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"From a publishing point of view, VR is just too risky"

A BIG Business Forum panel exposed a reluctance among smaller publishers to commit resources to supporting VR

Small and medium publishers may be two or more years away from supporting dedicated VR games, shifting yet more emphasis onto platform-holders like Valve and Oculus to continue funding content development.

Speaking as part of a panel at the BIG Business Forum in Sao Paulo, Brazil, Versus Evil general manager Steve Escalante dismissed a concern from a member of the audience that the emergence of VR technology would take publisher support away from traditional games. According to Escalante, Versus Evil has no designs on the VR market in the near future.

"How many units have been sold for VR today?" Escalante asked. "The market is very small, so from my perspective as a newcomer I'm not even looking at VR today.

"The market is very small, so from my perspective as a newcomer I'm not even looking at VR today"

Versus Evil

"I know that it could be big, and there's a lot of development dollars. From a development perspective I'd invite you to chase those dollars, because there are a lot of them out there. But from a publishing point of view, VR is just too risky. We have to go after the platforms that have an audience, so we know what they look like.

"We're willing to wait for the market to mature, but it is just too small today."

The panel was intended to offer Brazilian developers advice on what the kind of publishers now scouting the country's burgeoning development scene - mostly small and mid-sized outfits like Versus Evil - are looking for in a partner. Francis Ingrand, CEO and founder of the French publisher Plug In Digital, shared Escalante's views, but went further still.

"At the moment it's a very risky, very niche market," he said. "We don't invest any money in pure VR projects. We have some projects with a VR option, but we don't care about [pure] VR now and we'll wait two years or more before we invest in those projects. It's not the right moment to do that for a small or medium sized publisher."

And that hesitancy is also found among larger publishers, too. Yesterday, GamesIndustry.biz published an interview with Square Enix CEO Yosuke Matusda, in which he described the industry as being in a "wait and see mode" in terms of when and how much to invest.

Along with Capcom, Bethesda and Warner Bros. Interactive, Square Enix was one of several big companies to roll out a VR experience at this year's E3, mostly based on popular IP like Resident Evil, Batman and Final Fantasy. However, even the briefest Google search reveals a generally tepid and occasionally negative response to those experiences, raising legitimate questions over just how serious the industry's entrenched players are in supprting VR at this early stage.

In the absence of the bigger publishers, one might expect more specialist companies to seize the opportunity. However, the position taken by Versus Evil and Plug In Digital suggests that many of those companies remain sceptical of the market's potential to grow enough within the next two years - fuelled, perhaps, by the waning enthusiasm of analysts like SuperData, which has cut more than $2 billion from the $5.1 billion in revenue it projected for VR hardware and software sales in 2016.

"We don't care about [pure] VR now and we'll wait two years or more before we invest in those projects"

Plug In Digital

Back in April, against a backdrop of VR developers cutting the prices of their games, our own Rob Fahey asked the question: "How will developers make money from VR?" Since then, a debate over the role that exclusive games should play in the early market has exposed the degree to which Oculus and Valve are funding the creation of new content, offering "no strings attached" grants to ensure that developers can supply a market the size of which remains a mystery.

Speaking to GamesIndustry.biz at E3, Oculus VR's head of content Jason Rubin acknowledged that it is, "[throwing] more money into the ecosystem than is justified by the consumer base," on the grounds that it can't expect developers to take that risk, and in the belief that doing so will help the Rift's installed base to grow more quickly. "We have put huge amounts of money into the ecosystem," he said. "More than any of our competitors."

Will the existence of games like Superhot VR and Giant Cop - both of which received large enough amounts of money for Oculus to ask for timed exclusivity - genuinely lead to more sales of the $600 Rift, and its yet to be priced Touch controllers? Is a drop in the upfront cost a more important factor in the growth of the VR audience? Right now, it's only possible to speculate on such matters, but it's clear that Versus Evil, Plug In Digital and, one can reasonably assume, other publishers like them see no immediate chance of significant improvement.

Fortunately, Oculus and Valve have deep pockets. It may be a while before the VR market can survive without them.

GamesIndustry.biz is a media partner for the BIG Business Forum. Our travel and accommodation costs were provided by the organiser.

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Latest comments (9)

But in VR if you make a good game, you have a chance to get noticed, and make your mark and likely grab footing in a market that could be huge in the coming years. No risk, no reward.

However, the position taken by Versus Evil and Plug In Digital suggests that many of those companies remain sceptical of the market's potential to grow enough within the next two years

It amazing people cant see the most obvious trends right in front of their face. You really think Facebook, Sony, Valve arent market makers? As soon as the first "gotta have" VR game hits, VR will take off and never look back.

Edited 2 times. Last edit by Todd Weidner on 30th June 2016 5:01pm

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Hugo Trepanier Senior Game Designer, Ludia5 years ago
Yeah, and as soon as the first "gotta have" Kinect game hits, Kinect will take off and never look back...

Seriously, you can't blame companies for being cautious in how they invest in an as yet unproven technology. Sure it's got big names to back it but there's no guarantee that it'll become mainstream rapidly and provide enough income to survive.

It's good to explore the tech if you can afford to have more than one dev track but for smaller companies, betting the entire farm on a single VR project seems very risky to me, no matter how huge the potential rewards.
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Yeah, and as soon as the first "gotta have" Kinect game hits, Kinect will take off and never look back... said noone ever...
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Show all comments (9)
Hugo Trepanier Senior Game Designer, Ludia5 years ago
The point was, just because a big name is behind new tech doesn't mean the public will embrace it. Sorry for the sarcasm of my initial comment, I know it's not always obvious in written form.
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I think it would be a huge mistake to just ignore VR. $10B of VC cash can't be completely wrong, can they? I get the point about the relatively small installed use base. But then so are the number of competing products. More importantly, while software sales will be low, the techniques and design elements learned developing for in VR will be important lessons for developing successful products in AR. And I'm a firm believer that AR will take over the world! You sure do not want to miss that boat when it leaves the dock. Opportunities for success tend to ride the crest of the wave, not the trough behind it.

Edited 3 times. Last edit by Tom Buscaglia on 30th June 2016 7:17pm

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Martyn Hughes Managing Director, Staggan Interactive Ltd5 years ago
I think there are some valid points above... The problem I see, sorry if I am repeating, is, for developers and publishers, especially the smaller ones, that most cannot afford to lose money on a title. We are attempting to reboot one of our games to VR / AR, but it is a lot of work and expensive and we cannot do it without funding. Even if we could there are not enough users out there in my opinion to make it a financial success, YET!

So, what do we do?

Platform exclusives are one option, and I know some people are against them, but the platform holders have a vested interest in getting titles out to prove their hardware and build uptake, even if none of those titles break even, at least initially..

Angels, a good option, but how many are going to invest in smaller studios knowing they may not see a return on the first title, the second title, or maybe more... ?

VC's, a possibility for the more established names in the community, those with a bigger or better track record, but not so much for the smaller developers, or those newer to the industry.

AR / VR has some incredible opportunities, but funding it to the point that it becomes financially viable for most is going to be a difficult task.
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Marty Howe Director, Figurehead Studios5 years ago
its too expensive :I
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The smart money is to get first party developers to crack the VR market, and take a bath when the water is warm enough
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Sandy Lobban Founder, Noise Me Up5 years ago
Whilst the risk averse can't move, it's a perfect opportunity to launch a company and own the space. The needs and wants are not of the scale to maintain big studio burn rates yet. Its going to take years to get there.
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