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"Gamers are bored... They're ready to spend on something new"

Jesse Schell has waited 25 years for consumer VR to arrive, and he has a few theories about how the market will take shape

After years of relentless campaigning, even VR's true believers could be forgiven a little fatigue. Maintaining that level of enthusiasm on little more than utopian rhetoric and five-minute demos is no small task, and now that two of the three main contenders are available to consumers - in theory, anyway - the line between idealism and pragmatism will become inescapably clear.

Few in the industry are more eager to trace the arc of that line than Jesse Schell. Until John Carmack showed up at E3 with the duct-taped prototype that would become the Oculus Rift, most people's knowledge of VR will have been through one of the many half-hearted attempts that now reside in the industry's murky past. Schell, however, has been dedicated to virtual reality's evolution and implications for nearly 25 years, starting with a master's thesis on networked VR in 1992, via the creation of Aladdin's Magic Carpet Ride for Disney in 1995, to the VR-oriented teaching post he has held at Carnegie Mellon since 2002.

"We haven't had anything really new and exciting happen in gaming in, like, five years"

"We thought it was gonna happen way faster than it actually happened," he says. "I fully believed that in-home VR systems would be a normal thing by round about mid-2005, but even as we worked with the technology more and more it was still expensive, and it wasn't quite ready. It took longer than we thought."

To say that Jesse Schell has been waiting a long time for VR to arrive is to diminish the truth. When I mention my first meeting with Palmer Luckey, at a poorly attended London conference months before the Rift even hit KickStarter, Schell laughs warmly. "Was he delivering newspapers? The guy sells a company for $2 billion and has to wait six months to have a beer to celebrate. That's messed up."

Schell compares VR in 2016 to television in 1948. At that point, the people who were aware of TV would have assumed it was invented a few years before; according to Schell, it had existed in various forms since 1890. "You can imagine somebody in 1942 being asked to invest in television," Schell says, before wrinkling his nose in mock-disgust. "'Ugh, are you kidding? We tried that. That doesn't work.' But when the technology gets to a certain point everything clicks. That's what finally happened.

"We've turned a corner with VR technology. It now engages people psychologically in a way that it didn't before."

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That much is certainly true, but we're now at the point where we should regard the parade of impressive demos down the years as distinct and separate from VR as a consumer product. Blowing a person's mind for ten minutes at a developer conference or game expo is entirely different from asking that same person to bring a head-mounted device weighing half-a-kilo into their home, and to find a place in their daily lives for the isolating experiences that are its speciality. And to then weigh both of those concerns against a total outlay that - including PC hardware, in the case of the Rift and the Vive - is likely to top $1,500 for several years to come.

"Apple has trained people not to spend money on mobile. It's a great deal from Apple's perspective"

Schell admits that the difference between knockout free demos and actually selling that same experience presents, "a complex question," but he sees two factors that will allow VR to gather momentum. "One is: gamers are bored," he says. "We haven't had anything really new and exciting happen in gaming in, like, five years. Gamers are ready for something new. They're hungry for it and they're ready to spend on something new.

"Second, this feeling of presence is a thing that most people haven't experienced. It's going to be the thing that everybody is talking about. We're going to see a slow expansion out into the world... but people are going to be so viral about it, because when people have a good VR experience it's like they get religion. They can't stop talking about it."

Schell's second point implies a problem for the Samsung Gear VR, a budget friendly option that most would agree doesn't deliver the kind of heady experience that sends the user into a slack-jawed reverie. It is still VR, yes, but it is diet, caffeine-free VR, arguably lacking the viral appeal to convince users that the technology demands a greater personal investment. And that could be crucial in its immediate future as a commercially viable platform for developers, because, in Schell's view, spending habits on Gear VR will mirror spending habits on mobile.

"Apple has trained people not to spend money on mobile," he says. "It's a great deal from Apple's perspective: we'll sell you an $800 phone and give you lots of software for free. People like that, so they do it. But when they use that same phone for VR they expect that same deal. I don't think you're gonna be able to beat that [association]. I believe the serious revenue is going to be in the high-end stuff, because people are willing to spend.

"If I had to guess, over the next three to four years, I think VR revenue is going to be people paying for premium experiences, as opposed to your current free-to-play, 99-cent experiences. I could end up wrong about that, but that's what I think."

"When people have a good VR experience it's like they get religion. They can't stop talking about it"

This raises the further question of whether there will be a viable casual audience for VR at any point in that same period. Samsung Gear VR would certainly be the obvious platform for the casual market, but the business model those players prefer normally requires scale to work effectively. Indeed, Schell highlights in-game payments as a problem for VR in terms of user experience, too. "Everybody's going to try [microtransactions] because everybody's going to try everything," he says. "The problem with it is that the payment moment is a presence breaker. That's not great."

