Today (mid-2018) the VR market is in an interesting place. We've been through the hype of 2016, we've been through the trough of disillusionment in 2017, and we're climbing our way back out the other side. Things are looking up, but launching today might be dire for your studio. If you start work today, you might be able to release a killer game in 2020 when everything is amazing. It'll be amazing in 2020, right? right??
VR has been highly unpredictable, and anyone that says they know what the future will hold can't possibly. The VR economic and business landscape shifts every quarter, and your opportunities appear to dry up from under you as new ones appear on the horizon. The key to succeeding in VR is to act, and to act fast - if your plans take you beyond a quarter and you haven't signed any contracts, your assumptions are probably going to be out of date.
Here's some points I keep in mind when I'm trying to plot our future:
- The profitable developers in the VR space so far - including the ones you're probably basing your forecast models on - have had external financial assistance. This may be straight cash infusions, marketing support, hardware support, or even the studio supporting themselves with an alternative business models entirely (e.g. selling tools business-to-business on the back end, or getting into the location-based VR business).
- Chase down external funding opportunities! Local art grants. National government grants. Brain-drain prevention programs. Incubators. Pitching to publishers. Pitching to platform holders. Pitching to VCs. What you do here largely depends on the scope of your vision and your geographic location, so it's hard to give general advice. Know your options!
- That said - publishers are still very wary of VR, due to the high risk. Platform holders seem to be tapering their investment dollars with each passing day as more developers are "working for free." VCs know that games are a big gamble to start with. It's not an easy pitching ecosystem! You definitely need an angle. Maybe you have a killer game idea, but that's usually not enough these days.
- I only know of two games that have ever turned a profit in VR without any external assistance: Space Pirate Trainer (2016), and Beat Saber (2018). Some say this is evidence of the market being tenable - some say two profitable games in three years is frightful. The tide might be shifting, but it's still very risky. Know your odds before diving in.
- There have been several titles that have turned a profit - some were launch titles on platforms in 2016 (with cash support, such as Fantastic Contraption), some had publishing support, some had marketing and equipment support. There are even successful triple-A titles (Bridge Crew). If someone has your back or you are on a fresh new platform, your odds are much higher, but the odds of a game being a hit "on its own" right now appear quite low. Correlation is not causation though - perhaps all the best games happened to be picked up by publishers so far, and no profitable games have been published without that external support yet. Statistics!
- For example, there are a few stories that may indicate a viable marketplace that is simply untapped. Take GORN - it gained a lot of attention on itch.io of all places (!), which helped lead to a partnership with a publisher (Devolver Digital) and a successful Steam launch. The game was profitable in the first month of sales, and likely would have been without any external help.
- VR titles sell well at the 19.99USD mark. 9.99USD is usually reserved for experiments and prototypes, and 29.99 is usually reserved for premium or very high production value titles. Beyond those numbers are special cases. (Side note: science says mid-tier pricing, such as 14.99, is bad. Round to the nearest ten!)
- I estimate (via secret sources) that by the end of 2018 there will be a million head-and-two-hand VR units owned by the public. Most developers of quality-tier games count on a 2-5% attachment rate right now. Assuming you launch on all platforms with a killer title, you will sell 50,000 copies if we use our most generous values.
- 50,000 * 19.99 is just about a million bucks, which sounds nice for a small team, but given you must launch on all platforms this might mean you taking a loss. Besides, if you knew how to make a killer title you could apply that knowledge to the flat-game space and make ten times more money, right? Don't forget that video games are closer to trying to make it as a musician or painter than selling apples from a cart. Hit-driven economies require scale, or massive luck, and the odds are stacked against you here.
- Don't forget to take into account the increasing content-quality bar (it's more expensive every year to stay competitive in VR) and the cost to deliver your game on multiple platforms with very different hardware requirements. Getting something to look and feel amazing in VR is more expensive than a traditional flat-game.
- On the other hand, the VR space is much less crowded than the flat-game space. The ability for you to stand out with a quality title is much easier. Does that translate to more money? ... Maybe?
- There is currently no data on safety for children in VR. Don't build stuff for that market until we sort that stuff out as an industry.
- Pornography in VR is reliably profitable. The sex industry is usually the first to leverage new tech (remember "alternate camera angle" buttons on DVD remotes?) and there is a very vibrant, yet very quiet, industry churning along there. You might want to seriously consider that space if you need money to survive, though it does require a different knowledge set than traditional games (even just finding a new payment processor can be tough).
- It's very hard to hire VR expertise right now, which means it's more expensive than typical to run a VR studio. Silver lining: there are a lot of big companies looking for help. If you need to take on contract work to make ends meet, start being loud about your accomplishments - we've turned down more contract gigs than I can count in the last two months alone.
Now that you know what you're getting into - you miss every shot you don't take. Roll those dice. Try to stack them in your favour. Have a plan for failure. Take care of yourself and your team. Don't go out of business with blind hope that luck is on your side.
Note that many studios are intentionally taking a loss in VR so that they have a robust knowledge-base and brand-recognition before the market does finally become viable. If your team can afford this, seriously consider this opportunity. If you are thinking about long-term business goals and not just "the next game" it expands your ability space by quite a bit. Nobody wants to start making VR once the industry becomes profitable - everyone wants to be shipping a game on that day.
This is one of a handful of VR advice pages I've written. Check out the index for more.