these virtual spaces won’t necessarily have to be used with VR headsets. End users will be able to join in simply by using PCs or headphones for 3D audio.
High Fidelity also published a post on its forums explaining its rationale for the pivot from VR content to virtual spaces. In the post, the company continues to harp on the lack of critical mass of virtual reality users that would justify its investment in a low-margin content business. The company explains that there will eventually be enough headset-wearers to justify such an investments but “it will take a few years”. In the meantime, the company says it sees more promising prospects if it is able to refocus its efforts to more specific virtual reality use-cases.
Following the decision to pivot, the startup will be shutting down its virtual public spaces effective immediately although it will continue supporting third party developers working within their own virtual spaces.
High Fidelity will also continue supporting its digital asset marketplace which is currently based on a stable coin currency known as High Fidelity Coin (HFC) and which is powered by Blockchain Technology.