What needs to happen for 2017 to be the year virtual reality monetises?

What needs to happen for 2017 to be the year virtual reality monetises?
Jake Tucker

By Jake Tucker

January 10th 2017 at 3:38PM

Virtually successful

2016, in case you missed everyone bellowing about it, was the year virtual reality became a commercially available product. It largely lived up to the much hyped "year of virtual reality" we've been promised for the last few years, too — to a point — we got a trio of new high end headsets and a variety of other smaller competitors announcing some promising looking efforts.

However, as 2016 pulled to a close there was a slight souring of opinion towards virtual reality as hardware sales projections were revised downwards, with very few titles emerging as big financial successes. The real stumbling block for 2017, the year of virtual reality's awkward adolescence, is going to be how virtual reality can monetise and the steps it has to take for developers to break even.

This is a conversation that's going to become increasingly relevant as publishers, investors and even developers looking to work in virtual reality are going to look at how viable an investment this is before they commit cash and, potentially, time. With that in mind, how can developers ensure their virtual reality titles make money?

According to Sam Watts, Make Real's operations lead, one of the toughest barriers for developers to overcome is the low install base for VR headsets.

"The main thing that needs to happen to allow VR to monetise for more developers is simply large install base numbers," said Watts, pointing to reasonably low adoption rates across the board. "To ensure that there are the marketplace user volumes necessary to be able to sell games titles to a lot of people."

The lack of headsets is a big issue for those looking to make wheelbarrows full of cash - Raw Data was the first virtual reality game to make $1m within its first month, with SteamSpy data suggesting the game had around 33,000 owners.  This isn't an insignificant number, but developers Survious claimed that at the least, 20% of Vive owners had picked up the game, a low number considering how few games are currently available for Vive players. The game has largely positive Steam reviews and is critically successful — it's not too far of a jump to say that it's been largely limited in terms of sales by the lack of Vive headsets that people can use to experience the game.

The tentpole successes in virtual reality — titles like the above Raw Data and Owlchemy's Job Simulator — have gotten there from big marketing pushes, heavily marketed and showcased as the de-facto apps for those in virtual reality.

The biggest market for virtual reality right now — aside from the mass produced and, by design, low quality Google Cardboard — is the Samsung Gear VR, which recently announced it had shipped 5m units. Compared to the tens of millions of people owning a games console, and the hundreds of millions of PC's out in the wild, this means developers aiming for success are aiming for a big portion of a small pie. Factor in the cost of research and development with a nascent medium, where several concepts are going to fizzle out after a significant investment of time and cash, and it suddenly becomes much clearer the difficulties those specialising in virtual game development are going to face.

We asked Watts for his advice on how those working with virtual reality can keep the lights on in 2017.

"It's not my game business model of choice by a long shot, but some form of IAP and F2P mechanics could be integrated into games titles to reduce initial barriers to entry, in terms of up-front costs to the gamers, who are seemingly as hesitant as developers as to what reflects a suitable price point for VR games. Currently I think we are seeing a number of gamers grazing across content and looking for constant feed of new and exciting experiences, making a premium cost point hard to swallow, especially as some storefronts are heavily loaded with tech demos or short experiences that may not contain great replay value."

Tommy Palm, CEO of VR-focussed Resolution Games — and one of the people behind mobile smash Candy Crush Saga — suggests that those working in virtual reality need to take inspiration from Angry Birds' successes: "At this point in time the VR market needs games with depth and enough pull to get users to come back over and over again. Mobile games were around for a long time before Angry Birds became the first breakthrough success that shaped the industry. VR has its own very specific set of unique elements that a great VR game will build on."

Palm also points towards social interaction as an unlikely winner for virtual reality: "One of these unique elements is social interaction. Unfortunately it takes ever longer time to build great multiplayer games in VR. However, I am convinced that players are willing to pay if the right content is there. The big challenge now lies in the hands of the developers to pull these elements together and create great content."

The social aspect of virtual reality is going to be huge, and it's no coincidence that Mark Zuckerburg's speech at Oculus Connect 3 was largely about social interactions.

In fact, success could be as simple as making an exceptional game, and then convincing people to buy it. The first part is up to you, but for the latter, PC-based virtual reality developers could do a lot worse than landing their game on Valve's Steam storefront. Watts says that many gamers aren't keen on buying from other storefronts, as Steam's monolithic presence means most gamers have the majority of their library there, and they'll be looking to keep their purchases in one place. Companies can tempt gamers with platform exclusives or deep sales and indeed EA and Ubisoft have been running their own stores against Steam for a while, but in a new and unproven industry, this is a tough proposition.

If this sounds tough, it very probably could be. However, it's an emerging market, and it's all in the hands of the content creators. Virtual reality right now is struggling both with sticker shock and a perceived lack of must-try content for headsets. As the price comes down, great content could lead to a bigger install base, and more faith in the technology, which would help all those working in the space.