Microsoft Ditches Social VR Platform as It Lays of 10,000 Workers

Microsoft is reportedly axing its social platform, AltspaceVR, along with Mixed Reality Toolkit, its XR interface framework. These changes come into effect as the company lays off thousands of employees. 

The news comes in the wake of recent trouble with Microsoft’s major U.S. Army contract, where poor performance from the company’s military XR headsets led to the cancellation of orders by congress. 

Reports indicate that 10,000 staff will go, which represents 5% of Microsoft’s current workforce. So, why is this happening? And what does it mean for Microsoft’s VR projects going forward? 

Let’s take a look at the news about Microsoft’s VR redundancies. 

Why Is Microsoft Axing AltspaceVR?

AltspaceVR was developed by Eric Romo and launched back in 2015. In 2017, Microsoft acquired the platform after a lack of funds meant that Romo would have to end the project. Two months after the proposed closure of AltspaceVR, Microsoft was at the helm, and prospects looked good for the social platform. 

Less than six years later, Microsoft has now announced it will shut AltspaceVR down. As of March 10th, 2023, the platform will be no more. 

According to a statement from Microsoft, the demise of AltspaceVR is occurring as the company shifts focus to “support immersive experiences powered by Microsoft Mesh.”

Mesh was announced back in 2021 and is Microsoft’s tool for creating multi-user mixed reality applications. The software gives developers a framework that connects users across a range of different devices, giving them a sense of presence, meaning it feels like you’re in the same room. 

What is Happening to Microsoft’s Mixed Reality Toolkit?

Alongside AltspaceVR, Microsoft’s Mixed Reality Toolkit (MRTK) is also set to close. The project was designed to increase the development of cross-platform mixed-reality apps using Unity, the game engine. 

Although Microsoft will no longer work on the project, the toolkit will remain open source. 

What’s Prompting the Changes at Microsoft?

The recent layoffs and termination of key VR projects are linked to “macroeconomic conditions and changing customer priorities.” Microsoft’s CEO Satya Nadella has also talked about changes to the company’s hardware portfolio. Some reports claim that the recent cutbacks aso affect games teams, including those at 343 Industries and Bethesda Game Studios. 

Microsoft isn’t alone in the recent cutbacks. As interest rates rise sharply, many tech companies are bracing themselves for a potential recession which may hit the industry hard. 

Although the layoffs seem large, the company is making fewer redundancies compared to the number of employees taken on throughout the pandemic. A drive for cloud solutions and workplace software for remote workers meant Microsoft’s employee numbers expanded by 36% during the two years following the start of the pandemic. 

Outside of VR development, Microsoft still faces delays in acquiring Activision Blizzard. If regulators allow the purchase, this will provide huge payoffs for Microsoft. 

Elsewhere in the business, the company’s involvement in OpenAI may also prove valuable. The San Francisco AI startup recently launched ChatGPT, an AI writing tool with massive potential to change several industries. Although Microsoft may not see returns on their investment for a long time, ChatGPT has become massively popular in the two months since its release. 

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