How High Fidelity will make money while giving away software

Linden Lab founder Philip Rosedale offered insights into his new company’s business model and technical architecture yesterday in a talk and question-and-answer session about High Fidelity on the MOSES OpenSim grid yesterday.

Of particular interest from a business perspective is that the High Fidelity software will be open source, similar to the way the Web is composed of individual websites, most running on open source server software like Apache.

Philip Rosedale, founder and former CEO of Linden Lab, visiting OpenSim.

Philip Rosedale, founder and former CEO of Linden Lab, visiting OpenSim.

“We really thought of Apache as being a good model for High Fidelity,” he said.

The High Fidelity server software can run completely independently from High Fidelity the company.

“It can be completely disconnected, like for a government or military installation,” he said, with a nod at the the MOSES grid, which is run by the U.S. Department of Defense on secure private servers.

“Our thinking is that this next generation of virtual worlds will require a simple, stable world-wide open source system,” he said.

The client software will also be open source, he said.

Unlike Apache, however, which is run by a non-profit foundation, High Fidelity is a for-profit company.

So how is it going to make money, if the server software is free and the client software is free as well?

As an example, consider what would happen if Linden Lab started giving away the Second Life server software for free, allowing anyone to set up their own regions on any server they happened to have handy, and still connect to the main Second Life grid.

Rosedale said that High Fidelity will sell location name registrations and virtual currency, and run a content marketplace.

The High Fidelity economy

Rosedale didn’t go into detail about the location name registration system, other than likening it to the way that domain names are registered today.

In particular, he didn’t explain the advantage of registering a location with High Fidelity instead of simply using a regular old domain name, the way OpenSim grids do today.

He went into a bit more detail with the currency, however, explaining that it will be a cryptocurrency, like Bitcoin, except without the volatility. The supply of the currency will increase at the same rate that usage grows, so that it maintains a constant value.

Philip Rosedale

Philip Rosedale

“We’re going to shoot for something that’s more like a transactional currency, something nice and stable against real world currency like the Linden Dollar is,” he said.

He also talked about the future High Fidelity marketplace, which sounded a little bit like the Kitely Market in OpenSim. The Kitely Market is an online marketplace that delivers the purchases to any hypergrid-enabled world.

“We agree that having avatars, names, identity and content be movable around between these various worlds is another critical part of the design,” Rosedale said, referring to High Fidelity’s networking of the separate virtual worlds that will run on its server software.

“It’s similar to some of the cool work that’s been done with hypergrid,” he said.

Web viewer just for viewing

Another interesting piece of information about High Fidelity is that the company plans to build a simple viewer that can run in a browser.

“For basic looking into the virtual world, our plan is to make all the viewing of the world WebGL and HTML 5 compatible,” he said. “If you want to just look into the virtual world. We definitely should be able to do a 30 to 60 frame per second looking into the virtual world just with WebGL, just with a browser, without client software at all.”

Users who want to interact with the virtual world would still need to download traditional, standalone client software, however.

“And why wouldn’t you?” he asked. “It’s way better performance.”

Hardware support

Today, High Fidelity software runs on Macs, Linux and Windows, is compatible with the Oculus Rift headset, and Razer Hydra hand-held controllers and the PrioVR full-body motion capture suit.

Support for the higher-end STEM wireless system from Sixense is in the works.

“It supports the Leap Motion controller, but the first version was hard to use in a virtual reality environment,” Rosedale added. “The second version was extremely compelling and we’re integrating it now.”

The other device he mentioned was Control VR‘s glove-based controller, which just passed $300,000 in funding on a $250,000 goal with 21 days still left in its Kickstsarter.

“We’ve got a call with the folks at Control VR later on today,” he said. “It should be very straightforward to support it.”

Mesh versus voxels

High Fidelity will be a fully mesh-based world.

However, when viewed at a distance, the content will turn into simple block-based voxels.

“This will allow us to create an infinite amount of content in the world, and see it all at a distance,” he said.

Users will create content in applications such as Maya and Blender, import it into the world, and then use in-world tools to position the content.

This is where the motion-capture hardware will play a major part.

With a mouse and keyboard, it can take hours to learn how to build, he said. Motion-capture hardware and similar input devices can dramatically simply the process.

“You can start building in a virtual world in five minutes,” he said.

This is how virtual reality will scale from a million users to a billion, he added.

“We have got to get this hardware on people’s bodies,” he said. “That doesn’t mean that people who don’t have the hardware won’t participate — everybody here [his audience in the MOSES grid] can basically do this stuff with a mouse and keyboard because you’ve gone through the learning curve. Good for you.”

He admitted that the initial cost of some of the virtual reality equipment can be high.

