Unity CEO: VR Will Get Huge, But Devs Need to Survive and Avoid Hype Until it Does

If you watch one presentation from VRLA 2017, make it this one.


At VRLA 2017, Unity CEO and games industry vet John Riccitiello dumped a little cold water wisdom on the hype surrounding the red-hot VR industry. Riccitiello believes VR is coming and it will be huge, but advises that developers stay focused on survival and steer clear of the hype if they want to seize the incredible opportunities in front of them.

There’s a reason people are so excited about VR. Not only are there now a handful of high-end tethered and mobile VR headsets available to consumers—and among them there’s already millions of units in the hands of real customers—but the world’s leading technology companies have announced major VR initiatives, along with the venture capital sector investing in AR/VR companies to the tune of $1.8 billion in 2016 alone.

But, the industry is still in its infancy and still seeking a firm footing that will truly form an ecosystem: a self-sustaining web of hardware builders, software developers, and consumer demand.

John Riccitiello is the CEO of Unity Technologies, one of the world’s leading game engines. Before that he served as both COO and CEO of Electronic Arts (as well as a number of other CEO positions outside the games industry). Under Riccitello’s leadership, Unity last year raised a $181 million investment, reportedly valuing the company around $1.5 billion. That is to say, Unity, Riccitello vision that leads it, are a very important part of the overall gaming industry.

Photo courtesy VRLA

So what was he doing giving a keynote to a few hundred VR developers at VRLA 2017 last month, which, by the measure of the rest of the games conference industry, is a rather small affair?

It’s not where the VR industry is today that brings Riccitello to VRLA, it’s where he believes it will ultimately go. It’s a belief that started at least as far back as when he advised and invested in Oculus prior to the company’s 2014 acquisition by Facebook. It’s a belief that has lead the Unity game engine to be at the forefront of VR and AR hardware support—including Rift, Vive, PlayStation VR, Gear VR, Daydream, and HoloLens—used by two-thirds of AR and VR apps, according to Riccitello.

Despite that conviction, Riccitello was at VRLA to bring a little veteran wisdom to the young VR industry, using his keynote presentation (heading this article) to urge focus, survival, and avoiding the hype until the ecosystem really starts churning.

What I’m not here to do today is to convince you that AR and VR is going to be a big thing. I’m going to assume we agree on that. What I want to talk to you about is when it’s gonna happen, how it’s gonna happen, and what the ingredients are. The point being: I want to try to lay out a framework that I think will actually help the industry, but beyond that, figure out—when you’re putting resources into this marketplace, when you’re investing your time and hard-earned money—when you can expect a return on investment and what that might look like. I think it’s important that we have that so that we [the industry] don’t get too far ahead of ourselves, and maybe running out of that cash or going bankrupt before we really get a chance to get started.

Naturally, Riccitiello spends a good chunk of time evangelizing the Unity game engine, but starting around 10:30 in his presentation, he digs into his personal vision of when the VR industry will take off in earnest, and argues that industry forecasters have taken the VR hype too far.

About a year ago I put this slide up [above]. And it’s not for lack of enthusiasm for the AR and VR world that I own the white line and the industry forecasters own the red line. One of the challenges I think we’re risking right now is so much enthusiasm that’s out there in the marketplace has people forecasting crazy stuff that’s going to happen so near-term that it’s virtually not believable. One of the forecasts I read recently said that the VR/AR marketplace is going to be $164 billion three years from today. Now… the entire game industry, hardware and software—including the juggernaut that is China—is only two-thirds that size, after most of my lifetime building to that point. Now I’m not suggesting [AR/VR] isn’t going to get to $164 billion and then $264 billion, and then $364 billion; I think ultimately the world of AR and VR, the world of 3D compute, is ultimately going to be as big as the internet—it’s going to be trillions, but we’re not there yet, and we have to measure ourselves. So if you look at the shape of my line there, through at least 2022 or thereabouts, I’m a little under the industry forecast. So if you happen to be an industry analyst, and if they show up to events like this, look… I think it hurts us to the degree at which people write articles for the major press and say that our industry is underperforming […] and we should write this off. It is going to work. It’s just not going to work in the timeframe that we like to talk about.

Riccitiello addressed an audience of developers and industry insiders during his keynote at VRLA 2017 | Photo courtesy VRLA

There’s early hardware out now which has allowed what Riccitiello calls a “developer focused industry” to begin slowly growing. But for serious consumer backing, he hones in on the idea of a key “price to content” ratio which has not yet landed in favor of broad consumer adoption.

[…] price and content is absolutely critical for the understanding of when our industry is gonna get to some reasonable level of maturity, and let me explain a little bit of what I’m talking about. Now, price can mean a couple of different things, but ultimately when you’re spending $1,500 or $2,000 to put a brand new tower PC under your desk and you’re tethering it to the back of your head through a head mounted display […] that’s a lot of money. It’s really hard to come up with a product in any form of technology—other than like a brand new car—that sells in any significant volumes at price points like that. The price point is gonna have to come down. […] CPU, GPU, head mounted display—the whole kit—I believe has got to be significantly under $1,000 for the consumer.

