Beyond the Demo: 2018 Could Be Year for Longer, Profitable VR Content

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undergone meaningful growth and we have now reached a point where there are enough HMDs (head-mounted display devices) and users in the wild that VR content can turn a profit, provided that it is budgeted, produced, priced, and marketed correctly.”

The panel advised VR creators to map out the path to financial returns with detailed estimates. “They need to make sure their project’s financial model has a budget, project scope, price point, expected units sold, and other revenue streams that will result in at least a 2X return for investors. We believe production budgets between $100,000 and $1 million are the sweet spot. That’s enough money for a small team to produce high-quality VR content, but it’s also a small enough budget range that there is a reasonable chance of a project turning a profit.”

So far, the running time of VR experiences has averaged about five minutes, the panel says. But VR studios making narrative works for use at home now need to aim for about 60 minutes—broken up into episodes of five to 20 minutes. VR game developers can also boost their shot at profits by providing two or three hours of playing time. But they should also divide the experience into segments, because “the current generation of hardware becomes uncomfortable to use after an extended duration,” and consumers are still getting used to the medium, the panel says. The experts suggest game sequences of about 15 minutes.

Some VR artists have already broken out of the “free demo” stage, Pinnell says, pointing to Pasadena, CA-based Funktronic Labs, whose full-featured battle game Cosmic Trip (robots pitted against slimy aliens) is now distributed on Steam, where it debuted in its original form in June and built a following.

More than 35 VR games have reaped revenue of at least $1 million, according to a report by The Venture Reality Fund cited by Venturebeat in November.

The potential for profitable VR content will change the landscape of financial backing, with stronger participation from financial investors whose primary goal is to make money, according to the experts convened by Kaleidoscope. “It is hard to predict how much funding will come from this sector, but in the long run we believe the majority of funding will come from this area.”

Meanwhile, the backers that have been funding experimental VR projects are likely to shift their focus toward commercially promising works that consumers are willing to pay for, the panel says. Those backers include headset makers, distribution and publishing companies, media companies, and VR technology companies.

However, strategic investors such as marketers may increase spending on experimental work by augmented reality creators in 2018, the panel speculates. “Because of the large number of AR ready smartphones, we expect to see a few breakout successes in the AR space, which means there is real opportunity and real reason to invest time and money into meaningful AR projects.’’

The panelists are also bullish on the future of location-based entertainment (LBE)—the staging of VR or AR content in commercial spaces where participants can move around through the immersive environment.

“We’ve heard over and over from film studios that location-based is becoming part of their strategy moving forward,” says Doug Griffin, CEO of Nomadic, an LBE startup.

Over the next year or two, location-based VR cinemas and arcades could be popping up at malls, conventional movie theaters, airports, and standalone VR venues, according to the experts who contributed insights to the Emerging Trends report. VR creators should seize on this opportunity, the report says. “If possible, artists should produce both an at-home version as well as an LBE-optimized version of their project.’’

One of the panelists summarized the group’s conclusions:

“It feels like this is the moment,” says Hussain Currimbhoy, a programmer at Sundance. “There have been several cycles of when VR has come and gone, but it feels like right now is the time when VR will connect with people on a broad scale.”

Photo credit: Depositphotos

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