Microsoft shuts down social VR pioneer AltspaceVR • TechCrunch

AltspaceVR has had some close calls over the years, but the company that built virtual social spaces long before “metaverse” was a household word is shutting down for good this time.

After announcing it would be closing up shop in 2017, Microsoft stepped in and the company came under the tech giant’s wing. Now Microsoft is laying the groundwork for AltspaceVR’s virtual reality platform, a network of immersive social spaces that invited people to hang out with friends or colleagues as 3D avatars.

AltspaceVR will be no more as of March 10, and Microsoft says it will direct more resources to its mixed reality platform Microsoft Mesh.

“We look forward to what’s to come, including the launch of Microsoft Mesh, a new platform for connectivity and collaboration, starting with enabling workplaces around the world,” the announcement said.

“In the near term, we are focusing our VR efforts on workplace experiences, learning from and with our early customers and partners, and ensuring we deliver a foundation that enables security, trust and compliance.”

Outside of gaming, Microsoft has built many of its products with an enterprise-first mindset, and VR and mixed reality are no different. The company notes that it plans to “expand” its VR plans to consumers once they are established for the workplace.

AltspaceVR may never have built a formidable user base — a difficult task in VR, given the custom hardware required — but the company was very early on with social applications of virtual reality.

By 2015, AltspaceVR had created a robust social VR platform where users could mill around wood-paneled rooms with serene views, watch Taylor Swift music videos together, or surf the web via a virtual browser. Spatial sound made the experience more immersive, recreating the way people perceive sound in real environments and laying the foundation for virtual events.

At the time, most of the resources and attention in VR were focused on cutting-edge gaming applications – not virtual hangouts. Meta launched Horizon Worlds, an AltspaceVR-like experience with its own innocuous neutral interior and not-too-realistic avatars a full six years later.

It’s not clear whether Microsoft plans to roll the product into its second VR effort or abandon the project outright. Given the timing, AltspaceVR’s fate is likely tied to Microsoft’s dramatic company-wide consolidation detailed this week. TechCrunch has reached out to the company for additional information on what’s happening with AltspaceVR’s team and technology in light of the news.

Amid deep tech layoffs, Microsoft announced it will cut 5 percent of its workforce, affecting 10,000 employees. Microsoft CEO Satya Nadella pointed to economic uncertainty and the downturn from the early pandemic tech boom as reasons behind the significant cuts.

“We will continue to invest in strategic areas for our future, which means allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company, while divesting in other areas,” Nadella said.

It’s not clear if Microsoft is putting forward any of its metaverse plans, or if AltspaceVR is just a casualty of broad, company-wide cuts. It was just a year and change ago that Facebook boldly rebranded itself as “Meta,” throwing the industry into a busy hype cycle around a more immersive, possibly VR-powered vision for social networking.

A year later, the metaverse discourse has already rapidly gone through the backlash phase, making the future of avatar-driven virtual social spaces unclear. It’s possible that the metaverse never needed special hardware at all – non-VR online worlds continue to thrive in 2023 – but it’s worth remembering a company that was well into exploring these possibilities years before the tech giants emerged.

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