Schell refers to his former employer, Disney, which charged its customers on a per-ride basis when it first opened its theme park. The idea of including every attraction under a single ticket was first introduced by a competitor, Magic Mountain, and the improvement to the customer experience was so immediate that Disney soon followed. When the fantasy is so carefully crafted, and the illusion so delicately balanced, why spoil it with economics? Schell concedes that there will be a place for microtransactions, but not necessarily at the top table. "Premium payments are going to dominate in VR," he says.

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If the majority of revenue over the next few years will be earned from premium experiences on high-end headsets (Rift, Vive, PlayStation VR), a great deal rests on the size of the installed base those platforms can build. Developers have been committed to VR since Oculus started taking Kickstarter donations for the DK1 in 2012, and that community has grown exponentially in the time since. A great many studios have been working on nothing but VR products for two or three years. They now have a chance to recoup that investment, but it's very hard to put a price on the experiences they are selling. VR's fundamental connection to PC (Rift, Vive) and mobile (Gear VR) also fundamentally connects it to the spending habits of users on those platforms. Earlier this month, GI contributor Rob Fahey addressed the consumer response to the perceived high price of VR software, observing that the market, "isn't going to be immune to the price pressure which has, in recent years, seen the price of games on Steam decline rapidly, and made it nigh-on impossible to make money from anything other than F2P titles on mobile."

"I believe the serious revenue is going to be in the high-end stuff, because people are willing to spend"

There is anecdotal evidence of this already, with developers attempting to monetise short experiences created in VR's demo era attracting criticism from users, and Owlchemy Labs choosing to cut the price of the widely promoted Vive exclusive Job Simulator by $10 after just a fortnight on sale. This may have been due to a slower than expected start: SteamSpy's data indicates that Job Simulator has fewer than 8,000 owners; Audioshield, one of the most popular Vive games, has around 25,000 owners. Whether those figures are good, bad or indifferent depends on a variety of factors, but they are certainly small enough to suggest that targeting multiple platforms will be the smartest play.

For Schell, however, quality of experience is paramount to creating the viral enthusiasm that will drive adoption of the technology. The best way to accomplish that, he says, is to be honest about how different the market's key players have become. "Even the difference between the Vive controllers and the Oculus controllers. There's enough difference there you really have to stop and think. There's a lot of subtle details.

"Focus in on one platform. Optimise for that platform and make it great there, and once you've succeeded there, then take a step back and think. You're welcome to call this 'Schell's Law of Adaptation,' because it's not just true for VR, it's true for everything. Would Harry Potter have been better if they did the book and the movies at the same time? It wouldn't. Let it grow strong as one thing, and then adapt it."

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Latest comments (13)

Hugo Trepanier Game Designer, Behaviour Interactive11 months ago
Both as an active member of this industry and a consumer, I'm as curious as anyone else to see where VR will take us. However, so far I've been rather disappointed. When I took home the Gear VR for the first time, I was expecting to be blown away or at the very least surprised positively compared to my earlier experiences on early Oculus prototypes.

What I experienced was distorted or blurred graphics, poor sense of scale, very awkward controls, and a device that literally stopped working after about an hour of usage because it needed to "cool down".

I took it off, turned on my good old console and finished the evening playing a game I found much more immersive, had higher graphics quality, and very slick controls. On my Xbox 360. That was last night.

The entire Gear VR experience felt very gimmicky to me, and while not entirely unpleasant it did not convince me to jump the bandwagon just yet. Now I'm even worried that the other higher-end experiences will not be good enough to justify the expense (for me anyway).

The tech does have tremendous potential if done right, but I'm not convinced we're at the tilting point for mass consumer appeal just yet.

Edited 1 times. Last edit by Hugo Trepanier on 22nd April 2016 5:20pm

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It is great to read this from Jessie having had the pleasure to work alongside him for a period of his VR exodus, while at Walt Disney Imagineering, on the productizing of the VR experiment for Aladdin Magic Carpet (still operational at DisneyQuest today!)

Though I know Jessie will be excited to see much of what was established in the evaluation, research and development of VR from the 90s. Sadly much of the aspirations have been hijacked by large corporate ambitions. Though I feel that Jessie needs to look beyond consumer, and return to his roots at what VR in public-space entertainment can achieve in the medium tern.

