On VR, Exclusivity and Misdirected Outrage

Over the past few weeks, the long running debate over software exclusivity in the VR space has reached unprecedented levels of intensity, hostility and vitriol. Does Oculus’s approach of funding game development in return for timed exclusivity foster the development of VR content, or does its strategy threaten to splinter a market still in the process of finding its feet?

Like most internet dramas, the latest instalment in the exclusivity debate started with a throwaway comment on Reddit, where Mario Kotlar, a member of the Croteam team developing Serious Sam VR, implied that Croteam had turned down “a shitton of money” from Oculus offered in exchange for the game’s exclusive release on the Oculus platform.

The issue was further incensed by a separate but related discussion surrounding the announcement that Giant Cop, a game previously announced for the HTC Vive, had now ditched Vive support in favour of an exclusive release on the Oculus platform. Oculus was once again accused of “buying out” a developer to gain an unfair advantage over the competition.

Things were not so clear cut, however. Upon requests for clarification, Croteam confirmed in a statement that Oculus offered the team a grant to to accelerate Serious Sam’s development in exchange for limited time exclusivity on the Oculus platform, with the understanding that the game would eventually come to all VR platforms. Similarly, Oculus’s grant to Other Ocean, Giant Cop’s developer, did not even ask for timed exclusivity at all: it was in fact Other Ocean who first suggested a limited time exclusivity so they could focus first on improving the game rather than investing time in multi-platform compatibility.

Neither of these clarifications however have done much to abate the fierce debate on exclusivity in VR titles, with many VR enthusiasts taking to the internet to advocate opposing positions. Some advocate that there is simply no excuse for hardware exclusives in the VR marketplace, praising Valve for its universal VR headset support in its SteamVR platform. Others see Oculus’s investment in the development of games as a crucial contribution to the creation of quality VR content, and question Valve’s lack of first-party commitment.

What is clear is that debating the question of exclusivity from an emotional, philosophical or idealistic standpoint fails to take into consideration the harsh realities of game development, and the uneven market positions of the two main contenders in the VR content space, Oculus and Valve.

First, game development is risky, expensive, and time consuming. While the availability of modern content creation tools like Unity and Unreal Engine, and their excellent support for VR, has given anyone with an idea the ability to release an interesting tech demo, turning that demo into a full game with any depth is a challenge orders of magnitude more complex.

Secondly, the audience for PC VR content is extremely limited at this early stage in the game, with the total number of VR devices in consumer hands being almost insignificant compared to the addressable PC market as a whole. Thus, while a AAA studio with a steady revenue stream can take the risk of investing in the creation of a new VR property, a smaller indie developer would incur a significant risk should their VR title not succeed. Small game studios have gone bust while undertaking less risky endeavours.

Finally, and perhaps most importantly, one needs to consider the relative positions of Valve and Oculus with regards to VR: for Oculus, VR is everything, and failure is not an option. Oculus needs to do everything it can to “prime the pump” of the VR content marketplace, stimulating the necessary virtuous cycle of interdependent software and hardware sales needed to create the critical mass of users that will ultimately reduce the risk of developing new VR content. More quality VR software leads to greater adoption of VR hardware, which leads to less risk for game developers.

For Valve, on the other hand, VR is a low-risk project with plenty of upside and negligible risk: should VR succeed, Valve would gain yet another channel in which to expand its quasi-monopoly on digital distribution. Should VR fail, however, the impact on Valve’s bottom line would be minimal, even with a third of the company supposedly now dedicated to VR.

We can also look at the practical effects of the two main contenders’ relative policies on content. While the HTC Vive’s roster of mainly room-scale experiences is unarguably excellent, its overall content portfolio generally tends to be represented by shorter experiences, focused around novel but limited mechanics, such as Space Pirate Trainer, Job Simulator, Fantastic contraption, and Budget Cuts. Brilliant games with relatively modest budgets.

The Oculus content portfolio, by way of comparison, includes a greater number of high-budget, story-driven, multi-hour titles approaching traditional AAA production levels, notably Edge of Nowhere, Chronos, Lucky’s Tale, and Eve: Valkyrie - All of which are the direct result of partial or full funding of the games’ development by Oculus itself.

Neither the Vive’s nor the Oculus portfolio of games can objectively be called “better,” but the addition of Oculus’s high budget titles to the Vive’s excellent complement of indies undoubtedly adds a greater variety and richness to the overall VR content space, something which would have been more difficult to achieve without Oculus’s dedicated investments and the company’s direct enagement with developers trying to overcome the challenges of creating quality VR content.

It is also important to note that with the exception of titles fully commissioned, developed and/or funded by Oculus, there is no evidence to this day that Oculus has ever asked for more than a limited-time exclusivity in return for issuing a development grant. As a result, after a mere six months following their release on the Oculus store, the HTC Vive community will be enjoying a slew of Oculus-funded games that may never have existed at all, or may not have been as rich, had Oculus not actively invested in their developers. By contrast, while even HTC itself is actively engaging in the funding of VR game development, we are yet to see a quality, high-budget VR title funded (or indeed developed) by Valve.

That last aspect may however be about to change, with reports that Valve may finally be setting up a mechanism to help struggling indie developers take some of the risk away from developing VR content. According to Gabe Newell, Valve’s founder, his company will be offering what amounts to cash advances on Steam revenues to prospective VR developers, to be deducted from their game’s actual Steam sales once it’s released. While this will indeed allow developers to reduce their risk when developing their game, it is still money that will be repaid to Valve should a game be successful - in stark contrast to Oculus’s developer grants, which are repaid only with a limited time exclusive release on Home.

In the near future, the VR marketplace will become sufficiently mature to reduce the risk to developers of committing to the creation of quality VR content. When that happens, even the concept of timed exclusivity will become redundant. Until then, however, we should look at timed exclusivity as a benign, temporary inconvenience: if timed exclusivity deals ultimately succeed in convincing more developers to direct their talents towards VR, they may well be a price worth paying.