“But people who are willing to invest the time to learn how to do things without the equipment can do so,” he said. “Also, we’re at a a very exciting time.. the cost of these devices is going to be remarkably low… The word on the street is that the Oculus is going to be really amazingly cheap.”

Rosedale did not elaborate, but he may have been referring to recent reports that, as a result of the Facebook acquisition, the Oculus Rift may be priced at cost to get it into as many hands as possible.


MOSES — which stands for Military Open Simulator Enterprise Strategy — is an OpenSim-based grid developed by the U.S. Army’s Simulation & Training Center, under the auspices of Douglas Maxwell, the Center’s science and technology manager for virtual world strategic applications.

The MOSES grid is not open to the general public, but does allow other people to come in and work on projects, including private companies, researchers, educators, and non-profits.

Philip Rosedale addressing members of the MOSES grid.

Philip Rosedale addressing members of the MOSES grid.

Many members of this wider community were present at Rosedale’s talk yesterday, which was held during a special grid office hours session.

“This is one of the perks of being a MOSES member,” Maxwell told Hypergrid Business.

Watch the full video below:

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Maria Korolov

Maria Korolov is editor and publisher of Hypergrid Business. She has been a journalist for more than twenty years and has worked for the Chicago Tribune, Reuters, and Computerworld and has reported from over a dozen countries, including Russia and China. Follow me on Twitter @MariaKorolov.

16 Responses

  1. Hmm. We’ll see. I like the visionary aspect of High Fidelity, of course, but I’m rather curious about how exactly existing (meshed) content will be imported into a voxel-based engine. It’s not so trivial as Philip makes it sound. Unless he has some tricks up his sleeve. Remember, we had to wait a whole decade until we got a SL-compatible viewer that can both import and export COLLADA files… and SL, at the rendering level, has always been mesh (like pretty much everything else). Now we have a different rendering technology, but Philip still claims anyone can import meshes from Maya and Blender into HF…? Hmm. We’ll see.

    Making money with a ‘location service’ (which might be web-browser-based, and thus also sell ads…) and a cryptocurrency on a marketplace *might* make sense but… neither LL nor Kitely can ‘live’ exclusively from that. So why does Philip think that High Fidelity will be different? It’s worth giving it some thought. Of course, for a few years, since he’ll be burning investor’s money (including his own!), the HF team will not worry about breaking even. But what will happen in 2-3 years, when the money is gone?

    The only hope for HF is to get bought by Facebook 😉 — or eventually one of its direct competitors, if Facebook really launches its own virtual world. But perhaps that has been the plan all along…

    •' Ilan Tochner says:

      We’ve downloaded the High Fidelity codebase, compiled it and played with it to understand it better. Thou far from being market ready, the underlying technology has potential. Keeping both client and server open source can help the project gain traction with developers and gives it a better fighting chance against the proprietary virtual-world solutions big corporations will eventually bring to market. We also like that the distributed nature of the system saves you from having ongoing hosting expenses thus enabling you to use a freemium business model.

      The main problem I see is that what makes this an interesting open-source project will also make it hard for High Fidelity (the company) to make a profit when companies such as Kitely can offer the same value-add services they’ll offer and do so sooner and with more advanced technology than they can have coming out of the gate. It would be very straightforward for us to enable delivery from Kitely Market to High Fidelity, all we need is business justification to do so.

  2.' hack13 says:

    I would be interested to know what license the software would be under, and the rules to take the code and modify it.

    • It looks like they’re distributing it under the Apache license:

      •' Adam01time says:

        Interesting to see the tax payers money going to MOSES. But all I see is no trespassing signs. You think I would trust any part of the free software to a no trespassing sign. Well Most of this stuff is very old news It is being implemented.
        They have a long time ago figured out how to handle the Virtual Worlds. Anything Rosedale talked about was handled
        Long ago it just the new toys added to the server that are evolving. Nothing new here. Just a Trespassing sign.
        Smile send them your tax dollars so they can put up more no trespassing signs.
        This should be How to get the people to pay for government funded operations sounds weird.
        Sounds like another grid. Nothing new here but less freedom and more control of a market.
        And we payed them to do it. This is not what I would call a hypergate.
        It is a product that was built on the taxpayers grid and you will pay for it trust me.

        • Adam —

          It makes sense for the government’s own internal grids to be private — do you really want everyone in the world to be able to drop by and eavesdrop on their training sessions?

          However, they are giving back to the community. A lot of the content they’ve created — with the help of taxpayer dollars, yes — is available for free. You can download it here:

          They’ve also build a grid-management system, that they’ve donated back to the community, as well:

          If you’re referring to High Fidelity, they’re a different platform from OpenSim. Philip Rosedale was just making his presentation on the MOSES grid. Possibly because they’re looking to sell it to government agencies?

          I did notice that he pointed out that High Fidelity can be run completely behind the firewall, in private mode.