Edited 1 times. Last edit by kevin williams on 22nd April 2016 5:48pm

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Ralph Tricoche Studying MA, CUNY11 months ago
You're right, gamers are bored but its not because they want to spend hundreds if not thousands of dollars in "new experiences"
They just want to be excited about gaming as a whole. Where are the new games for this generation? I have my 360 hooked back up so that I can play the likes of Lollipop Chainsaw and Never Dead and SplatterHouse.

This gen is scarce. The industry has artificially created a vacuum, so that they can push 4k, monitors/ TV's, 4k players, VR tech and VR games. Making our current gen systems nothing more than paper weights.

There was a shift in the industry and it was a negative one. I've experienced VR in many kiosks in several conventions and I've yet to be indoctrinated.
There is no way, that VR will take over in the living room, not until the VR experience is as comfortable and seamless as sitting down in your couch, firing up your console of choice and playing.
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Show all comments (13)
Connor Martin Aspiring game designer/tester 11 months ago
Gamers are tired of being told how they feel, I know how I feel. I feel like many have lost the sense of beautiful joy and poetry in weaving together a game product and it shows consistently. Many old games were terrible, however the good ones stood out not by simply not being bad but rather by using the limitations to ground the joy in the simpler things. I hated Boom Blox on the wii for many control reasons and yet the concept of knocking shit down is one that is something almost all of us enjoy. Make a good, well made game about knocking shit down and I'll be convinced.
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James Prendergast Research Chemist 11 months ago
I was going to write a very long reply here but ended up writing a blog post instead.

http://hole-in-my-head.blogspot.com.mt/2016/04/ar-is-future-vr-is-past.html

TL;DR of it is: VR is an evolutionary dead end, AR is the future because VR is exclusionary and AR is inclusive. Imagine playing Jenga or D&D with VR and imagine playing it with AR... I know which I prefer and I know which makes more sense logistically.

[edit] This was in response to Connor's Boom Bloxx comment.

Edited 1 times. Last edit by James Prendergast on 23rd April 2016 3:12pm

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Todd Weidner Founder, Big Daddy Game Studio11 months ago
VR is an evolutionary dead end
I couldnt disagree more. Your assumption that VR is some sort of lonely experience is dead wrong IMO. Is World of Warcraft a lonely isolated experience? Now imagine being immersed into that? how is that a lonely single experience? Multi player games will of course be a huge part of VR's future, I dont know why you think otherwise.

Edited 1 times. Last edit by Todd Weidner on 23rd April 2016 6:34pm

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Chris Payne Managing Director & Founder, Quantum Soup Studios11 months ago
VR is exclusionary
Why do people think this? Yes, VR, excludes your immediate reality - that is the point. But if you can meet with your D&D mates in a virtual tavern and then trot off through a series of locations, that ENTIRELY supports the spirit of the game. Jenga would work fine in VR, and you could scale it to tower-block size, which would be pretty spectacular when someone fouls up.

Now, I will grant you that AR will dovetail more neatly with day-to-day living and probably become more ubiquitous than VR. But the ubiquity of smartphones hasn't killed consoles or the PC. Different tools for different tasks.

As a LRPer I regularly go to events which exclude modern conveniences in the name of immersion for an entire weekend. Some are 24hr time-in, so you are excluding even your own identity. That's pretty niche (though growing) but there are plenty of much less niche pastimes which require more commitment and expenditure than sitting on the sofa. And yet fishing, skiing, sailing, climbing and dozens more sports and activities continue to be popular because people do pursue rewarding experiences.

We just need to provide those experiences, and - critically - easy ways for the public to experience them BEFORE buying their own VR rig.

[EDIT: Only just read Rob's article :) They were original thoughts when I had them, honest!]

Edited 1 times. Last edit by Chris Payne on 24th April 2016 1:16pm

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Matthew Hardy Studying Multimedia/Game Design, ITT Technical Institute10 months ago
Job Simulator is not exclusive to Vive.
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James Prendergast Research Chemist 10 months ago
@Todd and Chris. You're both certainly entitled to your opinion. The discussion about these things wouldn't be anywhere near as interesting without differing opinions! :D

I think my two counterpoints are thus (and in order of your comments too).

Something like World of Warcraft is a terrible idea for porting/implementing in VR. Talk about multitudes of chat windows and skill bars along with walking/running thousands of feet... to fit that experience into a VR environment you would fundamentally need to change the game - and so it would no longer be something like WoW. This is the first problem of VR - it is a new experience and developers can't just apply the previously learned lessons. We need to stop thinking about how we can apply current experiences to VR and instead how new experiences may be found (and not from within existing computer gaming experiences).