And then he turns his attention to today’s blockbuster content creators. When do major franchises and the world’s best content makers start creating serious content for AR and VR? Not until they can justify it with at least a promise of a hundred million devices,  Riccitiello says.

Some of the great applications that will show up in AR and VR (and did show up in gaming and mobile) were written by very small teams. And they were ridiculously innovative. But markets matured to scale when major developers brought out their version of Star Wars or Marvel or these other things, and a lot of times these things can cost $20, $30, $40, $50… $100 million to build—all of the sci-fi or superhero movies cost over $100 million to build. And for those products to show up—for them to have a reasonable chance of penetrating a market well enough to break even or better—[…] if there isn’t at least a very near-term probability of 100 million devices in the marketplace that can play it, they won’t build it. They won’t build it because it can’t make money. And so, what needs to change for our market to get to a place that makes any sense at all for you to get the return on investment you want, is we’re gonna need to see the promise of that first 100 million [devices], and then the promise of the second 100 million. A couple hundred million devices creates an umbrella for the entire industry to flourish. And I think we’re a few years away from that.

Photo courtesy VRLA

So when does that happen? When does an individual AR/VR platform bring together the best of the what’s out there today at a price point less than $1,000 dollars and begin to point toward that 100 million device mark?

My sense is we’re going to see that in full flower in 2019, and we’re going to see the beginnings of that shape [of device adoption] in 2018. […] it will happen, it’s guaranteed to happen. It won’t happen at the time-table that people tell us it’s going to happen. It’s going to be slower than that because the pieces still need to come together.

And finally Riccitiello turns toward the exciting opportunity that even the smallest developers find themselves in today. He talks about the hardware makers who are putting out devices today, even when the content isn’t ready for prime time.

[…] if you run into anybody that works for Oculus, or anybody that works for Vive, or Samsung working on Gear, or Magic Leap folks etc. These guys have invested billions. Absolutely invested billions and they have many billions to go. My friend Clay [Bavor, VP of VR] at Google, he’s investing and building… he’s creating something. You know what he’s creating? He’s not creating Google VR. Brendan [Iribe, Head of Rift] and his team are not creating Facebook VR. Gabe [Newell, head of Valve] are not creating VR for Valve. They’re creating the opportunity for you to be in the same position that EA and Activision were in the early ’80s when they created their companies to get the game industry off the ground. They’re creating the same opportunity that [mobile game giants] Supercell and Machine Zone and King had in the world of mobile to get their companies off the ground. This is a simple equation; they created the opportunity, you will create the industry, and I can’t wait.

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  • VR and AR is a future tech. A lot of more development are yet to appear in the consumer market.

  • Michael Davidson

    Very well stated. I am grateful that sobering projections like this exist, in an attempt to keep everyone well grounded and moving forward.

  • Sponge Bob

    you don’t need full tower pc to run VR
    its mostly GPU rendering
    can be much less than 1000 for small VR box without any extras
    nvidia should change form factor and price point of those gpus

    • George Vieira IV

      It is mostly GPU, but Oculus still has decent minimum specs on the CPU too, so there must be some need for a good processor.

    • NooYawker

      It’ll work, but not well.

  • Lucidfeuer

    See you in late 2017 when some reality pours back in the eyes of VR hysterics.

  • NooYawker

    I’m happy with conversions like the upcoming Fallout and Doom, and the Doom3 VR mod for a few years. There’s lot’s of great games I’d love to play in VR.

  • J.C.

    It’s not gonna be $500 all-in, but for the forseeable future, the Scorpio has the best shot at being that device.

    As for AAA titles, EVEN IF a huge studio started making a VR-only title when headsets came out, it’d still be 3-4 years from release. Right now, we have Survios, CCP and especially Owlchemy Labs as VR’s star developers. While none of them have HUGE games, they’re high quality. Owlchemy’s two games so far are painfully high quality, especially Rick & Morty. They make most other offerings feel woefully inadequate. I’m hoping Owlchemy will eventually become the Naughty Dog of VR.

    Our job as early adopters isn’t to get all our friends and family to buy current-gen hardware. It’s to get those people excited about the tech in general. Put them in it, let them experience things like TheBlu, JobSim, and The Lab. Make sure they’re aware this is just the beginning, they’re getting a sneak peek at the main event. Yes, currently it’s more complicated to set up than they’d want to deal with, and screen resolutions aren’t what people expect yet. But that’s coming. Controllers will evolve to make even the highly praised Touch controllers seem as ridiculously inadequate as Atari joysticks.

