"We'd love to be the Rovio or Supercell of VR"

Much like EVE developer CCP, nDreams is one of a few companies in the VR world that has earned veteran status. And while it's hard to think of any particular studio as a veteran in a space that's so nascent, nDreams, led by founder and CEO Patrick O'Luanaigh, has been learning the ins and outs of the new medium from the very start. For O'Luanaigh, who I sat down with during the recent Game Developers Conference, the goal is very simple: to make the best experiences that anyone can enjoy in VR.

"We'd love to be the Rovio or Supercell of VR...we want to make a game that really changes things, that dramatically excites people. We're prototyping all the time and trying to come up with new types of gameplay and new ideas and things that haven't been done before. So I hope in five year's time when it does get too crowded that we're in that kind of position. That's the goal," he tells me.

As a studio, nDreams, which is the largest UK developer solely focused on VR, has been in a growth phase. O'Luanaigh believes that the excitement around VR combined with the frustrations some developers have had with other markets has been to nDreams' benefit.

"We're up to about 50 internally and we're also working with a couple of external studios. So we probably have about 70 developers in total working on projects for us at the moment and we're growing by about 2 or 3 people a month. So we are expanding, which is good but it's getting a bit scary and exciting," he says.

"Consumers want Skyrim, they want GTA in VR, but as a developer, as a publisher you can't justify that at the moment because the market's too small"

I remind him that some successful studios let growth get out of control to the point where it's harder to function effectively as a cohesive team. "We're a way off that actually; we're a nice size at the moment, and maybe we'll go up to 80 or 100 but I think that feels like a sensible limit for us. There are so many projects going on, so many things we're asked to do and we're also getting a lot of great candidates coming to us. There's a lot of people who have gotten a bit fed up working on free-to-play mobile games for a long time and are desperate to get back into console gaming. VR is exciting, and it's a great opportunity to learn new skills. It's quite hard to sometimes turn down people who are just brilliant at what they do," he continues.

While VR has been fairly kind to nDreams, the same can't be said for countless other developers who decided to dive into the market, perhaps without a full understanding of what they were getting into, O'Luanaigh says.

"I think we've seen a few smaller devs particularly [that have had problems]. There have been a few analysts that have done crazy numbers early last year, and I think a few people believed that and thought this is going to take off, there are going to be trillions of headsets out by Christmas and they went all-in on their games without having a realistic forecast," he explains.

"We've been really, really tight since day one actually about speaking to all the platform holders, speaking to other publishers, getting everyone's ideas and data and as much information as we can to get really detailed forecasts of where we see the market going. And actually it's pretty much where we've expected it to be. We've looked at other tech launches over the last few years... If you look at the charts for the Android and iOS installed bases, it took nine quarters before they started kicking off. It's a real long slow burn - people have to get used to the technology, price came down and people got what it's all about. I think the same is true of VR."

O'Luanaigh notes that nDreams should be breaking even on its VR projects in this coming financial year. You know it's a "slow burn" when one of the leaders in a space can't break even for a few years, but everything is on the up and up now, he says: "The good news is we're starting to see some good data, some good sales and revenue... It's working for us and we're doing okay actually. It's been pretty much what we expected but we've been quite conservative, and we've looked quite closely at what the future holds. I feel really sorry for the devs that got a bit carried up in the 'It's going to be crazy big so fast' [way of thinking]."

Part of being conservative means properly managing your budgets on VR projects. O'Luanaigh admits that with nDreams' narrative-driven title The Assembly, the company "probably invested too much."

"We've learnt a lot and I think the interesting thing is that as the market grows, developers can afford to invest more. The challenge is you don't want to invest too much," he says. "We're thinking very hard about how much we spend on development and those budgets are going up along with the installed base now. What we have seen is a few devs that definitely overspent early on. Last year they dived in and did a $3 million or $5 million project and that's incredibly hard to break even on given the installed base. I think if developers are smart they'll start small with great little gems, beautiful little ideas and then grow with the installed base and that's what we're trying to do now."

O'Luanaigh notes that typical VR high-end budgets are in the range of $1 million or $1.5 million, with maybe a maximum of $2 million in some cases, but that consumers have very high expectation and he wouldn't be surprised to see average budgets soaring in the near future. "Consumers want Skyrim, they want GTA in VR, but as a developer, as a publisher you can't justify that at the moment because the market's too small. Maybe an Oculus or a Sony could afford to spend that to promote the hardware but you can't as a developer; you've got to be smart about it," he says.

"The good news for consumers is the games are getting bigger all the time, because the market's getting bigger... You'll see much better games out this year"

"But the good news for consumers is the games are getting bigger all the time, because the market's getting bigger. There are a million PSVRs out there now and there are going to be a ton more, and Oculus just dropped the price and there's other stuff coming out, so I think it'll get there. You'll see much better games out this year and already at GDC there's been some really nice stuff shown off for the first time and people have some much bigger games in development that we'll be talking about later this year."

