As its name already indicates, High Fidelity focuses on sophisticated user interactions like motion-capturing for facial expressions while voice-chatting (remember Facerig yesterday?) and controlling the movement of your avatar - and things like VR glasses and probably even touch-sensations.
To start up his new virtual world Rosendale was able to raise $ 2.4M from investors like Google in 2013. Sure, this doesn't sounds like a gigantic sum, but I'm sure if interest rises, money will follow too.
The latest news are that High fidelity went to alpha status on January 14 and the developers are currently looking for test-users.
So far the High Fidelity Homepage doesn't tells much, but its blog gives a bit more information.
Sounds really interesting if you ask me, even if the videos published showing these features doesn't really look convincing yet. I'm sure compelling visuals aren't top priority at this stage of developement though, which certainly will change when High Fidelity goes beta.
If this new virtual world will be a success, it will certainly have an effect on Second Life too. I expect the handling of High Fidelity to be less technical than SL, which isn't a bad thing. Its actually a neccessity for mainstream success. On the other hand many SL users, have grown deep roots (and a large and expensive inventory!) they likely aren't willing to cut just to go somewhere else to start new. Also many people may prefer a less immersive and less physical involvement in their virual lifes - simply because its more comfortable and more private.
We will see how these new technologies will work out eventually. Its really hard to give a prognosis here. Some wise human once said: Predictions are very tricky, especially when they are about the future! ;-)