Virtual Reality is here

Last week Sony announced the Morpheus headset. A VR device designed for the PS4 and a major step forward from the Oculus Rift. By all accounts VR was the hot topic of GDC 2014 and there was a positive buzz from everyone who got to try Sony’s hardware as well a the new Oculus Dev Kit 2. There was a hint in the air that VR of the 21st century would not go the way of VR 1990s.

There are a number of developers already busy making games and experiences for the new hardware, even though it is not commercially available. Dedicated websites are up and running reporting on the latest news and games surrounding the new tech. There has definitely been more interest and more force behind the new wave of VR.

But until yesterday it was still seen as a bit of a geeky thing, something for the core gamer and early adopter, perhaps reaching the mass market in 5 to 10 years time. Then Facebook bought bought the Rift maker Oculus for a whopping 2 billion USD (including stock options). 2 things happened:

First millions of people around the world for the first time heard of the existence of the Oculus VR headset.

Secondly the core gamers, who to this point supported Oculus and all it stood for, started taking the the internet in a wave of shock and anger.

How could they have done this! Oculus was a grassroots thing! We funded it on Kickstarter! It was meant to be all about games, our games, core games! I wanted a deep and meaningful experience! ME! ME! ME! ME!

It was, frankly, not surprising to see this happen and it’s frankly not surprising to see just how narrow minded the “core” gamers can sometimes be. They don’t care about the industry, they don’t care about long term. They care only about their own experience and their own expectations. Some of them are incapable to stop for 1 second to think about what all this actually means for the industry, what it can mean for games. No, they immediately see FarmVille on VR and, worst of all, they think they will be forced to play games they don’t want to play. Facebook has killed VR for everyone, forever.

And core gamers are not alone with this. Some developers even spoke out negatively with regards to the Facebook takeover of Oculus. Most notably Notch of Minecraft fame. “I definitely want to be a part of VR, but I will not work with Facebook.” He writes, before summarizing: “And I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition.”

Harsh words indeed, and definitely his prerogative to not do business with facebook. But thankfully not every developer is like that. Cliff Bleszinski wrote a great article about the news and went as far to call out Notch. “Notch, your cancelling Minecraft makes you look like a pouty kid who is taking his ball and going home. It’s a bratty and petty move and it saddens me greatly.”, he wrote. And he was not alone. Palmer Luckey responded and shed some more light on the Minecraft for VR story.

Not to diminish the effort Notch has made when it comes to the rift. His donation was generous and his publicity has helped undoubtedly to gather more supporters. But i think CliffyB was spot on when he called the reaction childish.

In particular i have a problem with Notch’s statement about investment. That argument has come up a few times in the last 2 days, quite a few people commenting on Oculus essentially funding their company through Kickstarter, building value, only to sell it off. But is that really the case? First of all Oculus did not start from scratch when their Kickstarter launched. Those involved put down their own money to found the company and get started. Secondly the Oculus Rift Kickstarter delivered all it had promised, and then some. There were no shares promised, there were no partnerships as part of the pledge rewards. People pledging do not own the company or have any rights beyond the rewards they signed up for. It was inevitable that Oculus would be bought , anyone  with half a brain should have seen this coming. Facebook might have come out of left field, but a purchase was unavoidable. What did people expect? They deliver the Oculus and then shut down again, because making a profit might have been unfair to those who pledged?

As awesome as Oculus are, as much as they have done to revive VR and bring it to the 21st century, they did not have the means to really catapult it on the mass market scene. And, as much as core gamers might hate it, that is what is needed not only for the platform to be successful but also to ensure a wide variety of content. Core gamers don’t understand this. Game developers who let their hatred for Facebook and all things commercial and social take over, don’t understand that. All they see is the next wave of FarmVille on VR. But lets look at an example using numbers (and i am just pulling some numbers out of my arse now to simplify):

Let’s assume i make a VR game. Unless i sit in a basement at my mum’s place and do everything myself in the evening, while working a different daytime job, before i even start i need to look at budget. It does not matter how good my idea is, i need to be sure i can pull it off without ending up on the street or starving. Even more so if there is more people than me involved. I am not talking big salaries and expensive cars, i am talking just the basics. Do not forget dear core gamers, we devs love making games, but we also do need to eat and keep the lights on.

So lets assume the game i make, which won’t have a lot of marketing, will sell to 1% of all people owning the hardware (and that’s actually generous considering less than 8% of console owners purchase games like CoD with massive mass market appeal and marketing). Now lets assume Oculus manages to sell 1 million units after a year or so (so far they sold 75 thousand dev kits – so again i am being generous). So with those assumptions i expect to sell 10.000 units. Lets further assume i sell the game for 20 USD (which is mid range) – i would earn 200.000 USD. Subtract engine/tools cost, distribution cost (steam is not cheap) and i will be left with about 120.000 USD. If i am on my own, that’s a good chunk of money! But even for a small team of 4 or 5, factoring in running costs, office costs etc. this chunk of money could be gone quickly.

Sure there is a chance the game could be huge and all 1 million Oculus owners buy it, but not every game is an Angry Bird. Those games that for some reason or another (no matter how simple or shit people might find them) take off, are rare.

Now lets change the playing field. Say Oculus manages to sell 10 million units. All of a sudden (1% sales still remaining the same), my units sold raises to 100.000 and my earnings to 2 million USD. All other things remaining equal, i have just made a ton of money. I can take that money and invest in more people, more games and all the funky stuff.

But more importantly, and this is what the core seem to forget (because they think we just want to make more money), i no longer NEED to sell to 1% of the consumer base. If i am alone and make my own game, i can get away with selling to only 0.1% of the installed base. I will still make enough money to survive and make more games, maybe even grow a little. And what does that mean? It means we developers can be more experimental! We don’t have to try to hit the majority of consumers, we can make games we feel passionate about and believe in, and if only a fraction of the user base buys our games, that will be enough, it means we break even and keep doing what we do.

And this is what Facebook and Oculus together can potentially bring to the table. Oculus will be able to break out from the geek niche it currently sits in and thanks to money and marketing might of facebook has a potential to reach a billion people like no other product has done before. And if only a fraction of those people who own a PC and use facebook pick up a Rift when it comes out, it will mean a much larger installment base than what Oculus could have managed on their own.

What this will mean is that the Rift will be a viable platform to develop for, for a lot more studios and a lot more developers, and not just the hard core enthusiasts.

And so what if there will be games which try to go full-on retard commercial, including ads and microtransactions? That’s the beauty of choice. There will be games for every taste and every person. Overall this purchase is a great thing. The Rift gets the funding and marketing power it deserves. Millions of people will be aware of just how amazing a VR experience can be and with the money and expertise that Facebook bring on board, i am sure the device will be extremely user friendly and probably a lot higher spec than Oculus could have achieved on their own.

5 years from now, instead of a few hundred thousand rifts gathering dust in the shelves of a few geeks and core fans, we will have millions of devices in people’s homes and we will have a new way of experiencing and making games. We might have budgets to create VR games that will blow people’s minds. I am not talking AAA budgets, but budgets that mean we can go beyond the current breed of VR games in development. Instead of going the way of 1990s VR, 21st century VR will entertain and amaze us.

And then the geeks will come out and say “I was one of the first to fund it!”.