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Making VR and AR a low-risk investment

How Climax Studios is using unproven tech with a small installed base to build its business beyond work-for-hire

As virtual reality and augmented reality make their first steps into the consumer market, it's understandable that some people--and companies--would develop a fear of missing out on the new technology. Climax Studios might be one such case, but perhaps it's with good reason.

Speaking with GamesIndustry.biz this week, Climax Studios CEO Simon Gardner recounted the studio's first flirtations with mobile game development. Before the mobile market blew up, Climax was already experimenting with it as a technological curiosity, getting its console titles like Moto GP and Sudeki running on mobile hardware. Perhaps unfortunately, it never pursued the mobile market as a business.

"We looked at the numbers at the time and thought, 'No this isn't something we're going to get involved in,'" Gardner said. "When you've got big console games to make, they seem a bit of a diversion. I guess what I'm saying is this time around, we were determined not to miss out on the move into VR."

"[T]here's plenty of investment money out there at the moment where people are willing to put money into products and ideas in order to establish hardware platforms, and they're willing to let us retain the IP on that, so it's very low risk."

After decades of creating work-for-hire projects, Climax sees VR and AR as opportunities to establish and self-publish its own intellectual property, building value that will stay with the studio going forward. While the company will continue work-for-hire projects here and there, its VR and AR efforts are clearly not a half measure. Climax has already released a pair of Gear VR games in Bandit Six and Bandit Six Salvo, and just announced a third in Gunsight. By Christmas, Gardner hopes to have released two more VR titles and an AR title, with three more games following early next year. They won't all be on mobile VR platforms like Gear, either. Gardner expects the company's first Rift and Vive title to be revealed in the next couple months.

"Because the budgets and the scope of the games at the beginning of a platform are much smaller, you can enter that market with something competitive with a smaller investment," Gardner said. "So it's in our ability to either raise funding for those things or fund them ourselves in a way we couldn't with AAA console games or [the AAA] mobile market. With VR and AR, it was a chance to enter a new market almost at the bottom step and hopefully grow with that market over time."

That's not to say these early investments in VR and AR need to lose money. Gardner said last year's release Bandit Six has already turned a profit, exceeding what he admits were "quite modest" expectations and continuing to sell today. Despite the relatively small installed base VR platforms sport today, Gardner says Climax's VR efforts are doing all right from a business perspective.

"The long and the short of it is there's plenty of investment money out there at the moment where people are willing to put money into products and ideas in order to establish hardware platforms, and they're willing to let us retain the IP on that, so it's very low risk," Gardner said.

Even so, Gardner isn't absolutely certain that this wave of VR will prove to be a sustainable market for the industry instead of just another fad that will die when novelty wears off.

"At the moment, it's fairly simple interactions. And the way the interfaces change is probably going to be one of the bigger things that make the earlier games redundant."

"It's too early to really say about that, but I do have faith that there will be new platforms, new technology that will come along and make the experience even better," Gardner said. "There will be devices that come out that won't use tethering, and ease-of-use and less friction in all those devices. We're still in the early stage of VR, and I'm not really expecting it to truly develop for another 18 months to two years. We're still finding our feet at the moment, but I do believe there's an enthusiasm for it, and it is in a way a stepping stone into AR and augmented reality, which I do believe is going to touch everyone's lives. But all of these things won't just be gaming platforms; they'll be much, much wider than that. You'll use VR and AR for much more things in your life than just gaming."

As much as Climax's efforts in VR and AR are an investment in the future--financially as well as creatively--the rewards it reaps could be capped in some ways. Any game that becomes a smash hit on today's technologies with their rudimentary interfaces will be challenged to stay relevant when more refined eye-tracking, voice control, and gesture recognition technologies become standard.

"I think there is a danger of that, and that's more going to come about by the new ways manufacturers or whoever come up with to interact with the games," Gardner said. "At the moment, it's fairly simple interactions. And the way the interfaces change is probably going to be one of the bigger things that make the earlier games redundant. Because new ideas in the way you interact with the game are going to drive innovation, and that will come up with new gameplay experiences."

Gardner said even though the business model is working for Climax at the moment, the studio is still looking at this as an investment and skill-learning play to help it keep abreast of what he expects to be rapid changes to the market in the coming years.

"We're definitely in that early phase of the business. And there will be winners and losers in that, and consolidation," Gardner said. "That's inevitable."

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Brendan Sinclair avatar

Brendan Sinclair

Managing Editor

Brendan joined GamesIndustry International in 2012. Based in Toronto, Ontario, he was previously senior news editor at CBS-owned GameSpot in the US.

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