VR developers begin sharing some of the ‘hard truths’ of virtual reality’s rough economics

It’s tough to make a virtual reality game, but it is even tougher to make a profitable virtual reality game. And now developers are talking about it.

Light Repair Team #4 developer Eerie Bear Games has lost more than $36,000 making that HTC Vive puzzle game, according to a post from founder Joe Radak on blogging site Medium. He noted that he has seen some developers opening up about the difficulties of making VR games, like RocketWerks founder Dean Hall, who is directing the team working on the HTC Vive strategy shooter Out of Ammo. In a post on a Vive forum, Hall defended developers that take deals from publishers to bring a game exclusively to one headset VR platform, which is a practice that many gamers have expressed frustration with.

“Consumers have transferred their expectations from PC market to VR,” Hall wrote. “Specifically, they expect high quality content, lots of it, for a low price. I see constant posts, reviews, and comments like ‘if only they added X, they will make so much money! The problem is that just because it is something you want, it does not mean that lots of people will want it nor that there are lots of people even available as customers.”

Hall, who is best known for developing the DayZ mod for the online military shooter Arma III, explained that developers need to work with publishers because VR isn’t a money-making market yet for creators.

“I don’t mean ‘money to go buy a Ferrari.’ I mean money to make payroll,” he wrote. “People talk about developers who have taken Oculus/Facebook/Intel money like they’ve sold out and gone off to buy an island somewhere. The reality is these developers made these deals because it is the only way their games could come out.”

Radak’s post about Light Repair Team #4 bears that out. That game did not get any publishing deal. Instead, the puzzle game launched on Steam alongside the Vive. In the end, it has failed to recoup its costs. To illustrate that, Radak shared some details from his budget:

To develop the game:

• About 4 months x $10,000 USD per developer = $40,000
• Cost of setting up the company + legal = $3,500
• Server Costs $10/mo x 3 months = $30.00
• Cost of commissioning two music tracks = about $3,000
• Total cost: $46,530

But those are just the hard costs that are directly attributable to making Light Repair Team #4. Radak also pointed out that people should keep in mind other expenses game studios regularly have to pay for. Here’s some that he shared:

• Average Cost of one VR ready workstation = $1,500
• Cost of Vive or Rift (if you don’t get dev kits) = $600 – $800
• Cost of office space rental (heavily location based) = $500/mo – $5,000/mo
• Cost of (good) Internet = $110/mo – $180/mo
• Desks and chairs per dev= $1,000
• General Office Supplies = about $150
• Other Utilities = about $250/mo
• And I’m not including the licensing fees for software Unity Pro, Maya, or whatever else.

But then after all of those costs, it’s still not a straight shot to regular pay days from Valve. Eerie Bear Games still has to pay taxes to the government and royalties to Epic for using the Unreal Engine, and Valve takes a cut of every sale made on Steam.

“For each unit sold at the full price [of $8], we’re getting about $5.20,” wrote Radak. “With the correct budgeting, [we need to sell] 8,949 copies. This number will be higher though, due to the fact that we have gone on sale on Steam in all sales that we could. And this also reflects that we were working from home on personal computers.”

So how much of a profit did the game earn for Radak and his team? None. It actually cost them money to make.

“[It reached] about 2,300 units sold and about $14,000 in revenue for the company not including taxes and other royalty payments we have to pay,” wrote Radak. “If you look at even the ‘cheapest’ way of budgeting developers, the way you should never do, it still wasn’t profitable. Additionally, after the April launch of the Vive, we did launch a few more update over the next few months  —  so more money spent there that I didn’t even account for.”

Out of Ammo director Dean “Rocket2Guns” Hall thinks consumers have some fundamental misunderstandings about what it’s like to develope VR games. In a post on a forum for the HTC Vive headset, Hall gave some insight into what it was like for his studio, RocketWerkz, to make the VR strategy shooter Out of Ammo. And he used that to defend the practice of some developers taking deals from publishers to bring their games exclusively to one VR platform.