          That’s not just useful for government agencies, however, but also for private companies, non-profits, individuals looking for a private building location or hangout, and, of course, schools.

          As far as what High Fidelity has that’s new… I haven’t seen their currency or marketplace yet, so can’t comment on it, but the avatar puppetry — being able to control the avatar hands by moving your own hands — that does sound new and useful. Converting mesh objects to voxels so that you can see more stuff at a distance — that also sounds new and useful.

          The peer-to-peer aspects — I don’t understand how that will work, or why anyone would want this, but that’s pretty new for virtual worlds, as well.

  3. Ok, so if I am reading this correctly – 1) Its going to be opensource just like OpenSim, 2) Anyone can run a sim or grid on the HF software, on your own server hardware without having to connect it up to an “official grid”, just like OpenSim, 3) Its going to be based on a similar principle to HyperGrid, enabling free movement, just like OpenSim, 4) They are going to be offering a web based Marketplace, just like Kitely in OpenSim.

    So basically with the exception of a one grid/network currency, and requiring a registration fee – they have just copied all the best and unique parts of the current OpenSim model.

    No thanks Philip, I was part of your original creation – SecondLife – and decided long ago, not to be part of any grid network that is owned and controlled by one profit making corporation. Until the day OpenSim dies, I wont be taking part in your latest project.

    However, he mentions one thing that I believe we do need in OpenSim to make things take off, and that is a browser based basic viewer. So new users can “look” in world as Philip says, without the need to download the full client first. I am not a programmer so can’t work on such a project, otherwise I would. But it sounds like he has just taken a look at the OpenSim model and decided to monetize it.

    • …also a couple of other points as an edit. The fact that HF is copying these things goes to show that there is a market opportunity here, and OpenSim is on the right track… we as a community should be promoting and celebrating the fact that OpenSim is truly free in all sense of the word, and yet can link you up with the whole of the Open Metaverse community – we do not need one overarching entity in control of it all.

      Two, I have been banging on about this for ages, as have many others – I wish I could take the time to learn to program, but I just don’t have the time – but we in OpenSim need our OWN dedicated OpenSim viewer. It is time to cut the ties with SecondLife and start promoting OpenSim as its own product – by having a viewer that is designed for our needs, and supports OpenSim without having references to SecondLife and Linden Lab all over the place. OpenSim cannot truly grow all the time it is hanging onto the coat tails of SecondLife all the time.

      /me brushes down the dirt off my trousers and steps off the soap box, and closes my OpenSim bible 🙂

    • I was having some of the same thoughts as I was listening to this talk! But there are some differences:

      * It’s all mesh-based, no prims. So no in-world building. Just rearranging of stuff built in outside 3D modeling programs. Maybe you can reverse-engineer in-world building if you have the ability to move and scale, by giving folks a set of mesh building blocks. But I don’t think he realizes how powerful it is to be able to build and texture in-world.

      * Avatar puppets — you move your arms, your avatar moves their arms. This is huge, and a big plus for High Fidelity.

      * Meshes turn into voxels at long distances. Right now, it takes a lot of computing power to be able to see any distance. In High Fideliy, if you stand on a high mountain — or fly up in the air — you should be able to see as far as you want, because far-away objects are represented as simple voxel building blocks, not as full meshes.

      * Peer-to-peer processing. I’ve heard him talk about this a couple of different times, and still don’t really get it. I understand the Skype model, or the Bittorrent model — while you’re running their software, you’re also helping move data around for other people on the network. But the OpenSim model — or the Apache model — is that all the heavy work is done on the server, and the viewer shows up and only has to do a little bit of the work, and only for themselves. So a website might have some javascript that my browser has to run, for example, but the javascript is purely for my own benefit.

      With this system, if you’re running a server, and you’re not using all of your capacity, would you help out other servers? That doesn’t make a lot of sense to me since servers — these days, at least — are typically virtualized, and only use as much capacity as they need, to get all the work possible out of a given set of hardware.

      He also mentioned paying people for their time in virtual currency, which to me sounds a bit like the Seti At Home project, except you get paid to run the software. Or the like the Bitcoin model, where people are rewarded for doing processing for the entire Bitcoin infrastructure with new Bitcoins – i.e., Bitcoin mining.

      So the currency is free (in a way) but High Fidelity will make money by taking a cut of all transactions?

      I don’t think that this is necessarily a bad business model. After all, you have to remember that High Fidelity doesn’t have to pay for the land — people will run the software on their own servers. So they’ll be a location registrar, a payment company, and a marketplace — kind of like the GoDaddy, PayPal, and Amazon of the 3D web. It’s not too bad a place to be.

