Oculus not doing developers a service, says HTC Vive

In the high-end PC virtual reality market today, there are basically two choices for developers: Oculus Rift and HTC Vive. While there are some technological differences between the headsets, on the whole the VR games on each are rather similar. The approaches to the market from the companies behind these devices couldn't be more different, however. This became abundantly clear to me after sitting down at GDC last month first with Oculus head of content Jason Rubin and then HTC Vive's Rikard Steiber (president of Viveport) and Joel Breton (vice president of global content).

While Oculus repeatedly has stressed the importance of lowering price (and indeed, was the first to do so during GDC week), Vive appears to be reluctant to lower its headset price, instead offering consumers a zero percent interest financing option. "For $40 per month you can get the Vive now," notes Steiber. "If you are a gamer and already have the high-end PC but you don't have the $800 to get VR you can get it now... so we're trying to make it easier."

Steiber believes that by making sure the VR ecosystem on Vive has great content experiences, consumers won't mind paying a premium. He makes an analogy to the smartphone marketplace: "We don't mind paying a certain amount each year to have the latest phone or something and I do think something similar will happen with VR as well."

As the VR space continues to ramp up in the next few years, could we see more incremental upgrades with new headsets in the same way that better phones launch each year? "I can't comment on future product launches. But of course I think that what we've seen in general with consumer electronics is it's becoming more affordable once you hit critical mass. We intend to be leaders in this space for years and years to come and will do what's needed to make that happen," Steiber adds.

"What they are actually doing is getting developers to trade long-term success for short-term cash"

Joel Breton

Perhaps the biggest point of contention between the Oculus and Vive camps is what investing in the ecosystem means for developers and platform exclusivity. Oculus has invested $250 million and plans on "at least" another $250 million, and when the company funds the development of a title it expects that game to be an Oculus exclusive. And while Oculus sees its large investments as helping the overall VR ecosystem, HTC Vive does not agree. Breton believes that VR content should be free to go to any platform.

Citing a GDC survey from earlier this year, Breton notes that developers are choosing Vive because of the open platform approach. "We're very pleased by the GDC market survey, which showed that Vive as of today is the developer's choice, the best VR platform to develop for. And if you ask developers 'What's your next project going to be on?' that one spread towards Vive even further. That's been a dramatic shift in the last 12 months," he says.

"We took a very platform agnostic approach, both to our internal content but also to our partners' content. And that is, let's let content be free, and go wherever there's a market for it. As opposed to, let's lock down the content behind this wall and block out 70-80% of the marketplace. We just didn't feel that made sense for this early market space that we're in. And it doesn't make sense for developers because it doesn't give them a path to long-term success. So developers definitely appreciated that."

When asked directly about the big sums that Oculus has used to fuel VR development, Breton continues, "I actually don't think [their investment approach] is great for the market because... what they are actually doing is getting developers to trade long-term success for short-term cash. And so they are teaching the developers that essentially we can give you this grant for X millions of dollars but your content is not likely going to match the market that it's going to come into. And especially if it's locked down to a platform that has a very small percentage of the overall market.

"So this is not doing the developers a service in my view; in a sense it's trading some short term cash to maybe get them through this year but the folks that are working from the ground up and trying to match the development size and scope with where the market's at today, they are actually setting themselves up to be long-term businesses. That's who we want to work with."

Rubin said on stage during the DICE Summit this year that Oculus actually does believe in an open platform, but Breton isn't buying it.

"They should put their money where their mouth is. We're doing it today. Our first two pieces of content that we developed are already supporting other platforms, and within weeks of their initial launch. As a matter of fact, Knockout League came out at the same time for both platforms... I'd like to see them do it. My feeling is do something before you talk about it, because you have a lot more authenticity," he says.

HTC isn't quite the giant that Facebook is, but the company is certainly investing in VR as well - it's just not putting out concrete public figures.

"We have a lot of ways that we can support developers. We have both company level investments that we've done and they are public knowledge, such as Owlchemy, Steel Wool, Wevr, Baobab... some of these really top notch studios that have launched premium content, we've invested in them. When these companies win, we also win. This is also great for the whole ecosystem. Then we have the [$100m] ViveX accelerator program, which is platform agnostic again - we have companies in there that are working across the whole ecosystem and that's absolutely fine with us. We love that," Breton notes.

"It's very important that we could take our moms and actually have them climb Mt Everest or have a high-end VR experience, not just a Cardboard experience"

Rikard Steiber

"If their product is a metrics platform or a QA platform specific to VR and we think they've got a good business model and a way they can succeed, we can actually invest in them and help them get from maybe a 2-3 person team up to the 10, 15, 20 person team and then get to their A,B or C round [funding] depending on where they're at. The third way that we can invest is directly in the content and that's where my team at Vive Studios comes in. We have hundreds of VR content proposals coming our way constantly and so we're reviewing those and trying to find ones that we think will help the marketplace and will become showcases. And then we can invest in those directly with the developer - those don't involve company level investments, so it's a matter of just investing in that piece of content to make that a success."

Apart from the above investment methods, Vive also leads the $14 billion VR Venture Capital Alliance. "Not all of that is spent for sure but money is being put down," Breton says, adding, "We're not announcing how much we're spending on the individual content pieces, but we're not putting a ceiling on that either."

Vive also believes that its other initiatives, the newly announced Viveport subscription service and the company's big Viveport Arcade push, will become major ways for VR developers to further monetize their products in what's still a very nascent marketplace. The subscription service allows customers to pick five VR titles to play for $6.99 per month, and they can then swap out any, all or none of those titles for another five during each period. For developers who opt-in to the subscription offering, the net result will be about 84 cents on the dollar, Steiber indicates.