The point of board gaming, larping and experiences like D&D is the social interaction. Their mechanics are just a veneer on the whole thing. Until VR enables a group of people to see what's going on around them, see their friends faces, their expressions and interact in a natural social manner then you are losing the entire point of the draw of these experiences. Sticking a group of dissociated avatars together in a virtual world already exists in many places in computer gaming and they all work really well and also have the option of having a skype or other video/audio software running on a second screen or in parallel in order to enhance the experience further.

These currently existing experiences also allow a physical experience with the world through non-computer interactions, (e..g the now almost extinct LAN party, writing on paper and screen capture*) VR doesn't offer any of this value-added experience. i.e. VR lacks any principle of sharing - even on the most basic level.

The way most successful technology works is through enhancing humanity's endeavours (plus a large dollop of marketing and serendipity). For the same reason we don't apply all theatrical techniques to film and TV, we shouldn't apply all current gaming techniques to VR and vice versa. VR doesn't enhance current gaming (both electronic or physical). It's an adjunct - a valid one, but not the next, new evolutionary step. It's a further specialisation from the 3D tech screen monopoly and that didn't do so well after all...

It's true that theatre still exists as an entirely valid and unparalleled experience along with TV and cinema... I would never argue that they can't all exist in the same ecosystem.... but I've seen the viewer numbers for all three mediums and I wouldn't argue which two provide the most draw for the majority of the market.

*I guess you can output to a 2D view from some solutions, but doesn't that defeat the purpose?

Edited 2 times. Last edit by James Prendergast on 25th April 2016 8:33pm

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Todd Weidner Founder, Big Daddy Game Studio10 months ago
Something like World of Warcraft is a terrible idea
You missed my point. My point isnt to actually bring WOW to VR, but the point is, someone could see people all sitting by themselves in dark rooms with a monitor and think along the lines like you do " Oh those poor people, they must be so isolated and alone" when the truth is,they are playing an MMO like WOW , and they are anything but lonely and isolated. Its a great communal game and now with VR , this communal gaming is set to go to to a whole new level.

Think for a minute, why is Facebook so interested in VR, its because they KNOW VR holds the ability to allow for a whole new way of socialization and interaction for humans in the 21st century. I mean before you know it, you will be able to log in, select a location say a "beach at night with a nice fire" and meet up there with your friends and family from all over the globe, and hang out in virtual reality. VR "takes you there" you and your friends WILL BE hanging out in the digital world and you will make memories of the events taking place there, you will be there interacting.

VR is set to enhance and change how humans interact, its anything but isolating.

Edited 3 times. Last edit by Todd Weidner on 26th April 2016 3:00am

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James Prendergast Research Chemist 10 months ago
That's certainly possible, Todd. I've not seen any evidence of that coming to pass or even anything approaching evidence of that happening from the current demos and shared space implementations. Like I said, I think seeing people's faces is more important than seeing an avatar in a shared social space - just my opinion.

The thing is, I have thought a lot about VR and about AR. I can't see a social experience implementation of the first that isn't better in AR. I think Facebook has made a huge mistake by investing in VR as opposed to AR but I'm not in charge of any of these companies, so what do I know? :)

Microsoft might be a lot longer off with Hololens than the current VR pioneers are with their tech and implementations but I'd much rather be making a Holo-call in my living room with my mother/friend/whoever sitting on a chair or standing in the room with me where I can refer to real-life items and have interactions with my cup of tea and biscuits or my pen and pad, my laptop, the TV or looking out the window than having to enter into a confined VR experience. I think the "customers" of facebook would also prefer that.
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Andrzej Wroblewski Localization Generalist, Albion Localisations10 months ago
Gamers are ready to spend? Oh I can see some Gary from marketing rubbing the lamp... Well... suck it Gary!
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Gary Jesch Executive Producer & Founder, CHOPS & Assoc. Live Animation10 months ago
The things that made games work (paying for 3D artists, animators, and businesses) was that a lot of copies of games could be/would be sold to gamers who didn't mind popping for the latest and greatest Nvidia GeForce or AMD graphics cards and laptops. VR still has those similar computing requirements, which can now be met by a $400 Dell Alpha on the low end and perhaps a $3,500 GeForce card on the high end.

We're interested in creating content, and we know it's not going to be an inexpensive path, just to take what we're doing now and to bring it into the world of VR, where it has rightfully belonged for the past 15 years. Our interactive avatars are storytellers and MCs in a world still to be discovered, and there are financial, creative and technical obstacles that can be overcome, if the numbers would work out in our favor from the beginning. That means the demand and ability to buy must be present in the market. I'm still not seeing that. And I'm not giving up either.
How do you like that, Andrzej?
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