Virtual reality is undoubtedly the most talked about technology in the games industry today. It was a hot topic at the recent DICE Summit in Las Vegas, where industry veteran Mike Capps (former president of Epic Games) led roundtables focused on the VR space, and it'll be widely discussed in two weeks time at the annual Game Developers Conference in San Francisco.
There are so many questions that remain unanswered when it comes to virtual reality, including what the market size and opportunity will truly be, but there are few people in the industry better acquainted to dive into all things VR than Capps, who not only has a PhD in computer science with a focus on virtual reality, but also serves on the advisory board of Unity's recently held Vision Summit.
GamesIndustry.biz caught up with Capps to talk about the feedback he's getting from developers working on VR and what his hopes and fears are about the exciting space. Below is a slightly edited transcript of our conversation.
Q: Can you start by giving me an overview of the roundtables that you led at DICE and some things that you learned at the Vision Summit?
Mike Capps: I ran two roundtables at DICE and it was really hard for us to talk about the art form of games and how VR was going to influence that because everybody's in such a tizzy about the market. Will there be installed base? What will it look like? Who's going to use it? How long will they use it when they're using it? This was before the big Samsung announcement... I think that announcement is great in terms of putting platform out there but you could also say there's 5 million [Google] cardboards out there and obviously not all 5 million are being used everyday. So it comes down to not just installed base but frequency of use. It's really hard for us to skip that and say, “Let's just assume everyone has a Vive. Now what? Let's talk about the art.” We just kept coming back to, “Will there be platform and how fast?” There was a great mix in those panels of the large developers putting a toe in thinking about, “We're making our money on platform X, but we can't ignore this business and we should be experimenting,” and then smaller developers that were all in. They're building VR games now and trying to make a living right now off of making VR games and that was a neat juxtaposition. The little people are taking risks in it and the big devs are not taking big risks. They're taking carefully considered steps, which kind of matches what you would assume, but you could really see it there at DICE.
In terms of the Vision Conference, it was probably the most energetic conference I've been to in years. It was awesome. I was really pleasantly surprised because it was our first year and I had no idea what to expect. It was a young crowd, really just excited. There were some great announcements in the keynote that got everyone charged and that carried through both days of the show. DICE is a lot of folks who have been through mini cycles in the industry, both up and down and they're cautiously optimistic about new platforms, whereas at Vision, everybody was just, “Fuck yeah!” It was like '95 and the internet was starting and they were all building webpages. They're like, “Yeah! Let's do it!” It was really nice to get that sort of a boost and I had this mix of very experienced VR developers who were around in the late '80s, early '90s, saw it last time, and then a bunch of folks who weren't even around for that, much less remember that the first iPhone was spelled e-y-e, a VR headset. So putting those two groups together was a lot of fun.
"I saw a stat that 16 percent of game developers in the US are working on a VR product... and I'm like, 'Are you guys crazy?' It's not 16 percent of the market... it seems like folks are jumping in a little harder than I would say the metrics suggest"
Q: Like you said, a lot of people are focused on the market for the obvious reason. At the Vision Summit, John Riccitiello said that developers should be fearful of journalists. I hate to be the enemy but maybe he's right. It's our job to point out the trepidation and that the market is very niche right now because of high prices. What did you think of what Riccitiello said?
Mike Capps:That's a dangerous question. [laughs] Do you trust the press and the media? Well, I went through the VR hype cycle last time, and it was probably two-thirds media - journalistic media - and one third media being movie and TV and other presentations. When you see Johnny Mnemonic or The Matrix or Disclosure, and say, “Oh, that's what VR is!” and then you put on a shitty headset with a lot of lag and big wires and 320x200 displays, you're so disappointed, and you're like, “Oh, this sucks.” No, actually it's amazing. It's super super cool. It's just that it wasn't as cool as someone's dream of what it could be and, “Why isn't this a holodeck?” So fast forward to today, I'm not getting the heavy media influence. I'm not getting that everyone has read Ready Player One and they're disappointed by Valve's Vive demos because it's not what Ready Player One said, but I do worry about the movie when it comes out being the quality of Minority Report but in VR and how that will set expectation levels for what VR can do and it's not going to do that for a long time. So part of it is that side of the media. Then the journalism... good lord! The level of excitement that is being reported in the media I think reflects entirely the level of excitement everyone has. I'm not sure it's the right level of excitement, but there is just so much hype when it comes to VC funding and developers. I saw a stat that 16 percent of game developers in the US are working on a VR product, whether it's a port or VR direct, and I'm like, “Are you guys crazy?” It's not 16 percent of the market. It's not even close. So it seems like folks are jumping in a little harder than I would say the metrics suggest.
