While Oculus Quest and Valve Index were backordered through the holiday season as far as February 2020, it remains extremely difficult to get a handle on the actual size of the market opportunity for a VR project.

Did Facebook and Valve just have a very small number of headsets on hand or is VR finally on a path toward true mainstream appeal?

Lack of understanding of the market opportunity in VR is not a new issue but the lack of solid information remains a huge problem for many VR developers. Without knowing what works and the scale of success, developers cannot reliably judge what content they should emulate, which marketing strategies to employ and which platforms they should target first.

Breaking Down The VR Market

The consumer VR market is roughly five years old and the number of headsets in regular use remains an elusive figure.

Sony’s PlayStation VR headset is one of the only ones offering firm numbers. In March 2019, Sony provided an update to say that 4.2 million PSVR headsets sold since its debut in late 2016 and, during holiday season of 2019, it was possible to get both a PS4 and a PSVR headset for $400 all in — the lowest price we’ve ever seen for the console leader. We believe now it is likely there are well over 5 million PSVR headsets which made it to homes around the world.

The problem with this number is that some percentage of even the most popular VR headsets remain unused most of the time. This means a non-trivial number of VR headset owners very quickly just stop buying VR games entirely. Samsung, for example, provided indications years ago that its now-unsupported Gear VR headset passed 5 million “sold” and Facebook’s CEO Mark Zuckerberg touted that more than one “million” people were using VR every month.

Unfortunately for builders of VR content, neither the PSVR figure nor the Gear VR number nor “one million” provides a sense of the actual market opportunity available in VR development. This die off in usage of Gear VRs was so high — many of them bundled free with the sale of a phone — that lots of these headsets were thrown out or never used more than once or twice.

Working Toward Frictionless VR

“Friction” is the reason why phone-based VR headsets like Cardboard and Daydream and Gear VR are now unsupported or open source. Some examples:

— You can’t interact with virtual worlds in compelling ways without fully tracked hand movements.

— Many people feel uncomfortable without the freedom to lean forward, backward or to the sides and see that movement matched in VR.

— Your phone can overheat.

— Your phone’s battery can drain quickly.

— Distracting dust can get behind the lenses.

These problems mean that one of VR’s earliest and highest selling systems is also one of the first to be retired and abandoned.

PSVR features comparatively less friction, but I don’t ever wear one of VR’s most comfortable headsets because its tracking system — a single dual-eye camera — limits people to only facing forward. You lose your hands if you turn around and block the camera. I suspect many others encounter this limitation as well and it is a major cause of disuse by some VR buyers.

Does this all mean that VR itself is dead? Absolutely not. It definitely means that phone-based VR is a dead-end and, probably, 180-degree tracking systems like PSVR are far too limiting come 2020 and beyond.

For these reasons and others, some people worked for months or even years on projects only to find markets totally disinterested in their work. For some, selling less than a dozen copies of a piece of software actually happened. Only a few developers have been able to crawl through these difficult years and find enough revenue from sales to keep themselves going.

Building The VR Market Back Up

Investment in the VR market boomed and then busted driven in part by Facebook’s 2014 acquisition of Oculus VR for billions of dollars.

Facebook’s big bet on VR was only part of the inspiration for so many people making bad bets on poorly positioned VR projects in the consumer technology’s first few years. What exactly led to the creation of hundreds of poorly made 360-degree video projects and the cameras which captured them? A significant roadblock to VR developers was Facebook’s early promotion of limited VR systems like the Oculus Rift with Xbox gamepad and Gear VR — and even the $120 bargain price for the Oculus Go in 2019.

“We had to launch Rift as quickly as we could to get dev kits out there, you know, and to get Rift into the marketplace to learn from the marketplace. We launched Touch a little bit later, unfortunately, I think we should have launched it with launch,” Facebook’s Jason Rubin told us at E3 in 2019. “But we were racing to get VR to be real so that developers…could start prototyping.”

These limited systems combined with the choice to not release units sold for the Rift, Rift S, Index, Vive, Windows MR headsets, and Quest, still means developers building in VR generally don’t know what they should focus on or what opportunity is available to them. Certain developers may be privy to this information having earned headset maker’s trust, but it’s still not widely-available information between studios.

In early 2016, Valve partnered with HTC to ship the Vive room-scale VR system and it set the benchmark for high-quality VR people actually want to use on a regular basis. 2019’s Valve Index represents a refinement of this vision while the Oculus Rift S and Oculus Quest are designed around the reality that Valve got right from the outset. Let there be no more debate about it. More people prefer the freedom to turn around when they want to and use their fully tracked hands in software they want to pay for and experience regularly with a VR headset.

Honing Around Success

Make no mistake: VR development is extraordinarily difficult and most people fail. Competition is fierce and standing out on digital storefronts is not easy.

“No platform holder actually has your back,” warns Hot Dogs, Horseshoes and Hand Grenades developer Anton Hand. “At best you are convenient to what they want, and can occasionally provide useful input to them. At worst they will just lie to your face, fuck you out of a bunch of money, and/or ghost you. You don’t matter.”

