As a follow up, GBR asked several CEOs and investors in VR to comment on what they’re seeing in terms of sales, revenue and investment in VR and AR. Its ROUNDTABLE guests including:
- Marco DeMiroz – General Partner, The VR Fund
- Guy Bendov – CEO, Side Kick VR
- Sergey Galyonkin – Founder, Steam Spy and Head of Publishing for Epic Eastern Europe
- Mihir Shah – CEO, Immersv
What genres in VR seen to be doing well now in terms of monetizing?
Marco DeMiroz: We’ve been studying this across all platforms and we have our report coming out, Steam is more accessible than the others. Our analysis shows the top 5 titles are:
- Audioshield (Music, $19.99)
- Hover Junkers (multi-player FPS, $34.99)
- Final Approach (air battle, $24.99)
- Raw Data (action, battle, $39.99)
- Virtual Desktop (consumer, enterprise, $14.99)
As you can see, the list is dominated by games but music and consumer monetize effectively, as well.
Guy Bendov: Linear video entertainment (movies, sports, music, events), games, communication, utilities. Each represent a need and VR can offer unique experience that can’t be achieved with “flat” screens.
Sergey Galyonkin: There aren’t enough games for VR to come to conclusions yet. The biggest limit is the market penetration, not genre.
Mihir Shah: At Immersv the top genres we see in VR by
video view start are:
- Action/Adventure – 46%
- Shooter – 22%
- 360 Video – 20%
- Exploration – 8%
- Horror – 4%
When do you think we will see the inflection in hardware sales?
Marco DeMiroz: We expect the mobile VR inflection point starting with Daydream in 2017 with more to follow. At high end, the PSVR launch in Oct’16 is a major event to open up over 40M PS4 installed base.
Guy Bendov: Early in 2018. We are very encouraged by the growth of Gear VR, encouraged by the number of phone makers working on Daydream compatible phones and the market interest to extend the use of their phones to VR, AR and big screen viewing.
Sergey Galyonkin: Honestly – I have no idea. Consumer VR market has several major problems to overcome:
- the cost of ownership
- difficult installation
- lack of killer apps
Once at least two of those are solved we might see some successes in the consumer market. At this point, I’m more optimistic about B2B and B2B2C solutions.
Mihir Shah: I think the next inflection point will be Holiday 2016 (this Nov / Dec). It coincides with the mobile device upgrade cycle as well as new devices from Google (Daydream) and Samsung.
What kinds of companies do you see developing VR now? To me it feels like mostly indie developer and 360 video at this point.
Marco DeMiroz: We see both, indie to large developers, and on the video front, also small to established production companies. The fact is that outside top 2-3, like Activision, EA, they can no longer ignore the market opportunity for VR/AR.
Guy Bendov: Established teams are being financed by the big players who have major interest to see quality apps and content in VR. In parallel you see a few entrepreneurial indie teams putting smaller productions to market, leading innovation with quick wins and fails.
Sergey Galyonkin: Every single game development company I know is doing VR prototyping, no matter how big or small the company is. The only difference is that most big companies aren’t releasing anything until either the market is there or the hardware manufacturer (Oculus, Sony) will swallow the costs of the development.
Mihir Shah: There are three categories that we’re seeing: (1) Indie Game Developers, (2) Established mobile players shifting (GREE, Glu, etc.), and (3) Entertainment guys such as Warner Bros, Fox, etc.
There are a number of platforms and APIs developers have to wade through, any thoughts on platforms and APIs?
Guy Bendov: Gear VR is one and Google merged Cardboard and Daydream. New SDKs are mostly connected to new platforms from Asia. Other than that, ads, analytics and other SDKs are a similar effort to developing a mobile app.
Marco DeMiroz: They need to be cross platform to expand monetization options, however, there is a significant difference between high end (Vive, Rift and PSVR) and mobile VR for a variety of reasons; input devices, motion space, etc. It is probably best to focus on high-end to cover, and optimize, for all high-end platforms, then move to Gear VR and Daydream. Unity and Unreal have done a terrific job building their VR/AR capabilities plus offering easy cross-platform options. I feel the challenge is less about the API but more of coming up with a fresh/novel/unique game design, storytelling, or 360 video experience to leverage the magic of VR/AR to amaze the audience.
Sergey Galyonkin: We’re at early stages of VR development. I’m quite confident that we’ll see developers rely more on tools provided by game engines than on manufacturers SDKs and APIs in the future.
Mihir Shah: Much of the fragmentation is mitigated by development platforms such as Unity and Unreal. Which is different from early Mobile when these guys didn’t really exist. You can now develop in Unity and publish across VR platforms.
What would you say to a content company looking to monetize for VR right now?
Guy Bendov: Platform makers are looking for quality content, including payments. If you want to publish and can’t or won’t go for “platform money”, the audience is still based on “premium enthusiasts” and ready to pay to great content. It is fair to expect many more users early next year with Daydream. There are more opportunities in Asia (China specifically) and it has to be part of everyone’s business plan.
Marco DeMiroz: Move forward with contained expectations and adjust your expense profile to position your company for longevity. We do not favor big development budgets with long development time lines, unless completely funded by a platform partner. It is too early for large scale efforts. Our guidance to game companies is that they should be nimble and streamlined to develop rapidly with small teams and plan to iterate very aggressively by monitoring and analyzing user behaviors and adapting accordingly. Another factor to keep in mind that the current installed base is primarily early adopters thus with big appetite to purchase a lot of titles, the current user base behaviors may not reflect how the mass market will behave when VR/AR becomes a mainstream. Mobile gaming is now around $40B/yr market and we expect VR/AR to have a similar growth pattern.
Sergey Galyonkin: I’d say to look into B2B2C solutions – amusement parks, arcades and so on. There is a healthy market for these things in Russia and China already; it could be extended beyond those regions.
Mihir Shah: I don’t think platform “sponsorships” are a viable business model. There are three ways to build a real business, (1) Premium – you charge to download / view, (2) Freemium – download is free, but upgrades and incremental content are driven by in app purchases and advertising, and (3) Ad supported free.