      •' Ilan Tochner says:

        Hi Maria,

        The p2p system is based on every client also being a server that runs a small part of the simulation. So, for example, you connect with a mobile phone and the phone will simulate a flock of flying birds while another device simulates several avatars and yet another simulates the roller coaster they are riding on. Each of these devices sends updates to the other two devices so they’ll all have a shared world state. This concept was previously used by .

        The voxel optimization is also not original, it basically uses a 3D variation of (instead of a sprite you replace the object with cubes in the oct-tree which helps speed up Occlusion culling calculations).

        As the project is open source, people don’t have to use the builds provided by High Fidelity with their particular value-add services. They can just as easily use other distributions that include competing services. The long term viability of High Fidelity as a company (and not just as an open source project) will depend on their ability to provide a better collection of services than other companies using the same VW codebase can. This is not a given. For example, Kitely can quickly offer our own distribution with tieins to our own set of services and their brand will only take them so far if big companies with more marketing power decide they want to take over that ecosystem.

        • So we now have three potential contenders for the platform for the metaverse – OpenSim’s hypergrid, High Fidelity, and Utherverse.

          With the Utherverse server software costing significant money, and the company insisting on a centralized login system — and, thus, a centralized point of failure — and missing HiFi’s avatar motion controls, I’d put them dead last in the race.

          OpenSim is in the lead right now simply because we have a system that’s already out there and being used, but HIFi could come from behind because of their brand recognition and Silicon Valley connections.

          OpenSim seems to be a completely outside-the-Valley operation. How did that happen???

          •' lmpierce says:

            When I think about Silicon Valley, and when Silicon Valley is in the news lately, it’s as much about entrepreneurism as technological innovation; those who are developing like crazy and become deeply engaged are just as excited to make (a lot of) money.

            OpenSim has not been about money, neither has it represented next-generation innovation. It’s been about access. It’s the world creating software that virtually anyone can use, regardless of budget or 3D modeling skills. It looks and works amazingly well, but it improves through a slow process of gradual evolution by mostly volunteer efforts.

            Philip is doing what Silicon Valley likes best. He’s investing a lot of money in a new startup pulling together various technologies in an innovative paradigm for a product that he expects to monetize in a big way. That sounds like the Silicon Valley I’m always reading about! I suspect OpenSim is exactly how most in the Valley do not want to proceed.

        •' Siana Gearz says:

          There’s another potential. Instead of simulators as we have now, it makes sense to split communication hubs, which simply copy the same information to N clients (textures, geometry, positions and movement vectors) and can be replicated to better handle the load, and simulators, which perform scripts and physics. One of the two tends to create a bottleneck, while the other has unused resources. In Intel experiments, it was the communication that was a bottleneck, but i’m sure you have seen cases where simulation can bottleneck too.

          This can be further refined, i.e. instead of communication hubs copying information from purely authoritative simulators to N untrusted clients, it’s possible for some of the peer clients to do the copying work by providing crypto verifiability of the information. Another refinement is to split the simulation. Research from collaborative text editing (e.g action versioning) can be leveraged to allow conflict resolution and duplicate actions. For any action -> set of consequences, the consequences of a single action can be computed on a number of nodes, potentially also the nodes that the action originates on, e.g. on the client and maybe on its closest peer. This solution can be combined in case it doesn’t conflict, or when it does, an authoritative solution (provided by master hub or simulator) is chosen. The consequences are however actions themselves, so a dynamic model emerges.

          •' Ilan Tochner says:

            Using quorum systems is an interesting approach but may be problematic if the nodes are spread out and High Fidelity’s 100ms lag goal is to be maintained. In other words, network-derived latency may make this less than ideal. That said, if the nodes are chosen intelligently so that all authoritative ones are located in close network proximity to each other than the overhead may become more manageable.

  4.' Wayfinder Wishbringer says:

    To simplify:
    * Philip Rosedale
    * Lotsa claims
    * Maybe he’s learned from SL, maybe not
    * I like the idea of open source
    * Don’t like the idea of no in-world editor (if I understand… all external mesh, yes?)
    * That can be overcome by making mesh prims?
    * Where’s the beef? How soon, is this project well along or years away?

    And the big question I have after 10 years on VR and watching this circus run: why should we care?

    Sorry, not to sound negative… but that’s THE question the industry is going to be asking. OpenSim is open source and totally available to anyone and is VR etc etc etc… and for all intents and purposes has failed miserably in its goals, over and over. Second Life is declining and has been for years. For the most part all VR grids are either stagnant in region count or declining / shutting down. So what’s any different here?

    Rosedale is a visionary and a mover and shaker. But Linden Lab hasn’t been at all in touch with its users and has always, always put its own interests ahead of its users. Rosedale was the Captain of the ship. How is this ship expected to be any better?

    I’m not disinterested… just asking pertinent questions and making (hopefully valid) observations.