While it might look like bragging to see Superhot VR — one of VR’s earliest and most successful games — saying they grossed $2 million in the week surrounding Christmas 2019, it is also a clear indication that a well-made product with broad appeal and quickly accessible gameplay can achieve significant sales in VR in a short time. In September 2018, Schell Games said its early VR title I Expect You To Die cleared $3 million in revenue over its lifetime. Boneworks developer Stress Level Zero said more than 100,000 people played the $30 game in the first week. Seeing VR games clear millions in revenue while Beat Saber made Steam’s overall top sellers list indicates that, at least, some VR projects are able to find real success.

But what about smaller projects?

Developer Nathan Rowe is the driving force behind SculptrVR — a multiplayer sculpting app that’s something like a creative playground akin to Minecraft. Rowe says the product is built by himself working full-time and a contractor working about 1/4 time. He launched SculptrVR on practically every major VR headset — including ones with lots of friction — and competed against Medium, a high quality product developed at Facebook before the team transferred to Adobe. He also was able to win Facebook’s approval for release on Oculus Quest in 2019.

“Depending on how big my PS4 holiday sales were, total sales could be slightly higher than expenses, or slightly less. But I also had some contract income, so my company is definitely profitable this year for the first time ever,” Rowe explained in an email. “This year’s revenue by platform (approximate and rounded to nearest 5%): Steam: 10%, Rift: 5%, Go: 5%, PSVR: 25%, Quest: 55%.”

He says 3DoF VR (like Oculus Go) is something he won’t support in future titles. His next title will target PC, Quest and PSVR in that order. PC appeals “for ease of development, and a great early-access market,” while Quest, he says, offers a great market as well with full room-scale tracking, and “PSVR for its strong and passionate userbase.”

“The Go provides a great experience for certain sorts of activities, but not for the games I want to make going forward,” he wrote. “Every single VR game that has had great success creates an intense experience that gets the user to move around their hands and body. I think someday there will be room for more contemplative VR game successes, but probably not until VR headsets are so comfortable that we don’t mind sitting in them for hours.”

Hot Dogs, Horseshoes and Hand Grenades (H3VR) launched from RUST LTD. for the HTC Vive via Steam in 2016 and it is developed by a core team of four developers and assorted contractors and collaborators. In 2018, Hand and his colleagues at RUST LTD. sold via Steam their 100,000th copy of a $20 VR game that’s never been discounted. Sales accelerated since then, according to Hand, and the game’s been updated dozens of times with significant additions. He also refuses to allow Facebook software running on his computers, asking “Why on Earth would anyone trust Facebook?”

RUST LTD. is one of a handful of studios — perhaps one of the only — to find success for its project and build out a runway while not making any deals with Facebook (or Sony) nor distributing a VR project via their channels. You can still play H3VR on an Oculus Quest (via Oculus Link) or Oculus Rift, of course, but the game is only distributed via Valve’s Steam.

“Not enough of the discussion of these challenges is grounded in the reality of how hard it is to succeed in Indie Gaming (and media in general) PERIOD,” Hand wrote. “The only battle is for people’s eyeballs and product allegiance, not their dollars. A huge consolidation is occurring right now in gaming in general, with Sony & Microsoft buying up studios. We should expect Facebook to do more of that.”

Hardware Recommendations For 2020 And Beyond

Rowe is susceptible to simulator sickness, as I am, and he echoes my sentiment when it comes to recommending VR headsets to people in 2020.

“VR sickness is something that hits me hard. It’s unclear what causes it for me in each headset, but there’s only one headset I can use for extended periods of time: The Valve Index,” he wrote. “I love the ease of the Oculus Quest, but I can’t personally recommend it to people since it makes me sick in ~30 minutes. If you can afford it, get the Index. If you can’t, see if you can borrow a headset for a week to be sure it doesn’t make you sick before buying.”

For those unfamiliar, simulator sickness occurs for a variety of reasons and can be invoked by something as simple as not sleeping well or not eating a full meal before spending time in VR. It is yet another form of friction affecting regular usage of VR and early enthusiasts and developers spent years arguing on forums like Twitter and Reddit about how best to address the situation.

One way of addressing simulator sickness is through hardware design. As noted in my review early in 2019, Valve Index features a series of nobs, sliders and straps that provide some of the most finely tuneable optics I’ve ever seen.

Dialling the optics in just right with Index allows me to have a headache-free trip in VR that lasts much longer than I’ve seen in other systems — though Valve’s headset commands a costly premium of around $1,000. Some other headsets, like the $400 Rift S, cut cost by tossing some of this fine-tuned fitting out the window. Instead, a headset like Rift S seems to target the average person Facebook expects to be wearing the headset and designs the optics to fit those people just right.

What happens if your face isn’t shaped like the average person then? That’s why Rowe’s recommendation above is so valuable. There is no replacement for testing VR headsets before you buy them.

