nDreams CEO: It's time to break the market's misunderstanding of VR games

Since the advent of the Quest series of head-mounted devices, the VR game market seems to have brought a new vitality, and its development speed far exceeds that of the Rift era. It has been about 4 years since Quest 1. Where is the VR game market now? At GDC 2023, veteran VR game studio and publisher nDreams announced a series of data and pointed out that its sales have increased several times compared with 6 years ago and will continue to see greater growth in the future.

Looking at the VR game market from the perspective of VR developers may allow us to better understand the current market situation and future development trends. At the GDC event, nDreams also predicted the sales of headsets such as Quest and popular VR games. It believes that the revenue of "Beat Saber" may have reached 300 million U.S. dollars, which is a considerable amount. And its success also represents the potential development space for future VR games. In addition, nDreams CEO Patrick O'Luanaigh also believes that the growth trajectory of Quest 2 is close enough to that of Xbox, and may even surpass Xbox in the near future.

The following is the more detailed content of this GDC speech. If you are interested, come and take a look:

It is understood that nDreams has been in the VR industry since 2013. In 2006, there was only one employee. Now the company has 230 employees (expected to grow to more than 300 employees by the end of the year) and has 4 studios. Previously, it has developed and published a number of popular VR games (approximately 13-15), including "Phantom: Covert Ops", "Far Cry VR", "Little Cities", etc. Currently, the company is also developing a VR game based on Sony's film IP: "Ghostbusters: Rise of the Ghost Lord", which is expected to be launched this year.

O'Luanaigh said: 2023 is an exciting year for VR. The industry has just entered the growth curve and many big things will happen. It is also predicted that 7 new mainstream VR headsets may appear on the market this year, including new PC VR. VR hardware will become an important industry this year, as some super manufacturers will also enter the VR market.

The advantages and disadvantages of VR at this stage

Due to the complicated settings of early PS VR and PC VR, users had a barrier to use and the experience was not ideal. The VR box and Rift CV1 lack 6DoF controller positioning, making it difficult to achieve rich VR game interactions. In comparison, the performance, configuration, and experience of VR headsets such as PS VR2, Quest 2, PICO 4, and Vive Focus have been greatly upgraded compared to previous VR headsets.

Advantages: 1) High-quality VR content has appeared; 2) The market has seen visible growth, and major game companies, publishers, and IPs have also begun to pay attention to VR; 3) The prospects for VR/MR are becoming increasingly clear; 4) VR can bring a different gaming experience from PC, console, and mobile phone. It can amplify emotions such as fear, awe, excitement, love, etc., and make people immersed in it.

Disadvantages: 1) Market growth takes time, and some VR developers may take 10 years to start making big money; 2) Many people’s impression of VR is still in the era of VR boxes; 3) New technologies take time to perfect, and VR headsets The display size is still very large; 4) There are not enough VR hardware manufacturers on the market, and the main players are still Sony and Meta.

In addition, based on publicly disclosed data and the number of store reviews, O'Luanaigh predicted the sales and sales of several VR games. Among them, "Beat Saber" has the best sales, with an estimated sales of 6 million copies (sales of approximately $300 million), followed by "Half-Life: Alyx", which is expected to sell 1.7 million copies, with sales of approximately $60 million. "Among Us VR" has only been online for about 4 months, and has sold approximately 1.3 million copies, with estimated revenue of US$12 million. This is enough to illustrate the growth potential of VR games at this stage.

Compared to 6 years ago, nDreams’ revenue has increased several times and continues to grow year by year. O'Luanaigh predicts that it will further double from 2024 to 2025, and this growth trajectory is basically in line with the current situation of the VR industry.

Current status of VR industry

O'Luanaigh predicts based on online data that the sales volume of PS VR1 is more than 7 million units, while the sales volume of PICO 4 is close to 1 million units. The total PC VR market headset shipments are about 9 million units. The sales volume of Quest series headsets is 20 million units, which is already a public figure.

