Economic viability of VR games development

‘VR games development’ should be driven by passion, not by an idea of making profits.

In last few years, virtual reality has gone from predated technology to a household name. Recent research reveals that 9% of U.S. broadband households plan to purchase a virtual reality headset within the next year. While gaming still tops the list of VR activities, other activities include watching entertainment videos, virtual tours or travel, watching live events, social interaction, educational purposes, shopping, etc.

Earlier this year, a report from market research firm Super Data revealed that 6.3 million VR headsets were shipped in 2016. Out of which, most were cheaper, less sophisticated devices, like the Samsung Gear VR. But there are still several hurdles that VR faces in its widespread adoption. The number of people who wants to use VR on a regular basis is still very less.

Since the installed base for VR headsets is small, sales are low. The developers are not very keen to develop games in the present scenario. The major reason is the cost involved in developing a VR game.

The lack of VR content affects sales of VR headsets. A consumer, who would love to experience VR in their home, will be reluctant to spend significant amount of money on a VR headset when there is not much content (mainly games) available. While a good exclusive software would help encourage consumer to buy a specific VR headset over a competing one.

Jitesh Ubrani, senior research analyst at IDC (International Data Corporation), said, “The VR market is still very young and consumers seem to be taking a cautious approach. With plenty of headset options already in the market and even more coming soon, hardware isn’t the issue. The bigger challenge is the slow growth in content that appeals to a mass audience, combined with the confusion associated with a lack of cross-platform support.”

Now it has become a general practice that stakeholders subsidize the developer’s costs. In return of that, game developers offer timed-exclusivity to the stakeholder. However, getting funded by hardware developers isn’t making developers wealthy, even if they keep their expenses to a minimum. The funding helps developers at least reach a break even. Otherwise their game won’t see the light of day.

Although there have been some success stories like Owlchemy Labs with Job Simulator and I-Illusions with Space Pirate Trainer, the number is quite low. The most popular content such as Robo Recall and Google’s Tilt Brush are given away with the headset. Many other developers have been finding it hard to make a profit with the emanating medium.

One of the early pioneers in virtual reality and co-creator of Virtual Reality Modeling Language (VRML), Tony Parisi, who is now heading AR and VR Strategy at Unity, also refused to make an economic recommendation for developing a VR game.

At one of Parisi’s first public appearances in his new role, he said, “If I could recommend anybody to make a game in VR I’d do it on the basis of getting into this field. Not on an economic argument. We believe in the long haul, we don’t know how long it’s going to take, we believe in the long-term success of this technology. But, in the meantime, I can’t make an economic recommendation. It’s down to individual developers and it’s got to be around the passion and desire to get into it.”

To increase the installed base, VR developers need to offer interactive, must-try content that appeals to the masses. Hardware providers are in continuous efforts of making simple, light-weight VR headsets that are cost effective too. Low price and great content would make consumers feel like having value for money, which could lead to a bigger install base, and more fidelity to the technology.