VR & Game development is not a grocery store.
Joe Radak

Add to this the most basic and frustrating facet of any development at all: the almighty dollar (/euro/yen/pound/etc.). Small titles and experiences to test the market and capabilities of various VR functionality can be done as a side project with little/no funding. Full scale development requires paying a lot more staff and marketing and thus requires a *lot* of money (easily over $5 million - http://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649), and that requires the ability to make a profit. Right now, the user base is small (very rough estimate of 150k - http://www.fool.com/investing/2016/09/08/instant-analysis-sales-for-the-htc-vive-and-facebo.aspx), especially compared to the gaming market at large. This means that it will cost a lot more per unit, taking into consideration that the increased cost will affect the take rate. You can assume that if it is a strong enough title, you can increase the size of the VR using customer base by making it a destination title that people will invest in VR just to play, but that is a huge risk, and people with money don’t like taking bad risks. Basic math of the above estimates show that, even with a minimal AAA budget of $5 million, the game will cost over $33 per person, assuming EVERY SINGLE VR owner buys it.

I think that unfortunately, for now, native AAA VR titles are probably not viable. Probably the best we can hope for are non-VR titles that have have support for VR. As the author mentioned, VR is in the “Wild West” stage. That means that there’s room for something unanticipated. Probably what that means to me is that an indie studio (or possibly a few) will hit a great combination that makes it a “killer app” to draw more people to adopt VR, thus reducing the potential cost per unit. If this happens, the profit margin looks better and can start to entice “the money” to invest in native VR content.

(While I’m here, I’ll get on my soapbox for a bit) All this said, it’s still a very sensitive environment, and it’s part of the reason why I’m personally so upset by Oculus’ move to create exclusive content. It would have been a much smarter move to limit sales to their online shop, if they want temporary exclusivity, but still let the titles support other VR technology. Their decision to subsidize development is not a bad one, but I think they over-estimated VR adoption. It’s kind of like putting a great weight on a table and then realizing the table turned out to be a lot flimsier than you expected. You could have used someone else’s table to support some of the weight, but your hubris wouldn’t let you admit you needed any help.

Note that I am not in cost analysis, development, or even in the industry anymore. Still, I think I have some insight into how it works. I’m willing to take correction if I’m wrong and learn from others, so feel free to comment!

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