Is there room for a couple big sellers in VR? Sure, there was also room for a couple of big sellers on Kinect. Kinect, they had a giant consumer launch the first year. What was it? Ten million? That was a lot for attach rate, and there were a couple of games that sold in millions, which was awesome, and then not a lot of other folks made money, which is unsurprising. And so if we're in that same space, I think everyone would be delighted to see 10 million Vives and Rifts by the end of the year for the high end VR market, right? That would be a pretty pleasant number. There's only so many folks who can make money at that install level, so we'll see. So the excitement levels are really high and it's hard for me to determine whether that's the journalists reporting the excitement they're seeing or if they're creating it. I don't know. But, regardless, it has worked. It's a circle at this point, where everyone's excited.
Q: The difficult part is translating that excitement to the mainstream, given the combined cost of gaming PCs and VR headsets. Maybe that's where the mobile market comes into play. You mentioned Samsung and, obviously, giving away Gear VR with the Galaxy S7 is pretty big. Do you think that would be the path to more widespread VR adoption?
Mike Capps:Good question. Who knows? I think the Samsung announcement is a game changer. I think it doubles, to me, the number of headsets that are out this year. What'd they pre-sell last time? Wasn't it 15 million that they pre-sold with the previous Samsung phone? ...If it does 15 million units, that's a massive, massive increase in the number of folks who can buy VR software. So it totally changes the game for 2016, which is awesome. I am super psyched about it. Untethered VR is huge. It is theoretically possible to run a super high powered laptop on the airplane that runs your PC VR, but being able to watch movies or play games on your mobile VR [is huge]. I did a predictions talk at Vision and that was part of the way I think it's going to happen. Just watch how many folks on a plane, how many seats are lit up with a VR headset. It's like, if you saw someone on your plane today, everyone would think it was an interesting curiosity using a VR headset. Also, it was probably you that was the one doing it. You fly back next year, you're going to see a handful. And in two or three years from now, it won't just be a handful, they'll be handing them out in first class instead of noise-reducing headphones on good planes. On cross Atlantic flights, you'll be handed a headset. That's where the market's going to go very fast. Will there be awesome and compelling content? Maybe not. Will there be cool content? Yes, absolutely. There already is.
Q: I think there's something socially surreal about that, if literally everyone had a VR headset on their face and was completely unaware of the other passengers. It would be like VR zombies in a weird Twilight Zone.
Mike Capps:It's like the picture of Zuckerberg walking through the audience where everybody's got a headset on. That was dystopian. It was uncomfortable to me. And it's the reason why I think AR will take off much faster than VR. I think Riccitiello had similar comments about that. I've got little kids. I can't put on a headset, play a video game and block out the world in my own house. Even when they're asleep, I have to keep an eye on the monitor. If I look to my left, I can see my kids' monitor, I can hear the sounds going through, but I can still watch a movie or play 360 degree Call of Duty or whatever, but until I can integrate all those things, I'm not going to do it. And I have space, which puts me in a weird category. Not a lot of folks living in Tokyo have the space to put out a 15x15 VR area.
Q: Everyone's buzzing about VR, but as you've said AR could be the real game changer. I was stunned when I read about the $800 million investment Magic Leap got. Do you think how VR is or isn't accepted will ultimately have an impact on AR's future?
Mike Capps:That's a great question. I think if VR fails with the stigma it did last time - where I was totally embarrassed to tell people I had a PhD in VR because they would giggle - if it's that's bad, then, yes, it'll tar with the same brush. But I haven't heard a single person mention Google Glass when we're talking about headmount displays and VR and games and things like that. And Google Glass is an AR system, right? Not a great one, but a sort of early one. So it seems to me that, say there's 10 million headsets but nobody's making money but there's a couple of cool video games, a lot of good movies coming out and then someone releases a fully mobile, no need for tether augmented reality set of glasses that does everything we wish Google Glass could've, I don't think that the two impact each other. It's such a different thing. It's like wearable computing. It's Google Maps on the fly. I would use AR all the time compared to VR. AR touches my life 300 times a day like my phone does and VR touches my life once every two days when I have a headset on and I've finally got some quiet and some space to enjoy it.
Q: It's weird that they're often lumped together (VR/AR), at conferences and in other discussions, when the technologies and use cases are pretty different.
Mike Capps:Yeah, the optics are so different. The people who are working on them are mostly, completely different. Yeah, I agree. The only thing is that you can have AR devices that also can somehow block out light enough that you can fake a VR experience - hell, the first available glasses you just put a piece of plastic in and turn your AR glasses into VR glasses via IO glasses, whatever they were called, virtual IO.
