The Second Wave Of Online Gaming Powered By VR

Three takeaways from this month’s E3 conference and how Virtual Reality fits in.

By Shahin Farshchi

Having eclipsed the movie industry years ago, the video game business keeps getting bigger. Clash of Clans maker Supercell made headlines last week when Tencent acquired a majority stake for a record $8.6B. This deal comes off the heels of TenCent acquiring Riot Games, whose online game League of Legends generates billions through in-app purchases. This year’s E3 conference showcased a glimpse of where gaming is headed; here are a few observations:

1) Consoles/PC, mobile, and VR will co-exist and focus on their own strengths:

Ubisoft had a dazzling display of For Honor and Steep; each packing dozens of demo booths with snaking lines of gamers eagerly waiting to experience them. Although both were built in conventional 2D/HD formats, it was difficult to see how either gaming experience could improve by porting them into VR. Rich graphics, smooth gameplay, immersive sounds, and incredible attention to detail captivates the gamer without the need for masking their surroundings with a VR headset. Bend Games’ Days Gone injects the player into a zombie apocalypse where the sound of falling bullet shells and each anxious breath of the biker protagonist fills the room with the smell of fear, death, and decay. Sony previewed several of its VR games, but most seemed like conventional games ported into the VR format.

The current and future expected domestic U.S. video game market has surpassed motion pictures. The explosion of gaming in Asian markets, enabled by payment technologies such as AliPay (AliBaba) and Tenpay (Tencent) is not depicted here. Bitcoin-enabled micropayment companies such as 21 in the US can open the floodgates for social gaming and yield billions of revenue for gaming companies in the U.S. Data courtesy of PwC, VentureBeat, and NAICS 51213.

UbiSoft’s Star Trek Bridge Command; however, was an excellent example of the potential for VR. Players simultaneously take on the roles of Captain, Engineering Chief, Tactical, and the Helm on a Federation Starship in response to a distress call, only to come under attack by a Klingon Bird of Prey. The VR format enables players to manipulate the complicated Starship controls intuitively, use body language to communicate with their fellow officers, and feel far more immersed in an “out of this world” environment, together.

Ubisoft’s Star Trek Bridge Command is an effective demonstration of the power of Virtual Reality. Available only to the press, the demo cast players in the roles of Captain, Helmsman, Tactical, and Engineering Chief. Complicated Starship controls are made intuitive with Oculus’ Touch. The Captain commands the Helmsman to plot a course to a Starfleet outpost in response to a distress call. As the Tactical officer scans for signs of life, the ship finds itself under attack by a Klingon Bird of Prey. The bridge finds itself in chaos as it responds to the surprise attack. The VR format is key as it enables the rich interaction amongst team members while effectively recreating to hostile conditions. Beam me up Scotty!

2) Gamers can’t get enough of Virtual Reality:

Although it was the last day of the conference, it took hour-long waits to play games from Sony/PSVR, Oculus, Bethesda, or Survios (my firm, Lux Capital is an investor in Survios); even with an appointment. Star Trek Bridge Command was limited to the press only. Many were developers and gamers eagerly anticipating to try new titles. Most went into the demos exhausted from the lines, and came out with big smiles. The onus is now on the hardware makers and game studios to complete and ship these titles to the small albeit growing Oculus/HTC Vive install base.

Oculus and Bethesda continued to draw crowds in hopes of experiencing their new titles. Gamers exhausted from hour-long waits would emerge with big smiles. Oculus continues to demo new titles though hardware shipments have been delayed. Meanwhile, conventional 2D games keep getting richer and more immersive.

3) There is a massive opportunity in social gaming:

The stratospheric numbers generated by Riot and SuperCell stem from their hundreds of millions of active users. As millions more across the planet gain access to payments, broadband, and smartphones, they will turn to tomorrow’s rich gaming experiences through which they will connect and transact with friends worldwide. Is there a new genre of social gaming to be discovered? Will it be an extension of the existing strategy game — a genre which was mastered by Blizzard’s WarCraft decades ago? Can developers leverage mobile VR as a medium to generate novel social experiences that justify wearing something on your face and blocking off the rest of the world? I’m confident that there are talented developers out there that will figure it out.

Shahin is a partner at Lux Capital. Based in Silicon Valley, he invests in space, robotic, AI, transportation, VR and brain-tech companies; follow him on Twitter @farshchi