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AltspaceVR is shutting down as Microsoft’s mixed reality division shrinks

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The announcement comes just days after Microsoft laid off 10,000 workers across the company.

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An image showing a group of avatars in Altspace VR

Image: Microsoft

Microsoft will shut down AltspaceVR, the social virtual reality (VR) platform it acquired in 2017 (via VentureBeat), on March 10th, 2023. The company shared the news in a blog post just days after it announced job cuts affecting 10,000 workers, stating the move will help shift focus “to support immersive experiences powered by Microsoft Mesh.”

AltspaceVR emerged as one of the very first social VR experiences in 2015 alongside other platforms like VRChat and Rec Room. While the startup nearly shut down in 2017 due to financial issues, Microsoft scooped up the platform as part of its efforts to build out its own mixed-reality ecosystem. Microsoft says users can download their data from AltspaceVR before the shutdown.

“We look forward to what is to come, including our launch of Microsoft Mesh, a new platform for connection and collaboration, starting by enabling workplaces around the world,” AltspaceVR writes in its announcement. “In the near-term, we are focusing our VR efforts on workplace experiences, learning from and alongside our early customers and partners, and ensuring we deliver a foundation that enables security, trust and compliance. Over time, we hope to extend to consumer experience a[s] well.”

Unlike AltspaceVR, which hosts events and social spaces that people are free to join, Microsoft Mesh is geared toward companies looking to collaborate remotely. Microsoft has been gradually building upon Mesh since it first announced it in 2021, a platform my colleague Tom Warren says “feels like the future of Microsoft Teams.”

But now Microsoft’s scaling back on its metaverse ambitions as it looks to make adjustments to its “hardware profile.” The employees working on Microsoft’s open-source Mixed Reality Toolkit say they’ve all been laid off, and a report from Windows Central indicates that Microsoft cut the entire team behind AltspaceVR as well. The Verge reached out to Microsoft with a request for comment but didn’t immediately hear back.

In addition to the shutdown of Altspace, Microsoft’s massive layoffs also reportedly impacted the team behind the company’s HoloLens VR headset. The division has faced numerous setbacks over the past year, with HoloLens boss Alex Kipman leaving the company last year after facing allegations of sexual misconduct. It also doesn’t help that Congress recently denied the US Army’s request to purchase up to 6,900 headsets based on the HoloLens platform.

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