"I don't think we've sussed [VR costs] out yet. Quality expectations are certainly lower in the VR space"
Q: As you mentioned earlier, we're seeing small studios risking a lot on VR so far while the big companies seem to be waiting for the market to develop before they take the plunge. If a small studio's VR game fails it could sink them potentially. Do you think it's a concern?
Mike Capps:I don't think it's a big concern. [One of the big publishers] said 10 years out for them for VR... Somebody made a really bold statement saying we're completely ignoring VR, which is disappointing that someone would completely ignore it and push it off a decade. But what I saw with mobile and tablet was, there wasn't a great Madden game year one on the 3GS when the Apple iPhone became a legitimate gaming platform, right? But eventually they put together a great tablet game. They can afford to wait and lose some first mover advantage. I think it makes sense for them... It's a good business decision. And you see folks speculating in VR content plays where it's figured - you start a VR content company and if you have a little bit of success and the market blows up, then presumably Warner Bros. or Activision or whoever else is going to come snap you up to get a leg up in that new space just like PopCap got bought after it turns out that casual games were really important and they got snapped up by EA years later rather than trying to build that from scratch. So I think it's okay. It seems to me like normal market dynamics. Three guys in their basement taking a risk of 3-6 months of opportunity costs of working for a Fortune 500 company and instead of making their mobile game idea they're making their VR game idea and some of those will work and some of those won't and that's great. It feels like the right thing to be happening right now. Little studios taking giant risks, medium risks maybe, and medium studios maybe doing one VR game and two [traditional games] and the big studios just playing wait and see. I'm cool with that.
Q: Just how different are the costs of VR development? I know Unity and Unreal both have in-VR editors now, which has to be helpful, but are the costs substantially different or is it more about the challenge of the design being substantially different?
Mike Capps:That's a good question. I don't think we've sussed it out yet. Quality expectations are certainly lower in the VR space. So we can make a game like I Expect You to Die, which won the Vision award for best VR product yet it was cartoony and it was a small team. That's going to change. Once we have Call of Duty VR then everyone's going to want to compute at that level. Interaction is certainly tougher so it's a more complex thing to worry about user experience. Imagine Gears of War with the controller versus Gears of War with two hands in the air. It's a tricky problem. But you can already spin around really fast in almost all the big 3D products anyway. So it was already made to allow you to wander around freely. I don't know that you would design Gears of War differently in terms of layout and space for VR. There are other games that you would, say, Telltale's The Walking Dead. You can't just immediately assume that you can move around in 3D the same way that you'd want to because it's not meant to do that. For some games it won't translate cheaply to VR but most of the tiny games would. Make Crossy Road and now make it for VR and now make it have [support for] hands for interaction? It's a completely different product. So the minimum bar is probably a little higher. It's tough to say. It's going to be really interesting. I don't think it's going to be as easy as going from PS2 to PS3 was 10x the cost and going to VR is 10x more. I don't think it's that simple.
Q: It does seem like more of a design challenge than an economic challenge. The analogy I would make is that it's like going from pixel art to polygons. Making 3D spaces for the first time was a big change. This is another major leap.
Mike Capps:Yeah and if you think of going from a game that's controlled by a controller to a PlayStation Move game, it's completely different the way you interact. It's a lot of work. And many of those games did both because they couldn't assume you had a Move just like Ghost Recon had Kinect support. They couldn't assume you had a Kinect and that stuff starts getting really expensive if you can't assume people have certain capabilities. That's tricky. Port something that's 50 flavors of Android and talk to me about how difficult it is to support... [but VR] is nothing compared to that.
Q: Given everything you've seen, what do you think is the worst case scenario and the best case scenario for VR in the market?
"I think we're going to have to redefend our art form as we go into a space that's more immersive; and that scares me a bit because the major players in the VR world are not the ones who spent 20 years in the video game world"
Mike Capps:Well, I was on the ESA board and the ESRB board, the ratings board. So when I look at VR I think about the fear issues and especially in a hot politics season. It scares me to death to think about the baby shaker games on the phone and then somebody builds that in VR with your hands drawn. At first it's fun and then you realize that this is so far beyond the medium that - and most folks who are in Congress today or running for governor in some state, probably their wife plays mobile games or their kids play Xbox or something, right? None of them have people in their family that play VR. It's super scary just like rock music was in the '60s or whatever. So I think we're going to have to redefend our art form as we go into a space that's more immersive; and that scares me a bit because the major players in the VR world are not the ones who spent 20 years in the video game world. I was on the board when we were dealing with the Supreme Court defense and that was a lot of really hard work and preparation to protect our art form and of the major players in VR I think essentially zero of them were involved in any of that or involved in video game defense or ESA. It's Google, Amazon, Steam, Valve, walk through the list. Epic is probably the only one - Unity wasn't - who's been involved in the video game side that's a major platform player on the VR side. So it's a little scary that we could accidentally expose ourselves to a Tipper Gore music lyrics-like crusade and suddenly we have a harsh regulatory environment because people are afraid and don't understand. So that scares me a lot. That's less of a nobody buys it and more of a we're not allowed to buy it [situation]. So it's just going to take some proactive effort to show VR has amazing potential as an education platform.
