EditorialEventsNews

VR: Investing, Exclusives and Mobile’s Future

August 7, 2016 — by David Radd

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EditorialEventsNews

VR: Investing, Exclusives and Mobile’s Future

August 7, 2016 — by David Radd

Recently, we posted an article talking about the near future of VR. Given the statements made on the state of VR from various industry luminaries at Casual Connect USA, we’re taking a look back at the market to reflect on its current state.

“Scary” VR Investment

Mitch Lasky, who has had multiple successful investments in their career including Riot Games and Snapchat, considers the current state of the VR market as overfunded. They’re a bit gun-shy about investing in VR, and it goes back to Facebook acquiring Oculus.

“When I look at it more structurally, I’d say something that may sound a little strange: perhaps the Facebook acquisition of Oculus wasn’t the greatest thing for the development of virtual reality in the long-run,” said Mitch. “It set such a high watermark, and it rung the bell so loudly for the industry, that it sort of forced the hand.”







VR InvestIf Samsung, HTC or Softbank had spent the $2 billion USD, Mitch thinks that there may have been more doubt surrounding the viability of the investment. Facebook, however, made the investment seem smart and that it in turn forced other large companies, major venture capitalists, and plenty of game developers to jump in. “It’s a dramatically overfunded space, actually, from a VC perspective,” they said.

After Facebook purchased Oculus, it helped give a larger perception that VR will definitively be the next big thing. “I’ve talked to senior executives at Facebook who’ve told me that it’s the next mobile phone,” noted Mitch. “I don’t personally share that view.”




An example of some of the money being thrown around now in the VR space is Samsung heavily advertising the Gear VR on TV sports broadcasts. At the same time, there still isn’t a consensus around how VR will be used, which scares Mitch as an investor.

“I’ve seen 25 or 30 excellent demos. I haven’t seen a lot I would consider finished products, or even things that suggest finished products. And if it’s anything like mobile games, I started a mobile games business in 2000. It wasn’t until 2008 or 2009 that they really became viable as big businesses,” they noted. “It was not just the launch of the iPhone, but the launch of the App Store, and even the launch of in-app purchases, that were necessary to get mobile games catalyzed in a way that made it meaningful as a business. VR may take a while.”

Our take: There’s a lot of interest in the field right now, but there’s isn’t a lot of knowledge on what, exactly, is going to be profitable. While VR is here as a commercial product, there’s still a lot of experimentation, differences between the different platforms and serious cost/supply issues still constraining the industry. While the upside of VR is potentially huge, there’s still many more questions than answers in the field.

VR Exclusives Here to Stay

Platform exclusivity for VR is something that’s recently become something of an issue for the nascent VR industry. While this has led to some consumer frustration, given the reality of the different resources for the myriad of VR developers, it was likely to be expected.

“All of our bottom lines in terms of what we need are different. What we need to make back on this, and what we need our games to do, requires a different amount. He [Edward McNeill, independent] needs less in terms of making profit than I do, which is then less than what she [Kayla Kinnunen, Roadhouse Interactive] needs,” said Otherworld Interactive co-founder Andrew Goldstein. “And, in terms of what she’s building, it might not even be about making a profit; it might be about positioning the company to be more cutting edge and tech savvy. You first have to ask the question: Why am I building this?”

Superhot

A lot of VR studios right now are small teams, creating things as much for love of VR as fans as they are for the bottom line. “You had this huge opening of a lot of indie devs who loved VR, but a lot of tiny studios that haven’t done a lot of game development,” said Andrew. “The development community is more a community of fans than it is necessarily of studios.”

The issue of games exclusive to certain VR platforms really came to a head when games like Superhot and Giant Cop received exclusivity deals with Oculus. While some consumers see this as large publishers taking advantage of the developers, the reality is that such deals often enable the games to be made in the first place.

“I think a lot of gamers – especially in this recent dust up – are not entirely realistic about what’s at play,” noted Edward McNeil. “In a lot of cases a game is not gonna be made at all unless it gets a boost from something like a timed exclusivity deal. A lot of times, unless a studio can ensure it will be available to survive, it won’t go on to make its next game.”

