Short answer: We were trying to create a market that didn't exist.
Adobe shelved it and we migrated the scenegraph into Acrobat 3D in
order to target an actual market: CAD & manufacturing.
Atmosphere rose in ~2002, mind you. Our competitors were ActiveWorlds
and Blaxxun. There.com started about that time and I think SecondLife
was still gestating. We had great ideas about doing everything in 3D
but our work revealed that many things are better in 2D, e.g. shared
meetings, watching video, etc... We ended up with a small group of
dedicated users who dressed up in fancy avatars to hang out & chat in
the same world day in & out. Sound familiar? SecondLife has been
struggling with this same demographic for a decade now, unable to
finance the scenegraph, comm, and authoring upgrades it so sorely
needs.
My takeaway: open-ended virtual worlds inevitably become vast, pretty,
and empty deserts with a handful of hang-outs where cliques of users
chat & flirt with each other. There is no real incentive to be there
other than to see your friends. The real opportunities are in strong,
narrative-driven virtual worlds like WoW that have built in structure,
progress, goals, and rewards around which community organically
emerges.
Now we have an interesting crossroads where heavily-funded MMORPG's
are the only substantial VW's and what we know as virtual reality is
about to break out of the screen and overlay onto the real world as
augmented reality. Before long the two will overlap with virtuality &
reality increasingly intertwined and indistinguishable. You walk
downtown and through your Ray Ban's you see a fellow WoW clan member
virtually dressed as their avatar.