And then the best case scenario? Well, I think what I'm seeing right now is this ridiculous K-factor of you hand your Gear VR to your 80-year-old grandmother and she plays with it and goes, “Wow!” and you hand it to your 7-year-old niece and they go, “Wow!” and I just want to maintain that. Best case is people are actually using it a lot. You don't want the Wii situation where they sold a bunch of them and then Nintendo sold - I'm being pejorative - two Nintendo branded games and then nobody else made any money on the platform. They all just died trying. It wasn't that bad. They had great attach rates but we can't have that in VR where everybody downloads free demos and then all the developers who are taking risks making products don't sell any because there are a bunch of cool free demos by people putting their toes in the water and your niece plays it four times and puts it on the shelf because there's not new interesting stuff and then it collapses under its own weight of tons and tons of hardware out there that nobody's using. That would be pretty disappointing. The best case is that we're playing hours and hours every day. Throw away your consoles unless it's a PlayStation VR and we take a big chunk out of gaming [leisure time] to VR, that would be awesome.
Q: What's your reaction to the price point of the VR platforms? People were flipping out initially about Oculus at $600 and then again for Vive at $800. Do you think the prices are fair?
Mike Capps:Well, both of those companies really want to build a market so I can't imagine that there's a big plan where they're profit taking $200 out of that price. I'd be shocked. Given that we're giving away Gear VR if you're Oculus, I doubt that there's a big profit take on the first version of Rift. It's expensive hardware. As you say, the total spend - I'm having to buy a new rig. I have a two-year old high end work station with a Titan card in it and it's not going to do the trick. I have to upgrade it. It's ridiculous. But I think there are a lot of people who are waiting for a reason to upgrade their PC so I'm not as scared about that as I would have been four years ago. There hasn't been a reason because everything ran OK for a while now in the PC space. So I think it'll be alright. Yeah, there's no way to make those cheaper other than people buying a lot of them and working the price down. I mean, how many hardware products has Facebook shipped to date? I think this is the first. So saying, “How come you guys don't have a faster, more efficient pipeline for shipping hardware and try to squeeze $20 out?” That's just not what we wanted. What we wanted was this new player building hardware for the first time and doing it ideally in a cost efficient way but mostly in a quick way. I want that thing in my hands and I'd rather pay an extra $100 today than get it a year from now cheaper, and I bet everybody else feels the same way. And if they wait a year, they'll get it $100 cheaper, right?
Q: Facebook doesn't have hardware experience but HTC does of course, so maybe that'll help Vive?
Mike Capps:My guess is Valve wants a platform and Valve makes its money off of software, not hardware. So again, I would bet they're break even. They might even be losing money at first. Two hand controllers, brand new designs, two laser towers, and a really gorgeous headset - I doubt they're making any profits per sale on those things.
Q: So before we wrap, I'm just wondering, there's so much excitement around this space, don't you miss game development? Do you want to build your own VR game?
Mike Capps:Well, I've got a one-year-old and a three-year-old and I'm super lucky to get to spend a lot of time with them. Ask me again when they're both going to school. It's probably obvious that I had the opportunity to build a game or a studio and I've found a lot of happiness in just a little bit of effort that's got very high leverage, like introducing someone to a publisher that they couldn't have met otherwise or talking to someone who has money for a certain kind of VR platform and then the next day meeting someone who's trying to find money and matchmaking them together. And I'm lucky I don't have to charge for that. So I'm just trying to do a lot of matchmaking and trying to make this industry successful, paying back a whole lot of dues since the industry was very good to me.
The hardest part is I feel like the industry's taking off again in an area I love and I feel like I'm missing the start of it by not diving in fully but I know diving in fully probably involves moving to the west coast and working 80-hour weeks and I'm not ready to do that because I'm lucky enough to get to be a dad instead. Ideally VR and AR are still very hot in four or five years!