It’s understandable for consumers to want VR products when they come out. However, the resources provided often make the games better and are usually only temporarily exclusive.

“My goal as a developer is not to get rich and live a lavish lifestyle at the expense of gamers. I want to be able to keep on making games, and sometimes that might require the strategic decision to go as an exclusive,” said Edward. “The alternative is not to just go multi-platform with everything, and make everything available to everyone. The alternative sometimes is to make a different game. The alternative sometimes is to quit.”

Our take: There was a lot of talk early on about how it was all about having VR as a medium succeed over a particular brand or headset. Some consumers really took that sentiment to heart and were upset to see various games being signed as exclusives. It was probably naive in the first place to think that, given the investments involved in the various VR headsets and the inherently competitive nature of business. Exclusive games on different game platforms have existed for basically as long as game platforms themselves, so there’s every reason to believe this will continue for the foreseeable future.




The Rise of Mobile VR

Right now VR has two distinct markets: desktop and mobile. Desktop has greater hardware capabilities and better control methods, but is also more expensive. Mobile, by contrast, is much cheaper and often easier to use with a large existing userbase, but the fidelity is far lower.

“It really has the largest addressable market, and the longest tail in the long-run,” said Edward on mobile VR.

“Mobile has more users,” agreed Andrew, “so if you want to increase your brand, your notoriety, or just get yourself seen, mobile is where to go.”

Andrew notes that the current limitations of VR in general level the playing field for move indie VR developers, and that right now neither mobile nor desktop is significantly more popular than the other for that to be a deciding factor. “I don’t have to worry so much about competing with AAA studios,” Andrew said. “In that sense, it feels a little bit more indie friendly. The ceiling is a bit lower. I don’t like talking about it in those terms, but that makes it a more friendly environment for a one-person shop.”
stuff_google_daydream_android_vr_virtual_reality_headset
Between the Samsung Gear VR and the Google Daydream headset, there’s a lot of serious resources being put in the mobile VR space. They also offer the experience of untethered VR, which most feel like will be the future of the platform. The panel also noted that mobile VR is closer to desktop VR than it is to regular mobile games. While the mobile VR systems themselves are more actively portable than desktop VR, they are not going to be used “on the go” the way most mobile games are.

“It’s weird to me that there seems to be such a big division between what people see as mobile VR and the rest of VR,” Andrew reflected. “Mobile VR is much more about VR than it is about mobile. To me, it doesn’t feel like a phone game; it feels like a VR game. It’s more like Oculus Rift than it’s like your cellphone.”

“When we say ‘mobile VR’ it really isn’t that mobile. We’re not using it in trains or when we’re walking down the street. We’re finding a space to sit down in our houses. Google gave a talk yesterday, where it revealed that it’s expecting people to have long play sessions [with Daydream], because the time it takes to get your gear set up…as a player you’re really wanting to have those longer experiences,” added Edward. “The content we’re building for mobile VR has to be just as longform as content for desktop VR. We’re looking at 30-minutes or more in terms of sessions times.”

One considerable point that still has yet to be fully addressed is that mobile VR hasn’t really had any universal control methods. However, Google has developed a touch controller for the Daydream, and it’s not hard to imagine others coming up with similar sort of elegant solutions to mobile VR’s control problems.

“I don’t see it being very long before we have full six degrees of freedom, full head-tracking, hand-tracking,” Edward said. “Right now, mobile VR is very restrictive in terms of what your input types are like, but I don’t see that being the case for very long. Very soon, the content you’re playing on Vive will be very easily playable on what we call mobile VR platforms right now.”

Our take: There will always be hardware limitations for mobile VR compared to desktop VR, but given the lower cost and the penetration of mobile hardware, it’s not hard to imagine that as being the leading way people have VR experiences, if some good solutions are found for the input issue and features like head-tracking. It might not be what some people have imagined, but success in consumer technology does not always go to the most technologically impressive performance, but rather the most accessible from a cost and usability standpoint.

 

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David Radd

David Radd

David Radd is a staff writer for GameSauce.biz. David loves playing video games about as much as he enjoys writing about them, martial arts and composing his own novels.

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