The first year of VR isn’t even over yet, and Valve is already heavily invested in the second generation. The company recently discussed its short-term plans for the SteamVR platform.

Last week, Valve held a series of meetings to discuss Valve’s future, including software, platform, and VR developments. We we're present this time around, but the Valve News Network recorded the discussion and posted a mostly uncut copy to YouTube.

Gabe Newell took the lead for most of the 35-minute conversation. The founder of Valve had much to say about the current state and future of virtual reality. Newell is excited for the future of VR, but he holds a somewhat pragmatic opinion of the technology and its potential. He is attuned to the possibility that it could still flop.

“We’re sort of optimistic. We think VR is going great. It's going in a way that’s consistent with our expectations,” said Newell. “We’re also pretty comfortable with the idea that it will turn out to be a complete failure. Simply because if you’re not trying to do things that might fail, you’re not actually, probably, trying to do anything interesting at all.”

Valve’s optimism for virtual reality is pushing the company to do more with the medium. So far, Valve’s contributions for virtual reality have focused on building out the platform so other developers could be successful. Now that Valve has established the SteamVR platform, the company is going back to its roots and producing software.

Newell said that Valve is happy with the current rate of VR sales, and that customer acceptance falls in line with the company’s expectations, but he also acknowledged that there is little reason for the average consumer to jump at the chance to get a VR system. The content isn’t there right now to drive widespread consumer demand for VR hardware, but Valve is taking steps to change that.

Newell announced that Valve is creating three games for the SteamVR platform, and he emphasized that the forthcoming games aren’t demos like The Lab. “When I say, we’re building three games; we’re building three full games. Not experiences,” said Newell.

“At this point, people at Valve don’t think it’s correct to invest a lot of their time in things that are only going to be experiments or super small scale,” added Greg Coomer, a 20-year veteran product designer at Valve. “They want to be investing their time in something that’s going to be meaningful.”

Newell isn’t fully confident that all three ideas will work, but he’s hopeful. When asked if he believes that Valve’s new titles will drive customer demand for hardware, he replied “We hope so. If they don’t, hopefully, we learn interesting stuff from it, but we’re definitely trying to make stuff that has mass appeal.”

Regardless of the economic rewards of producing three games, Valve is willing to take risks for the greater good of the VR industry. Valve is in the enviable position of being able to take the brunt of a complete flop in the name of advancing virtual reality. If what Valve builds attracts customers, that’s great for the industry. If what Valve builds turns out to be a complete failure, the wider development community would still learn from Valve’s mistakes.

“We think we’ve learned enough to make bigger bets," said Newell. "For us, everything is an experiment. We think we know enough to make three big games, and we’re going to find out if that’s the case. We’re pretty sure that all the other developers will learn positive or negative things from us, and we feel like that’s sort of where we have to be right now.“

The entire SteamVR team agreed that the lack of software is a much bigger deterrent from VR than the price of entry. Newell argued that an 80% price reduction for the Vive would account for a minimal increase in sales because there’s no software out there that’s good enough that “justifies being in VR for 20 hours per week.” But that’s not to say that hardware innovation is on the decline. On the contrary, Valve is actively working to improve the SteamVR hardware technology.

Newell spoke briefly about the “knuckles” controllers that Valve revealed at the Steam Dev Days conference in October. Newell noted that Valve is actively developing the new controller hardware while simultaneously developing games around the controllers, and the company is working with partner developers for feedback along the way.

“This is something that [Nintendo's Shigeru] Miyamoto has always had,” said Newell. “He’s had the ability to think about what the input device is, and the design of the system should be like while he’s trying to design games. And our sense is that that is going to allow us to built much better entertainment experiences for people.”

The company is also developing a new version of the Lighthouse Base Stations and plans to make them available to third-party Lighthouse licensees later this year. HTC’s Lighthouse Base Stations offer up to 120-degree FOV, and each unit features two motors that spin the internal IR emitters. The new version of the Lighthouse Base Stations feature a wider FOV and a single spinning motor. The net result is a smaller, lighter, cheaper Base Station design that demands less power. Less moving parts could translate to better reliability, too.

Newell also noted that the upcoming Lighthouse Base Stations could open the doors for “house-scale” tracking. The current iteration of Lighthouse technology allows for two Base Stations at a time, but Valve is developing a way to transition from room to room seamlessly with additional Base Stations.

Of course, moving from room to room would require a wireless headset. Newell considers wireless a solved problem. There are several upgrade kits coming to market this year, including TPCast’s line-of-sight option and Sixa’s Wi-Fi solution. Newell expects to see wireless HMDs come to market in 2018 or 2019, but don’t be surprised if a company other than HTC is the first to do so. The company founder said that over 500 companies signed up for Lighthouse licensing, and several of them are building HMDs.

Some of those companies are also making input devices, which could end up being superior to Valve’s designs.

“We love our controllers,” said Newell. “But the odds are pretty good that one of the other 500 people is going to come up with a controller design were we all smack our heads and say ‘Why didn’t I think of that. Thank God we’re all participating.’”

Newell expects to see fast innovation in the VR industry. He speculated that soon, VR HMDs would offer higher resolutions than any other display option available. He argued that displays for VR HMDs would drive innovation from display manufacturers because HMDs would benefit from faster panels with higher pixel density more than a desktop display or smartphone could.

“Just a couple years ago, it was like pulling teeth to get cell phone panel manufacturers to pay attention and to try and get panels that would fit,” added Joe Ludwig, a Valve programmer. “And now, lots of companies are coming forward with different things they want to do with panels. They all have different tradeoffs, and they are all better than the first-generation panels.”

Valve’s VR team said a lot about the future of Steam VR, yet the company shied away from discussing release dates for anything. Three teams are working on full-length VR games, which Valve previously said we’d hear about this year. That doesn’t mean the games will launch this year.

Valve was a little more specific about the Lighthouse Base Station upgrade (but just a little). Valve said Lighthouse licensees would have access to the new base station design, but who’s to say we’ll see any of those products this year. We don’t even know which companies are among the 500 current licensees.

Suffice to say, the future of the Steam VR platform looks promising. We just have to be patient for now. New stuff is just around the corner.