He also pointed out that most PS VR1 may no longer be used due to high user resistance. PS VR2 sales appear to be exceeding expectations, and Sony believes it will outsell PS VR1. According to O'Luanaigh's prediction, as the price of PS VR2 drops, its sales have prospects for growth.

Comparing the sales of Quest 2 and game consoles, from the end of 2020 to the end of 2022, the sales trend of Quest 2 is close to that of Xbox Series S/X, and even slightly higher than Xbox most of the time. If the market size of Xbox is already large enough, then the market size of Quest 2 has also reached a comparable level. In addition, compared with mainstream game consoles, VR headsets are updated faster. With the improvement and optimization of technology, the VR headset market will continue to expand.

Practitioner Survey

In order to further understand practitioners’ views on the VR game industry, nDreams surveyed 25 VR practitioners (including CEOs and senior developers of VR companies in North America and Europe, etc.) to learn about their views on VR and the VR market. . For example, in the survey, respondents answered the following 6 questions:

1) Do you believe that the VR game market will surpass the console game market?

Some people believe that VR games will surpass console games, but it will take some time. Some people believe that VR games will surpass console games only when AR and VR technology becomes popular and 2D content is upgraded to 3D form. Some people believe that the development path of VR games is similar to that of console games, and it may reach a scale similar to that of console games in the future. Some people believe that the application scenarios of VR are not limited to the gaming field, so VR games should compete with mobile games instead of competing with console games.

2) What are your expectations for future VR?

Respondents believe that VR can allow developers to fundamentally reimagine game design and allow players to experience exciting stories immersively. VR is considered to have greater innovation potential in game design, applications and user experience. Some people also expect that cloud computing can reduce the unit cost of VR hardware.

O'Luanaigh pointed out that the future of VR is already around the corner, and the VR market size has reached the level of game consoles, which is exciting.

3) What big challenges does VR still need to deal with?

• People’s preconceived negative impressions of VR;
• The active consumer market allows large-scale VR games to be profitable. The current budget for VR games has reached between 10 million and 20 million US dollars, but there is still a considerable gap between it and AAA PC games, so the VR market needs to continue develop;
• The hardware cost, size and weight also need to be optimized to further lower the entry barrier, reduce setup and content loading time;
• VR is unique and should not be compared with PC, game consoles, and mobile devices. The best VR games are specifically designed for VR, but copied or ported from other platforms.

4) The biggest misunderstanding about VR from the outside world

• VR is not just about games, you can also watch movies, socialize, etc.;
• VR box is not real VR, too many people have not experienced high-quality VR equipment;
• The VR market is not a niche, it is a prosperous and developing ecosystem;
• The main users of VR are not just teenagers. The largest age group on Quest is between 25 and 34 years old, and 20% of users are over 45 years old;
• VR has a lot of high-quality content and is constantly being added.

5) Will F2P (free online game model) become the most important VR business model?

F2P games perform well on all-in-one VR machines, but 3-4 people surveyed believe that VR games can start from the GaaS model in the short term. As the content continues to be enriched and the user base grows, there may be opportunities. To F2P, this model is expected to require a user base of hundreds of millions of people. Some people believe that F2P still has room for profit in VR at this stage, and may even become an important part of the VR ecosystem in the future.

Currently, nDreams already has a dedicated studio dedicated to developing F2P VR games. It is expected that F2P VR games will be developed within 2-3 years.

6) What impact will Apple’s entry into the VR market have on VR games?

According to the interviewees, new competition is good for promoting the popularity of VR technology, and big brands like Apple may change people’s views on this technology. Some people believe that any market Apple enters will bring that market into the mainstream. Of course, just like the original iPhone, Watch and iPod, Apple's VR headset shipments may not be large in the early stage, but after a period of development, its user base will grow rapidly.

In short, O'Luanaigh believes that VR has escaped the stage of hype and shuffle, and will begin to embark on a growth curve. At the same time, the shipment volume of Quest series headsets is expected to surpass Xbox. Reference: GDC

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