How To Build a Profitable VR Business

Lessons learned from four and a half years building a profitable virtual reality startup.

1) Survive

VR isn’t mainstream (yet). VC funding isn’t flowing into this space. Find a way to support yourself, business, and team. Don’t die.

2) Find paying customers

B2C, B2B, or B2G…build something someone will pay you to use on a consistent basis. Use their feedback to improve your product. Find more people like them and repeat.

3) Give amazing demos

Most of the people you meet have never experienced #VR before. This is your opportunity to blow their mind. #VirtualReality is sexy, spreadsheets and databases aren’t.

4) Skip the networking events

Less networking events, more coding and talking to users. It seems like there is a new VR event every day, but you don’t have to go to them. You do not need to be everywhere. Pick two to three high impact events every year.

Head down, hoodie up. Keep building.

5) Bundle the hardware

Most people don’t own a VR headset…let alone a VR-ready rig or laptop. This will benefit you down the road when its time to upgrade (upsell). Factor this into your distribution/sales process.

6) Raise your price

Whatever you’re pricing your product at right now, double it, if not, triple it. VR is incredible and the experience is worth more than whatever you’re charging. You need money to survive and improve your product. Charge more.

7) Use the best hardware available

Whatever rig you use for demos, always have the best hardware. If your build is experiencing frame drops, you’re going to make people sick. $100,000 on beautiful assets doesn’t matter if it isn’t optimized and runs like 💩

8) Do things that don’t scale

Paul Graham said it best, “Do things that don’t scale.” Whatever you have to do to gain users and generate revenue, DO IT RIGHT NOW! You can’t change the world if you don’t have users and run out of money.

9) Press doesn’t equal progress

If you’re chasing an ego boost, press is great for this. If you’re chasing revenue, spend more time talking to customers. Most of the time, press and articles feel great emotionally but deliver nothing. Chase sales and revenue, not vanity pieces and panel positions.

10) Don’t die

Yes, I put this in here twice. IT’S IMPORTANT! The VR industry has nowhere to go, but up. Nobody knows when virtual reality will reach mass adoption. If you can survive until this date, you will be years ahead of the competition. Be a cockroach.

This post was originally shared on Medium and adapted from a Twitter thread I posted in August 2018.

2018 Virtual Reality Predictions

Chase Dittmer's predictions on the virtual reality industry in 2018.

Statistica’s projection based on data from Goldman Sachs for the total market value of both VR and AR is expected to reach $35 billion by 2025. This market is going nowhere but up.

Below you will find my predictions for where I think the VR industry is headed in 2018. I hope you enjoy.

Higher Resolution Headset

As we approach the nearly two-year mark since Oculus and HTC released their consumer version virtual reality headsets, the VR community has been very vocal about their desire for a higher resolution headset.

Pimax

In 2018, I anticipate that their wishes will finally be granted (as long as their wallet can back it up). After a long preparation starting with CES 2017, Pimax, a Chinese Virtual Reality HMD manufacturing company, launched a Kickstarter campaign for a marvelous headset offering an 8K resolution, 200° FOV, SteamVR compatibility and modular accessories.

Graphic from Pimax’s Kickstarter campaign about their 8k virtual reality headset.
Graphic from Pimax’s Kickstarter campaign about their 8k virtual reality headset.

Originally, their Kickstarter goal was $200K, but they reached that in a few hours. By the end of the Kickstarter campaign, Pimax raised $4,236,618 from 5,945 backers.

Pimax 8k vs Pimax 5k vs Oculus Rift vs HTC Vive
Virtual Reality Headset Comparison: Pimax 8k vs Pimax 5k vs Oculus Rift vs HTC Vive

On paper, the Pimax looks amazing. It answers everyone’s wishes. However, the big is question is, can they deliver? If they can deliver on their claims, this product is going to significantly improve the VR experience.

Vive Pro (Vive 1.5)

For those looking for a completely new model, you may be disappointed. However, the Vive Pro offers a welcomed update. The Vive Pro will have two OLED displays with a common resolution of 2880 x 1600 pixels (similar resolution to the Vive Focus).

Mockup of HTC's newest creation, the Vive Pro virtual reality headset debuted at CES 2018.
Mockup of HTC’s newest creation, Vive Pro virtual reality headset debuted at CES 2018.