"We want to be first to market in testing this because from the consumer point of view they want to have freedom of choice to discover a lot of great content for a low monthly fee, but it's also a great opportunity for developers because it's providing them with an additional monetization window in parallel. We think you should choose to do both [subscription and straight download release]. It's also an opportunity for them to get extra marketing," he says.

"If you have 10,000 people... you get $8,400 that month. If you get 100,000, then of course you get $84,000 that month. So it has the potential to turn into something very meaningful. We have a lot of developers who signed up already so we're feeling confident," Steiber continues, noting that developers can opt-in at the beginning of a game's lifecycle to get a marketing bump before removing it in favor of paid download only, or they can seek out the long tail by opting in nearer the end of the game's lifecycle.

As for the VR arcade sector, which thus far Oculus has shown no interest in, Steiber believes it'll be a $100 million business this year. Viveport Arcade has a pilot going on now with 20 operators and 1,000 locations, in partnership with Imax in the US, Ctrl V in Canada, MK2 in France and Leke VR in Taiwan and China. The way it works is that it's essentially a pay-per-time model where operators purchase points worth a certain period of time from HTC, and then HTC tracks usage of each VR app, ultimately sharing the money spent with the developer.

"I think it's going to be important for developers because the monetization per unit is so much higher. If you do the math, let's say on one station you sell 3 hours per day, 300 days, and it's 10 bucks. That's $9,000 per year per station and if you have 1000 stations, then that suddenly turns into significant money with just one of our partners," Steiber explains.

While the VR arcade scene may not be as big as the home VR market in the long-term, Steiber sees it playing a dual role for the business. Not only does it extend monetization potential, but it helps VR become more accessible to a wider demographic. "I think it's very important not just for the developers but also for educating the market around VR and making it publicly available... For me, it's very important that we could take our moms and actually have them climb Mt Everest or have a high-end VR experience, not just a Cardboard experience," he says.

The Viveport Arcade experience will maintain a platform agnostic position as well, Steiber adds: "We are going after every platform - so we don't care if it's Vive content or some other platform content. If some arcades want to have games from other platforms or mobile VR we'll look to provide that as well... The way we look at it is 'How can we create a VR ecosystem and help the developers monetize across as many windows as possible?' I wouldn't mind helping all the Oculus developers get into the arcade opportunity or to get into the home, for that matter as well."

A big showcase for Viveport Arcade that was being demoed during GDC is Front Defense, a military shooter from internal studio Fantahorn that gives the player a variety of weapons to defend a bunker with. "It's going to launch first in April on Viveport Arcade, and then we'll roll out the home version in June. And we're encouraging developers to do both, do a home version and an arcade version," Breton says. "They are two markets so it gives you two ways to monetize, and arcade can help promote your home version and vice versa, and [devs should] make them unique a little bit - so people who might have a home version would have a reason to check out the arcade version and have a reason to bring their friends there. This is going to get a good crossover with the ecosystem.

"As a developer it's not that hard to make two versions - it's like making a remix of your content. You're not starting from scratch - you're like 'I want a really fast-paced 5-7 minute experience that doesn't have a huge tutorial, doesn't have a lot of things you have to learn, you just jump in there and start having fun' and that can be your arcade game. But then if you want [many] hours of content, that's more suited for the home version."

The other two experiences on display from Vive during GDC were VR Sports - an accurate, physics driven compilation of tennis and ping pong - and MakeVR, which is a CAD-like modelling tool. It not only should be helpful for game developers, but specifically for engineers modelling products across a variety of industries. As Breton explains, the design and tools category is one of a number of verticals from the VR content perspective that his team needs to flesh out.

"We're really pleased that developers have jumped on board the [Vive] train and we're here to support them and help them... there's about 200-300 new Vive titles going up on Steam and Viveport each month right now"

Joel Breton

"With five studios, we're in charge of making sure Vive is the best place to get the best VR content. From a high level we're tasked with creating showcase content across 10 categories of VR. Gaming being a huge 900lb gorilla today, the majority of the content is games so we want to certainly put some good time and effort there, but we're also tasked with these other nine categories like healthcare, education, design and tools, cinematics, and theme parks even. And certainly arcades and location-based. So we do have a wide portfolio and we're going after these areas that we think need showcase content," he says.

The new $99 Vive Tracker opens some interesting VR gameplay variety as well, but it is ultimately a peripheral and Breton acknowledges that developers can't automatically target it. "Developers will still want to develop the version that uses the motion controllers but they can very easily make a different mode... So for instance, our boxing game (Knockout League), we found that with just putting trackers on your feet you can actually kickbox. Developers experimented last week with the Trackers and were like 'wow we've got a kickboxing game here, all we have to do is animate a foot.'

"So developers will figure those kinds of things out but what we're encouraging them to do and what just makes sense so that we don't split up the market is you make the version that addresses 100% of the market and then you also make a mode or option screen setting that says enable Trackers and then I get my feet added as well. So you get additional functionality but you certainly wouldn't want to, as a developer, say ok everybody has to use the Tracker because the market's not all going to have it."

In the end, HTC Vive is hugely optimistic about the future of VR and the initiatives it has put in motion. Breton concludes, "We're really pleased that developers have jumped on board the [Vive] train and we're here to support them and help them. Vive Studios will come out with about 25 titles this year, and that's just the ones we're working on, and there's about 200-300 new Vive titles going up on Steam and Viveport each month right now.

"So it's a very active market, it's not slowing down. There's about 1,300 titles available for download today on Vive, if you take both Steam and Viveport into account so we think there's plenty of content there and it's only accelerating the pace and the quality with which the content is coming. I think Q2 is going to be a very exciting quarter both for what we have coming with the different titles but even more so with what the third-party developer community is working on."