2018 Ends With a Record Number of VR Headsets on Steam

TL;DR: unless we find VR uses besides immersive gaming, the inconvenience will make it irrelevant to most people and the market will remain too small to justify developing for it, even in 10 years with the Rift 4 or Quest 3.

IMHO the focus on market penetration changes at such a low level just distracts from the big picture, the core question why after years the numbers are still minuscule. But I’ll adjust my estimates to include rising Steam account numbers and a more optimistic HMD owner growth to see if time will actually solve the problems.

Assuming the current 0.8% were fully achieved since 2016, we get a slightly higher linear growth of 0.3% per year. Factoring in the exponential growth of Steam accounts since 2006 of ~25% (now slowing down), we get a nicer factor for absolute HMD number development: years * 0.3 * 1.25 ^ years. Relative numbers are still bad, the 100% mark moves to the year 2349. The absolute count is more impressive due to the growth of Steam. That gives us 15x the number of todays HMDs in 2024 and 100x in 2029.

This looks much better, but is it really? At OC5 Zuckerberg estimated that a VR platform like Rift, Go or Vive needs 10M owners to make it sustainable for developers. Assuming continued exponential Steam growth these 10M will be reached ~2025 +-1. (And in 18 years every single human has a Steam account, which seems too optimistic, so don’t bet your money on 2025.)

The Zuckerberg estimate is quite relevant. VR users complain about the lack of VR support in games, but if you run the numbers, supporting VR is simply a bad business decision, at least until 2025. Few developers can afford to lose money that long, hoping their games help grow the market sufficiently before they go broke.

Today even huge VR hits like “Job Simulator” or “I expect you to die”, both out since 2016 and available on PCVR and PSVR, are small by gaming standards. Both passed 3M USD revenue, selling probably ~150K units, meaning ~3% of all PS/PCVR uses bought them. Beat Saber seems to be the only (pure) VR game that is even more successful with an install base > 200K (SteamSpy).

Some regular game hits for comparison: GTA V made 1B USD in the first three days alone, and by 2018 had sold 100M copies. “Clash of Clans” on mobile generated about 2B in 2017, Fortnite 3B in 2018. From a AAA publisher point of view, VR doesn’t exist as a market.

Adding VR support to existing games makes little economic sense either. You can turn any Unity first person game with gamepad support into a shitty VR game in minutes, but adding proper VR controls and changing the game play and mechanics to fit VR takes a lot of effort. Those who dare to release VR games on Steam for gamepads and without proper hand controller support are met by angry comments and downvotes. Which can be avoided by not supporting VR in the first place, and the low number of potential VR buyers is rarely worth the risk of bad reviews.

Most smaller VR developers work on VR because they love it and despite (or blissfully ignoring) a high probability of never getting payed, making it more of an expensive hobby. Some survive by doing contract or niche jobs, and very few are sufficiently talented and lucky to earn enough money to continue developing other VR projects.

This will not change until the market is at least a magnitude larger than today, which is why the current low user acceptance is such a big problem. And even if the absolute number of headsets increases to a point where the average developer can sell enough to recoup their cost, the small relative market share will still make it irrelevant for AAA studios.

Most current VR users and developers argue about the success fo VR with (survival) bias: they were blown away by the experience, love the immersion, can deal with the technical setup, don’t suffer from nausea, are okay with strapping things to their heads and don’t mind isolating themselves completely from their environment. They love VR and are sure that everybody else will too, if only they give it a proper try, if only the resolution gets better or if only Valve releases HL3 VR. The added immersion is worth it all and the experience is so much better than gaming on a flat screen.

These assumptions might be wrong. The best solution doesn’t always win. PCs offer the best gaming experience, yet more people play on consoles. And the mobile gaming market trumps both. Convenience wins, as seen in camera phones, MP3 players and Roomba robots. VR will not succeed simply because it is more immersive. If you check the numbers, people aren’t looking for immersion or presence, instead they pump billions into short and colorful battle royal matches and free to play games with tons of micro-transactions.

Most people don’t care for VR, have no use for VR, consider VR way too much hassle and not worth it beyond the initial wow effect. But to get the VR market to an economically sustainable size, we need these people that care about other things than the VR enthusiasts. That’s why the lack of acceptance is a much bigger problem than any technical issue, and why neither better HMDs nor better games alone will solve this.

Today most VR games are just regular games in VR. Outside the “manipulating physical objects with your hands” category, very few of the current VR games need VR, it just adds to the immersion. Most would be easier to play without VR, so for someone unimpressed by the experience they are actually worse. Tetris Effect is spectacular in VR, but this is 100% visuals and immersion, 0% gameplay. Not enough for most people to consider playing Tetris in VR instead of on their phone.

To get these people, we have to find something other than wow effect and immersion. Facebook is betting on social, making VR more like a telepresence platform for shared experiences. Maybe social will work. Maybe virtual travel will be the killer app. But it has to be something that cannot be done without VR to get people to overcome the inherent inconvenience.

So my big picture is: The current record numbers aren’t a sign of slow, but steady growth that will lead to success. They are a sign of insufficient use cases and usability that will prevent the success. VR is not and for many years will not be “worth it”, unless you really value the immersion or have a very specific use for it. Most people don’t, so unless we find uses for VR beyond “added immersion” and niches, the market will stay too small to justify the development of titles that can touch the real potential of VR.

This argument comes from someone who loves VR. But this makes me part of a very small minority. I want VR to reach its full potential, which will not happen unless the larger majority also gets on board. And this will not happen unless the VR community stops reiterating that VR is/will be great for everyone and starts asking what those not convinced by VR are actually looking for.

Kool aid drinkers…. Right back at you with the way you wrote that posting.

Everything is fine, but I will however change the “exploding” to “growing” to make it more appropriate, and less mocking. People are seeing the benefits of it with the market steadily growing. The problem, as always, is how someone has to do all the hard work to the point where AAA game companies shall swoop in pretending they’ve done all the hard work. Indie developers doing all the hard work with Sony Playstation. At the very least Sony (Playstation) is shouldering majority of the VR costs so developers can make their games they desire to make without worrying, thus why PSVR is selling the most and why the adoption rate is the highest for PSVR.

But yeah… I get it, it was a hastily made sarcastic joke.