The new 2800 x 1600 resolution (1440 x 1600 per eye) has thus increased by 78 percent when compared to the original Vive. The new resolution should achieve a much sharper and clearer presentation.

Resolution comparison of the different virtual reality HMDs.
Resolution comparison of the different virtual reality HMDs.

The new 2800 x 1600 resolution (1440 x 1600 per eye) has thus increased by 78 percent when compared to the original Vive. The new resolution should achieve a much sharper and clearer presentation.

Cut The Cord

In 2017, the general consensus was that the next big hurdle for virtual reality is obvious to anyone who’s put on a headset: getting rid of all of those wires. By the end of 2017, TPCast, a Chinese company, with financial backing from HTC, delivered a solution.

After multiple delays in their North American release, we finally received our TPCast a few days before Thanksgiving. There were quite a few bugs and quirks that we had to work out. However, with an active discord community and a $25 purchase of the Open TPCast software, we had the TPCast running flawlessly.

Demoing APEX Officer’s wireless virtual reality training platform featuring TPCast.
Demoing APEX Officer’s wireless virtual reality training platform featuring TPCast.

In 2018, I expect to see more wireless high-end virtual reality solutions reach the market. With the development of Intel’s WiGig technology, we can expect to see companies incorporating this technology in their wireless virtual reality solutions.

Although HTC backed TPCast financially through their Vive X program, I anticipate HTC will offer their own wireless adapter. However, we’re going to have to wait awhile because at this point HTC’s Vive division is stretching themselves rather thin and I believe they will prioritize the Vive Pro before rolling out their wireless adapter solution.

Predicted Delivery: Q3 or Q4 of 2018.

Tools for Developers

Although tools and software like Unity, Unreal Engine, and SteamVR, have made development easier for devs, VR is currently in a wild west moment where there is no industry standard. In 2018, I expect to see more tools, standards, and resources committed to improving the development process for VR and AR applications and devices.

I’m looking forward to the work that the OpenXR project, of the Khronos Group, is producing to solve this problem. According to their website, “their cross-platform VR standard eliminates industry fragmentation by enabling applications to be written once to run on any VR system, and to access VR devices integrated into those VR systems to be used by applications.”

OpenXR’s cross-platform virtual reality standard.
OpenXR’s cross-platform virtual reality standard.

Enterprise Adoption

The professional and enterprise use of Virtual Reality, in my opinion, will skyrocket in 2018, with applications for education, training, rehabilitation, psychology, marketing, art and other 1000 possible usages that will start becoming pretty popular. Imagine virtual training and certification programs for everyone from sales reps to aerospace engineers.

New WalMart employee completing orientation using a virtual reality headset
New WalMart employee completing orientation using a virtual reality headset.

I don’t think we’ll see a case where VR will create new jobs in the enterprise setting, but rather it will be incorporated into the workflow of existing types of roles and jobs. For example, rather than have a welding trainee accompany an experienced worker to learn how to carry out a repair, a 3D simulation of the process can be created so that the trainee can learn before starting the job.

Simulator designed to train new employees on how to operate a forklift in VR.
Simulator designed to train new employees on how to operate a forklift in VR.

Before all of these industries start deploying VR headsets to workers, we’re going to need growth in enterprise VR software and content development. The possibilities of VR in the enterprise are endless, and I can’t wait to see the ways it will reshape business as we know it.

Higher Quality Content

If you ask the average consumer, “why haven’t you purchased a high-end virtual reality headset?” They will probably tell you that, “they haven’t bought a virtual reality device because they don’t find it useful enough.” Unless they have a specific use case or FOMO, it’s hard to justify spending a rent payment on “video games.”

A lot of people in the industry keep talking about the “magical VR killer application,” that will make everyone run to the stores and buy a VR headset. However, that’s just a pipe dream. For widespread adoption, what we really need is more high-quality content.

Currently, most VR applications are just games or storytelling experiences. We need less zombie wave shooters and more social content, educational content, content for work, content for learning, etc. Additionally, we need more content and games tailored to different kinds of people.

The technology is here and has been for years. It will keep evolving as that’s what technology does. No one doubts that. However, the technology itself is just an empty shell without the content to drive it.

