Why VR content outside of games and entertainment is failing

Many content creators in the virtual reality space are struggling at the moment.

VR content companies that aren’t making a game or something that is entertaining are finding little money or engineering talent available to them.

Money and talent are being funneled mostly into the “fun” categories, which are expected to see the earliest consumer adoption and generate the first real profits. That leaves few resources on the table for content creators exploring other types of content.

The reality is that non-entertainment VR companies don’t get the encouragement or subsidies that those in the gaming and entertainment space get. In the struggle to manage their cash flow and runway, they end up producing lower-quality content than they had planned. And that puts them in a vicious cycle, where critics point out their deficiencies, making even less money and fewer skilled workers available to them.

As a result, some of these companies choose to become hybrid studios or “agencies” that create their own content and products while also servicing whichever clients they can land in order to bring in a pipeline of cash and establish a stable business model. I’ve seen this happen to a range of VR companies in verticals as diverse as architecture, home design, wealth management, and painting. The initial rationale is that the agency business can help support and subsidize the in-house work.

The problem is that this naturally leads to a slippery slope, where the agency side of the business inevitably takes precedence and priority, compromising the startup’s original vision and roadmap. And when the pipeline begins to contract and deals aren’t coming in, the founders invariably start taking on side-projects as consultants or abandon ship altogether.

These types of VR content companies face another tough challenge: VR is still in its hype cycle and at an embryonic stage of development. It’s all about hardware now, and software is having a hard time keeping up. What this means to content creators is that they are consistently having to push back their release dates to accommodate technology shifts.

Hardware players are constantly price cutting and changing specs, leaving production teams at these companies wide-eyed and nervous as they try to work to deliver their wares against deadlines.

The only winners in this situation are consumers, who are witnessing an ever more affordable proposition for jumping onto the VR bandwagon. The more affordable VR hardware becomes, the more likely it is the industry will reach the user-base forecasts pundits have projected.

All of these conditions – the flow of capital, the temptation to become an agency, and the frenzied flux of VR hardware – will gradually improve with time. Meanwhile VR content companies outside of the entertainment space will face the hard reality that the market is not oriented to support them and far too many factors are against them.

Amir-Esmaeil Bozorgzadeh is the co-founder at Virtuleap, a sandbox for creative developers to showcase their VR concepts to the world. He is the European Partner at Edoramedia, a games pubisher and digital agency with its headquarters in Dubai.