While nDreams' specialty is games, the studio has shown that it's not afraid to dabble in other VR experiences. Its meditative escapism app, Perfect, is well, the perfect example of that. And as the VR installed base grows, it could be a source of recurring revenue for VR newcomers entering the market who need a positive first VR experience, O'Luanaigh hopes.

"It's not a game at all. It was really designed to be... you bought your headset at Christmas, you want to show if off to your wife, your neighbor, your grandfather, whoever it is... You don't want to show them a game. You don't want them to try full-on first-person shooters. Robo Recall probably wouldn't be right for them but this is great because they can look at the northern lights, they can pick up snowballs, they can skip stones on the water. It's a nice relaxing place," he says. "It's a good example [of succeeding with something small]; it's a really small niche but it's done really well, it's done well above our expectations."

If Perfect has worked out so well, why not make more non-gaming experiences, especially if VR takes off in other fields, like education? Game developers are on the frontlines of VR, and they can show people in other industries how to make solid apps, after all.

"We're trying to be one of the best, highest quality developers of VR and I think education in particular is going to be huge in the future in a few year's time - it's such an amazing way to learn, it really is, for teaching history and languages and all sorts of things. VR is going to revolutionize education I think. Once we get to that point, who knows, maybe we'll take what we've learnt and we'll do amazing stuff in that area, but at the moment we're really focused on entertainment, which is kind of gaming and experiences as well," O'Luanaigh says.

One area that nDreams is very much interested in participating in, however, is social VR. In case you'd forgotten, nDreams led development on Sony's PlayStation Home and that experience could prove to be invaluable as companies look to make virtual meeting spaces. That could very well be the end goal for Facebook-owned Oculus one day, and O'Luanaigh would love to see nDreams tapped for that in some capacity.

"People sunk a lot of costs into learning VR and coming up with new stuff so I think you should expect as a VR user to maybe pay a little bit more because everyone has sunk so much money into figuring this stuff out"

"We definitely would want to be involved because we've learnt so much from PlayStation Home. We've got so much data about what worked, what didn't work, what people liked and didn't. We're not going to create a world ourselves; it's a hugely expensive thing to do and if I was going to put my money down I'd say that Facebook and Oculus are going to do it because they've got the social network and what Mark Zuckerburg showed off last year at Oculus Connect was lovely," he says. "You're more likely to see us working with those guys than trying to build our own virtual world competing against them... We talk to everybody, that's all I'll say! Those guys are amazing and what they're doing is fantastic."

As the VR market continues to evolve and mature, one thing that developers will want to keep an eye on is game pricing. There's been some feedback from consumers in these early days that certain titles are just too expensive for the value they provide. O'Luanaigh concedes that some consumers may be paying more in the early VR market because of all the blood, sweat and tears that developers have poured into learning how to use the medium.

"People sunk a lot of costs into learning VR and coming up with new stuff so I think you should expect as a VR user to maybe pay a little bit more because everyone has sunk so much money into figuring this stuff out," he says. "But I think you'll find prices settling down to be pretty much the same to what the non-VR games would be."

Don't misunderstand O'Luanaigh, though. He believes the developers have a responsibility to the consumers as well. "I also don't think developers should be ripping people off. You have a choice as a gamer whether you play a VR game or a non-VR game and there are lots of great non-VR games out there," he continues. "So as a VR game developer we have to offer something that's that much better, that's different, that's a big step up over what you can play so that people don't mind paying the same amount or a little bit more for something that's different.

"I think part of the problem is that a number of VR games have been very similar or ports of things that would work as non-VR experiences. With our new games what we're trying to do is make stuff that wouldn't make sense without VR, stuff that's been designed right from the beginning with VR in mind and that's important; I think people are more willing to pay money for those kinds of games."

With both Oculus Rift and HTC Vive having celebrated their first year on the market now, the actual reality of the VR space is coming into view, and if anything, nDreams is looking forward to a much brighter future, O'Luanaigh says. "I'm even more bullish about VR and mixed reality than I ever have been. There are a few people here [at GDC] who are like, 'Oh well, is VR really kicking off?' If you've seen the Gartner hype cycle, there's this huge hype and everyone says it's going to change the world - stuff comes out, it's expensive, it's not got amazing software, we're still learning how to make great VR games, there's this trough of disillusionment. And now we're coming out of it, and that's happened in every new tech... There are a couple of futurists from big companies I've spoken to who are 100% certain it's going to happen. It's going to take some time, [but] I'm coming away more excited...than I ever have been before."