AAA Titles

I’ll admit it, developing for VR takes a lot of time and resources. The pool of potential customers is very niche, and the economics aren’t in the developers’ favor. It doesn’t make sense for studios and game devs to invest the time and resources into a project that doesn’t have a lot of potential customers. However, AAA titles will be the catalyst for VR widespread adoption.

Man demoing the game Robo Recall with the Oculus Rift virtual reality HMD.
Man demoing the game Robo Recall with the Oculus Rift virtual reality HMD.

Over the past year, we made significant steps forward in high-quality VR-exclusive games such as Robo Recall, Google Tiltbrush, Star Trek: Bridge Crew, Onward, Rec Room, Arizona Sunshine and more.

In 2017 we also saw a wave of VR ports of AAA games, like Fallout 4 VR, Superhot VR, LA Noire: The VR Case Files, Doom VFR, Skyrim VR, Payday VR, and more.

Man demoing Fallout 4 VR with the HTC Vive virtual reality HMD.
Man demoing Fallout 4 VR with the HTC Vive virtual reality HMD.

In 2018, I think we’ll continue seeing improvements in the quality and length of VR games and experiences, as well as additional VR portings of games (cough GTA cough).

Standalone Headsets

We all know this: 2018 will be the year of standalone headsets. If they don’t sell over 2 million units in 2018, I will be very surprised due to the low barriers to entry for the consumer.

In 2017, a lot of companies have started investing in the standalone form factor:

  • Qualcomm (with the Snapdragon 835 VR reference design).
  • HTC announced the Vive Focus at the end of the year.
  • Pico announced NEO, a completely 6DOF VR headset.
  • Facebook/Oculus announced their cheap Oculus GO and Oculus Santa Cruz headsets.

HTC’s standalone virtual reality headset named the Vive Focus.
HTC’s standalone virtual reality headset named the Vive Focus.

Although standalone headsets are good for widespread adoption, standalone headsets could kill the potential of this industry. If more people are using standalone headsets, the need to push the industry and the technology further becomes second priority. We need higher resolution headsets, we need better GPUs capable of powering two 4k displays at 120 fps. I’m worried that the focus on standalone headsets will derail what the core users and early adopters actually want.

Immersive Accessories

In 2018, I think we’ll see more and more accessories, of every kind, for every price. Examples of accessories that we’ve seen in 2017 and that we’ll continue seeing in 2018 are:

  • Haptic Feedback Suits
  • Special Controllers
  • Guns and Weapons (we’ve already built a few…)
  • Sports Equipment (Tennis Racquets, Hockey Sticks, Golf Clubs, Baseball Bats, Etc.)
  • Brainwave Readers
  • Scent Emitters
  • Haptic Gloves
  • Cable Management Solutions
  • Cockpits
  • Treadmills
  • Motion Machines
  • Driving Simulators
  • VR Bags/Suitcases
  • Etc….

Arcades

If you haven’t seen a VR Arcade pop up in a town near you, you’re either living under a rock or in a very small town in the Midwest. We even opened one in summer of 2016 in a Midwest state, so you’ve probably seen one.

In 2017, VR Arcades spread like the plague across the country and they were even more popular in the Eastern part of the world (China and Japan).

Virtual reality arcade in Japan.
Virtual reality arcade in Japan.

In 2018, we’re going to blessed with both highly technological VR theme parks with massive warehouse-scale VR experiences and smaller, niche, locations that allow users to pay to use a VR device (like the HTC Vive or Oculus Rift) that you can’t afford at home.

Mario Kart VR on display at a virtual reality Arcade in Japan.
Mario Kart VR on display at a virtual reality Arcade in Japan.

As the awareness of virtual reality continues to spread across the world, the rise of VR arcades will continue. However, this trend will reach a plateau heading into 2019. By 2019 the price of consumer-grade virtual reality headsets will become more affordable to the average family and instead of spending $50 for a family of 4 at their local VR arcade, they will make the investment and purchase a VR system for their home.

Conclusion

The actual applications for VR are endless. Virtual Reality can never replace “reality” (or at least, our perception of reality as some people claim there is no one “reality”), but it can sure help it.