In a panel at Casual Connect London, Alex Schwartz, Callum Underwood, and Steve Tagger all weighed in on the evolving VR business.

“It appears that Silicon Valley and VCs worldwide feel a bit cool on VR as a market today but that changes extremely quickly and on a week-by-week basis,” Alex Schwartz, Owlchemy Labs co-founder, acknowledged on a VR panel at Casual Connect London last week.

While some investors may be disappointed in the VR market since 2016 when numerous analysts exaggerated where VR would be in a few years, Schwartz along with Callum Underwood (director of special projects at Superhot) and Steve Tagger (head of business development at nDreams) expressed great enthusiasm for the growth they have seen in a short time.

“People who are long-term committed like we are understand the curve and see where it’s going. It’s a matter of speaking to and convincing the right partner at the right time,” Schwartz added.

Underwood believes there’s a “healthy amount” of investment in the VR space currently, but not much of it is directed at content creators specifically, because it’s hard for investors to see a big ROI at this stage.

As Schwartz reminded everyone, he and co-founder Cy Wise saw one of the few successful exits in VR’s early history when the duo sold Owlchemy to Google in 2017. It is possible to enjoy major successes, but it won’t come without a lot of determination and self-promotion.

“I genuinely feel a lot of Superhot VR success and Owlchemy’s success is a match of good, solid game development chops with strong BD support,” said Underwood. “If you look at any of those top games [in VR], all of those are very close with Valve, or Oculus or Samsung or whoever. I don’t think that gets talked about enough.”

Underwood stressed that platform partnerships are “super important” and that Superhot VR “would not have existed” without the funding Oculus provided. And while his preference is for multiplatform in general, if an exclusive deal means a better chance at success for the studio, he’s not going to shy away from that. He admitted that some fans may get angry, but that their reactions abate quickly.

Schwartz agreed, “In a vacuum you can make great things but no one will know about it unless you’re bringing it up, and showing it and putting it in a spotlight to the right people and the right platforms.”

From left to right: Tagger, Underwood, Schwartz (Image: Casual Connect)

One of the biggest and probably most impactful things to happen to the VR landscape in recent weeks has been the launch of the Oculus Quest, a standalone unit with full 6DOF tracking that provides players with the freedom to start up a VR session in any space they have available. At a price of $399, and being completely tetherless without any need for an expensive PC or even a console, many in the development community feel it could be a tipping point for VR adoption.

Tagger commented, “The market is growing and we’re at the point where the market is starting to show a lot of positive signs. The Quest has opened up the conversation… and we’re breaking out of that VR isolation chamber we were in before.”

Superhot noted several days ago that its VR title has enjoyed a 300% uptick in sales on Quest compared to when the game first launched on Rift. Underwood was ecstatic about the Quest during the panel.

“Quest is doing great. Honestly, Quest is our best VR launch ever, which is crazy compared to some of the VR launches we had before,” he said. “And I hope a lot of devs are encouraged by that to continue making VR [games] or to start in VR. I saw Shams [Jorjani] from Paradox who I tried for four years at Oculus to try to get to do something with Cities: Skylines or something and he’s finally like, ‘Oh now I’ll do it, it looks great!’ Mike Bithell wants to make a new VR game [too]. This is happening over and over.

“Gamers who are also developers who are also consumers are looking at the Quest as like, ‘Finally it’s something I would want to play, so maybe I could make a game for it.’ And it’s backed up by sales, which is fantastic for the market.”

Tagger added, “It’s a lot easier to show people as well,” alluding to the portable nature of the device. We’ve already heard from a number of developers who’ve had impromptu VR sessions or demos regardless of what venue they’re in because they can just carry the Quest with them.

As a studio, Superhot will always support high-end PC VR, but Underwood stressed that completely tetherless is the future. Quest just feels like “first major stepping stone,” he said.

The panel was dubbed “Surviving the VR Winter,” but Tagger believes that the Quest actually represents the end of that so-called winter. He’s not expecting a rocket-like trajectory, however.

“There is a lot more talk about VR at the moment and some positivity in the air but we’re not getting carried away... Everyone who is in it is more realistic about what’s ahead and we’re creeping forward,” he said.

One of the great things about the Quest and the variety of VR devices out there in general is the cumulative long tail it offers game developers. Schwartz alluded to certain games (Skyrim, World of Goo, etc.) that can be released over and over again on different platforms and gamers will keep buying them. This is definitely something that Underwood has seen as well.

“I’ve never seen tails like this outside of VR. I think we made more last year than we did the year before on one game,” Underwood said, adding that the Superhot team is now working on rolling all the changes they made on Quest back into PSVR and PC versions.

He’s hoping that Quest can help level the playing field for developers somewhat as well: “What I hope happens with the launch of Quest over the next 2-5 years, right now you have maybe 10 games earning this much and then after that there’s this super sharp drop-off. I think those top games, whatever they may be, those will continue to rise in what they get, but my hope is that cliff will start to even out a little bit a becomes more of a bell curve.”

That drop-off in revenues is partially due to discoverability, but it’s also just a market reality that some studios don’t have proper funding or team sizes, and that can have a drastic impact. “The finished quality of the games sometimes leaves something to be desired,” Underwood stated.

Apart from the Quest, another good opportunity for developers in VR could be the arcade scene. The panel agreed that VR arcade is definitely a supplemental revenue stream, however.

“In terms of straight revenues, it’s still dwarfed by consumer purchases of Superhot VR on various headsets,” Underwood explained. “But arcade is exciting for two reasons: One is the potential for revenue from people who can’t afford the headsets, but also it’s very, very good marketing if you believe in your game as a commercial product.”

It got to the point where Superhot was “inundated” with arcade request over email. “It’s fine to ignore an email that’s for $20, but if you’re ignoring tens or hundreds or thousands of those, it starts to add up,” Underwood said, noting that Superhot evetnually hired someone to run the arcade side of the business.

Tagger agreed that arcade revenues are important but still limited. While nDreams successfully brought Shooty Fruity to VR arcades, the studio is very much focused on the in-home consumer market for the bulk of its business. “Chances are that consumers going to arcades aren’t the same ones playing at home. Maybe in a year’s time they will be playing at home, so there’s a long play as well as short-term growth in the arcade sector itself,” he said.

For developers entering the VR space, the key is to remain small and nimble. As Schwartz said, it’s always good to “grow at the size of the industry rather than outpacing it.” With that in mind, most of the team sizes mentioned on stage were around a baker’s dozen, if that. Shooty Fruity had 15 people working on it, but Underwood stressed that Superhot VR has always had under 10 people working on it. The main game was made by a core group of six people, he said, and he’s heard similar numbers for breakout hits like Beat Saber.

As the VR market continues to mature, and especially with the Quest bringing in new audiences, there are growing expectations from players. Developers beware: the old days of demo-like VR titles won’t cut the mustard.

“If you look back at the launch of Rift people just wanted to see cool stuff in VR… but it’s now become [a market where] people want legitimate full-blown game experiences with all of the things that they’re used to. [We’re definitely] seeing a new market with normal gamers as opposed to just VR gamers and expectations are much higher,” said Underwood.

Casual Connect is now GameDaily Connect -- stay tuned for more information on GameDaily Connect in Disneyland, August 27-29.

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