“Do your own research and don’t just defer to people’s suggestions,” wrote Hand. “There is no clear overall best system/HMD to get. They’re all better for different types of content, play patterns, budget, amount of space, etc.”

Current VR Buyers Are Still Mainly Gamers And Many Have Steel Stomachs

When it comes to software, popular products like Job Simulator and Vacation Simulator — even Beat Saber — are built in such a way that they don’t simulate movement for players at all or use instantaneous teleportation to decrease the mismatch between what somebody feels and what they see with their eyes.

Any mismatch runs the risk of making some percentage of VR headset owners feel uncomfortable, and some types of mismatch invoke discomfort more quickly than others.

Even so, Boneworks found a pathway to become one of the most popular VR games of 2019 by employing “smooth locomotion” with a default of snap turning. This means you can push a stick on the controller in your left hand to move in some directions while the stick on the controller in your right hand instantly turns “or snaps” the body to new positions at regular increments.

In some games, this method of simulating movement is sometimes combined with other systems, like vignetting the view into the world by artificially decreasing how much you see. My favorite game of 2019, Pistol Whip, splits the difference between Beat Saber’s no movement and Boneworks’ smooth locomotion. It drags the player through its levels at a constant rate of speed only in a straight line. It sends bullets directly at the player’s head to demand heart-pumping constant physical movement. In Pistol Whip, then, very few people feel discomfort while simultaneously experiencing intense and constant action.

Some developers put options in menus to let players tweak a game to their liking. Rec Room, for instance, introduced a new gameplay mode in 2019 called “Stunt Runner” that sees players running, bouncing and climbing across an obstacle course. The Seattle-based developers also introduced an extreme comfort mode we’ve seen in a few other VR games that essentially gives you the sense of being in a world within a world. The main virtual world anchors you in place while the inset world still flings your senses all over the place.

Check it out here:

Boneworks, developed by Los Angeles-based Stress Level Zero, found a significant audience exclusively in VR responding positively to the work of its small development team while not employing all these options. We rated it 4/5 stars, it carries very positive reviews on Steam and yet it employs intense climbing mechanics that sees you grasp simulated walls and ladders and “pull” your body to new places — mechanics that, when they go wonky, can make some VR enthusiasts so uncomfortable they need to rip off the headset and then crash into their bed for 45 minutes with their eyes closed.

Boneworks also simulates the physics of everything in your environment — a rare joy in VR right now as it turns the environment into a playground. You can grab a trash can lid to shield yourself from turrets or grab a threatening creature out of mid-air and then bash it against a virtual wall. When you need to go through a door you can “push” it open with your hand, or any object in your hand. Stress Level Zero helped ensure success for its title partially by teasing to a significant YouTube audience for much of 2019 the many fun things you could do in Boneworks environments. This level of simulation is somewhat reliant on powerful PC processors to calculate the physics of everything and we expect similar levels of simulation from Valve’s highly anticipated upcoming game Half-Life: Alyx in 2020.

The takeaway is that there’s a vast audience of early headset buyers who don’t necessarily need lots of comfort or movement options. Stress Level Zero picked a set of defaults that fit perfectly with people who have steel stomachs (or will just fight through discomfort because they want the experience badly enough) and want exactly what Boneworks gave them. Incorporating too many comfort options, too, can split the multiplayer audience in some VR games and tear apart a community. It is a running joke, for instance, in Rec Room that players using teleport to play a game of paintball are cheaters. Plenty of players have been kicked out of online games for using this built-in feature to play.

Of course, there’s also a large audience of early headset buyers who get uncomfortable easily in some VR games. True, this issue presents tough questions for VR developers and it remains an ongoing challenge. Do you offer lots of movement options to players? How do you balance multiplayer without fragmenting the player base with multiple movement styles available?

But I argue we are past the phase of “poisoning the well” when developers make shrewd choices about which comfort and movement options to support. Instead, we’re informing buyers by setting expectations and educating them. Boneworks warned players at every step how intense it would be and our reviews here at UploadVR.com include sections to inform players of comfort options before they dive in.

VR development isn’t easy and the market certainly is still small compared to the number of people with TVs or gaming consoles. But that doesn’t mean success can’t be found or that there aren’t strategies small studios can employ to increase their chances of finding an audience for their work. Pistol Whip, Asgard’s Wrath, Boneworks, No Man’s Sky VR, Beat Saber, Vacation Simulator, A Fisherman’s Tale, Wolves In The Walls, Blood & Truth, Gorn, Hot Dogs, Horseshoes & Hand Grenades, Ghost Giant, Titans Of Space and many more represent just a fraction of the fascinating, mind-bending and genre-defining work being done in VR. It has been a true joy for us to spend time with these projects and so many more, and to share them with our own growing audience.

We have a lot we’d like to accomplish in 2020 helping developers shine spotlights on interesting projects as well as helping the people buying these headsets find exactly what they want to do in VR.

As always, email tips@uploadvr.com with anything you think we should know about.