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"There's a lot of money in VR, but you need to look at different avenues"

Surviving the market's growing pains means keeping open mind, VR devs say - platform exclusives, second jobs and b2b contracts can help balance the books

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Developers entering the nascent market for virtual reality game would be wise to hedge their bets, according to a panel of experts at Berlin's Quo Vadis conference last week. There is money to be made in VR, but betting on the market for consumer games is a "risky business."

The panel was inspired by an article from Joe Radak, an independent game developer who documented his experience trying to make money with Light Repair Team #4, a launch title for HTC Vive. Ultimately, Radak lost $36,000, despite taking great care to budget as carefully as possible based on realistic performance goals. You can read the piece over on Medium, but it's worth noting the bittersweet tone of Radak's conclusion.

"From the viewpoint of a business person, VR developers are stupid, idiotic and reckless. And for VR, that's fucking beautiful," he wrote. "You 100% need to be all those if you want to succeed in VR. If people weren't being reckless, and if it wasn't for companies like Oculus or Intel shoving money at developers to soften the financial blows, VR would not last long at all. Period. End of story."

"There are some lucky ones, like Job Simulator, that actually make money, but most games in VR don't"

Sara Lisa Vogl

For Dr. Adam Streck, a developer in the final days before the launch of his own Vive game, Duel VR, Radak's article made for sobering reading. With €30,000 in funding from the Medienboard of Berlin & Brandenburg, Streck and his team had a better start than some developers working in VR. But after nine-months in which half of his time was spent working on Duel VR, and with the game's launch just a week away, he admitted that funds were "basically at zero now."

"We could definitely make more money if we were not doing VR," Streck said with a rueful laugh. "All in all, as a freelance programmer it's a very bad investment [of time]. Now we have to hope that we can get some money to continue running the project, because it's multiplayer. We were hoping we can get a foot in that market, because VR multiplayer isn't very big right now.

"Everybody in our core team sold themselves very short on the amount of money [we needed]... We're hoping it will be a project that establishes us as a VR development studio, but we don't really expect that we'll be able to get the money in return that can run a studio in the longer term."

"If you are in it for the money right now... then you are in the wrong spot right now."

From the left: Dr. Adam Streck, Sara Lisa Vogl, Martin de Ronde, Thomas Bedenk - Photo credit: Uwe Voelkner / FOX

For Sara Lisa Vogl, starting early didn't provide much of an advantage when it came to making a living from selling Lucid Trips, the HTC Vive game on which she has worked for three years. Vogl told the audience that she and her team were still updating the game despite a lack of money coming from sales, she now splits her time between development and setting up co-working and networking spaces in cities around Europe with a new initiative, VR Base - Amsterdam, Berlin and Paris so far.

It was a way of making use of the experience she gained as an early mover in VR, she said, but it was also important to establish a second source of income. "I was very early in VR, and I got a lot of connections and a network that can actually get to the funding," he said. "There's a lot of strategic partners in the field who want to drive the industry forward, which we can use to help local scenes and build them up."

For the overwhelming majority of developers, Vogl said, the first game (and often more than just the first) is best regarded as a source of experience. "The first games you do in VR are a lot about learning, a lot about iterating, a lot about exchanging with other people, and not about making money," she continued. "Establishing a name, establishing knowledge; these are the things that happen in these early games.

"One studio picking one game and putting all of your money into that? You might as well go to a casino and put everything on number 27 at the roulette table"

Martin de Ronde

"There are some lucky ones, like Job Simulator, that actually make money, but most games in VR don't."

However, for the other two panelists, the solution to the lack of money available in VR games has been to take the emphasis away from games. For Thomas Bedenk, an indie developer working on VR with Berlin-based digital media agency Exozet, the future of the market is all but assured. "It is going to be huge," he said, unequivocally. "Especially if you consider VR and AR, there's almost no application in the world where you can't bring one of them in somehow."

The same is true right now, though, and game developers may be overlooking the value of their skills to the myriad other industries already interested in VR. Consumer brands with designs on VR as a marketing tool, for example, "do have a lot of money, and it's not that different from making games." The business-to-business sector can offer a way to sharpen your skills in VR, but in an arena where the money is more consistent and the market more predictable.

"You can bring in all that knowledge of iterative workflows, how to make something user focused," Bedenk added. "Apply that to VR and you have a very good head-start against agencies that have no clue about those things."

This more expansive approach is fundamental to Force Field VR, by far the biggest company represented on the panel at Quo Vadis. Martin de Ronde, Force Field's co-founder and one of the original founders of Guerrilla Games, has built a staff of more than 80 people in Amsterdam, and yet despite those high overheads the company is already profitable.

"The turnover we create to feed those 80 mouths is all coming from the VR industry, actually," he said. "There's a lot of money in VR, but you need to look at different avenues... There's money coming from hardware manufacturers, there's money coming from brands who want to move into VR.

"Putting all of your money on the home consumer market is, I think, a bit of a risky business. Budgets either need to be small, or you want to partner with a hardware manufacturer that is setting aside millions of dollars for funding budgets in order to bring content into the market. That's also something we're doing."

Force Field's Landfall was an exclusive title for Oculus Rift

Force Field developed Landfall, an Oculus Rift exclusive with the kind of ambition and production values that, de Ronde argued, are made possible through the kind of funding available from hardware manufacturers. Of course, the whole concept of exclusive games in VR has long been divisive, with Owlchemy telling that it should be a "last resort" in an article published earlier this week. Now, it's worth noting that de Ronde wasn't aware of Owlchemy's comments, but he did place the Job Simulator dev in a rarefied group whose experience isn't necessarily in line with their peers.

"If you are in VR for the money right now... then you are in the wrong spot right now"

Dr. Adam Streck

"I think if you are putting all of your money into game consumers hands, so to speak, when it comes to VR that's a big risk at the moment," de Ronde said. "I'm sure some of you have seen the data coming out of some developers: Arizona Sunshine, Job Simulator, Raw Data; games that have hit the $1 million or more revenue mark, and I think Job Simulator recorded having made over $3 million.

"That's an amount of money where you can start thinking about those [bigger] budgets, but if there's only two or three developers reporting that turnover then you should take into account that the vast majority of developers are probably not."

The contacts that de Ronde built up throughout a long career in the games industry were important in giving Force Field its strong start, but there is clearly a lot to be said for being open to different approaches to the VR market as it exists today. Part of that could be a more pragmatic attitude about the partnerships and the caveats attached to certain sources of funding. Part of that could be a willingness to think beyond games to recognise opportunities that could support a business in the longer term.

"We started working in VR in 2014," de Ronde said. "Nobody quite knew which genres would work well in VR, so our risk management was literally, 'let's make sure we don't put all of our eggs in one basket.' Don't just work with one hardware manufacturer, work with multiple; don't just work with one genre, work with multiple genres; and don't just work in one type of industry, games, but also look at location-based entertainment in VR, theme parks, business-to-business assignments for brands, and also get our feet wet with AR.

"We're really hedging our bets, and I think that's necessary. One studio picking one game and putting all of your money into that? You might as well go to a casino and put everything on number 27 at the roulette table." is a media partner of the Quo Vadis conference.

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Matthew Handrahan avatar
Matthew Handrahan: Matthew Handrahan joined GamesIndustry in 2011, bringing long-form feature-writing experience to the team as well as a deep understanding of the video game development business. He previously spent more than five years at award-winning magazine gamesTM.
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