Pokemon Go is leading the conversation about VR/AR.

Above: Pokemon Go is leading the conversation about VR/AR.

Image Credit: Niantic Inc.

Shah: I think it’s a big opportunity. This blending of video, real-world environments, where you then go in and play — it’s already happening. We kind of saw one last night, something I can’t quite talk about yet. From a commercial standpoint — that’s an interesting thing for the gamer in me, and we want to see that market drive. In the theme of this panel, though, from a commercial standpoint, I continue to believe that commercial success will come from people who figure out how to blend mobile with mobile VR. That’s going to get you the reach you need.

Again, it’s a little bit different. But the single largest commercial success last year, which was a bit unexpected, was Pokemon. That was a blending of mobile and AR. You don’t have to put on an AR device and do something totally different. Those kinds of walk-before-you-run blends are going to drive the commercial successes in the next couple of years. It’ll be the folks who figure that out.

Dazin: Making games is all about cheating behind the scenes without players seeing what you’re doing. There are a couple of games out there right now, where it’s a mix of VR and video. It’s not volumetric video. The video just turns with the player enough and fits in the frame so it looks 3D. There are ways to skate by that can help you cut down on costs and reuse content.

Rodriguez: AR versus VR. We talk a lot about VR, but AR for a lot of folks represents different opportunities. Some people are more bullish on AR. Are there different economic considerations for someone who’s developing content for AR versus VR? Are you looking, as VR ad companies, at the AR space?

Shah: We absolutely are. The idea, from an ad standpoint, from a content delivery standpoint — ads are just another form of content you deliver. In this case we pay people to deliver it. But it’s about putting physics into something else, whether it’s AR, VR, or mobile 360. Unlike banner ads, which are flat, you have to put physics into a different experience to show a full 360 environment.

There’s a whole discussion around the enterprise market that we’re not going to touch today, developing enterprise applications in VR and AR. There are some really interesting things going on there. But in terms of consumer applications, the single largest thing, whether it be VR or AR, is whether consumers will adopt the necessary hardware. And that leads to a chicken and egg problem — is there enough content, and content that everyone’s friends are playing, that people go out and spend the money and go to the trouble of using another device?

The question with VR and AR, and I’m sounding like a broken record, is what experiences can be blended with mobile, so you can have cross experiences? I don’t know yet. In the absence of mobile there’s no reach.

Takahashi: With something like FarmVille, maybe two percent of players would ever make an in-app purchase. You needed that billion-person market to make real money. But Wargaming had an interesting experience on the consoles, where they found that when they brought World of Tanks to Xbox 360, the fans were so rabid that they bought a lot more. You change the economics of that model such that more than 10 percent of players is spending, and they’re spending a lot of money.

When you get to that kind of market with the right kind of content, the rules that used to apply in a different situation are no longer true. There may be more potential for good content.

Raw Data from Survios is now on the Oculus Touch.

Above: Raw Data from Survios is now on the Oculus Touch.

Image Credit: Survios

Rodriguez: This morning we were having this conversation about microtransactions and what VR games have proven so far that microtransactions can work. The room struggled to come up with examples. The one title that was mentioned was Bait!, the Gear VR game, one of the few that anyone could point to as an example of a VR game that’s done well with microtransactions. Dean, you mentioned a list of six or nine titles that have made $1 million. What games would you recommend folks look at as good examples of what can be done in VR?

Takahashi: Raw Data, the first-person shooter game from Survios. It’s one of those titles that’s done more than $1 million. Job Simulator has also done very well.

Job Simulator seemed to benefit from this idea, what turned out to be the falsehood, that VR is not social. Mike Abrash from Oculus was quoted as saying that’s totally wrong, and that VR will be the most social platform we’ve ever seen. With Job Simulator, it became a party game. You show it at a party, have it running on the TV, and everyone sees what you’re doing. It can be something that entertains everyone, even though there’s just one person in the experience, and everyone passes it around.

Shah: We see a number of examples on mobile VR and mobile 360 with microtransactions. But again, it comes back to the content, not the monetization. Microtransactions work when you have content that’s episodic, and you have a lot of depth and breadth to the experience. If you have a VR game that’s the greatest casual game in the world, but it only has one level, microtransactions don’t work, because there’s nowhere else to go.

If you think about mobile games that monetize exceptionally well, there are infinite levels and lots of stuff to get you through those levels. You have energy packs and weapons. All that comes through microtransactions. From a VR standpoint, we’re starting to see that, but again, it’s fully driven by the content developer creating those rich environments, such that the player wants to come back and there’s a reason to transact.

Dazin: Spending is directly tied to how much time the player spends in the app. That’s a big thing we see in VR right now. Even on Steam, the top 10 most played VR games, hours-wise, aren’t even VR games. They’re productivity apps like Bigscreen or Virtual Desktop. It’s hard to make money off microtransactions or ads if your players aren’t coming back every day. That’s something we can solve with compelling content.

We’ve learned that in desktop and console and mobile. We’ve learned how to get players excited to come back once a day or five times a day for something exciting. That needs to translate to VR, but the same mechanics don’t quite apply. You reflexively pull out your phone all the time and check on your farm. You never accidentally put on your VR headset. That’s a challenge we need to address.

Rodriguez: When you talk to developers, when you talk to indies, what would you say is a common misconception about the VR space for folks just breaking into it?

Dazin: A lot of the groundwork is already done for you. Unity has democratized development for a lot of people. It makes it really easy to create a baseline of content. But actually building full high-quality games with voice recognition and all these other things that you might think are part of the ideal VR game, that’s not there from the beginning. A lot of developers are creating this stuff for themselves in-house and building off that for future titles. I’d love to see more of that get shared with the community, so everybody can more easily build robust games.