    We all got into this at the halfway point. If you didn’t realize that, I can understand your disappointment. What you were hoping for IS coming! There wouldn’t be cars as we know them if the model Ts (and its insanely unsafe predecessors!) weren’t sold to the public.

    • elev8d

      Scorpio isn’t even that much more powerful than the PS4 Pro. It’s just barely powerful enough for VR and it’s more in line with the min-spec requirements for PCVR. Also, we don’t know how good tracking will be yet, which is the most critical element of VR. Point is, I’m not counting on Scorpio VR to do much more sales than PSVR.

    • kool

      I’ve had pretty good reactions with the psvr. My mom surprised me the most even with bad eyesight she still wants to see more stuff when she comes over. My pops just wants a flight stick and even my girl who gets sick watching fps games enjoys the vr room games. Word of mouth is also a big factor most people aren’t aware that vr has landed. Sony has the best chance of pushing the industry into the mainstream with price and brand awareness. But if the psvr doesn’t move units this Christmas devs may back off and the industry may stall. I’m excited for farpoint. Even if the game isn’t that great, the gun gives fps games a standard control scheme for vr. If they could get cod on psvr it could the game that puts vr in the spotlight. The other being halo vr on the Scorpio. I expect for at least one big dev to take the plunge at e3 and announce vr support for an AAA game. It worked out pretty well for re7 so who’s next.

  • VirtualRealityNation

    I have been working up a presentation for a big pitch for a few weeks and nearly everything I was going to say was mirrored in this speech. I feel much more confident that I am speaking the truth now.

  • Wow, wow, wow, finally someone saying things the right way

  • kool

    The killer app right now is YouTube 360, which is good and bad. Good for showing VR to casual users bad for gamers. Bigger games are trickling out the next being farpoint. If Sony would bundle a pro, farpoint, the gun, the camera and psvr together I wonder how much would it cost? If they were willing to take a loss maybe $600, it would probably come with the slim though. Sony should take the wands out and bundle the camera and hmd for $400, the only game that uses the wands is rush for blood. Or just drop the price for the holidays.

    • WyrdestGeek

      I’m still kind of wondering how VR and gaming are going to fit together in the long run.

      I’m pretty sure VR is different enough that it won’t be a good fit for existing gaming modalities.

      So what will probably happen instead is:
      1. People going into social VR to play games with virtual screens — this might seem weird, but even now people might go in to VR to play e.g. checkers or chess with a virtual board.
      2. Totally other games made for VR from the ground up that only passingly and superficially resemble existing games.

      • kool

        So far driving, flying and on rails games work well. Platformers play like an interactive diaroma, which has an unlimited cool factor. RTS games should be doing this too. Fps games work alright when slower paced. I think the psvr gun will be a game changer for the genre. Puzzle games will probably change the most being the most abstract genre. Adventure games like Myst should also make a comeback.

  • Armando Tavares

    Oh look… *FRIGIN* big industry mogul agrees with what I’ve been saying ever since RIFT announced it’s selling price: «…The price point is going to have to come down. […] CPU, GPU, head mounted display—the whole kit—I believe has got to be significantly under $1,000 for the consumer. …»

    As far as I see it, the price point for VR devices has to be around the 350$ mark. Period.

    For the record (again): OCULUS and VIVE did it WRONG. Both devices were wrong at that particular point in time (and people will disagree with me on this): Both overthought and overdid the concept and, both, got (and still are to this day) so caught up in coming up with the next trillion dollar content ‘thing’, that they forgot about everything else that already existed, thus neglecting consumers as a whole.

    I’m not talking out of my a** here. I sell hardware for a living and got a first row sit while OCULUS and VIVE trashed the hopes and dreams of quite a few people.
    People used to come to me for information and it changed from curiosity about:
    – release dates
    – minimum computer specs
    – device prices
    – will I be able to, some how, play the games I have now? <- REALLY IMPORTANT!!!
    – etc

    to reactions like: «LOL… are they serious???»

    Price point and the promise of lower minimum hardware requirements to drive VR, is why I'm paying REAL close attention to the Microsoft+partners joint venture.

    • Sponge Bob

      300$ for light (tethered) headset with quad-hd display and IMUs – sounds about right – we”ll see those by next year.
      full PC is redundant – XBox type of console will do – another 300$

      I would say 600$ for complete VR setup is a very good price provided content is there to justify purchase
      After all we are paying 700$ for those smart phones and replace them every 2-3 years…
      But good VR content is frigging expensive to produce – much more expensive than you regular XBox games

  • Mane Vr

    I think vr in it beginning do more porting of big game into vr some of these indie vr dev could offer their services to do the port then use the money and the things you learnt from doing the port to make their own game… that would help dev get thru the start up of vr so their skills in creating vr games will be amazing by the time it hit mainstream

  • MW

    Point is-today HMD are (from customer point of view) insanelly expencive crap. And we will not buy it unless it will be much better and chepaer. But we don’t count on that. So,thats it about VR today.

    • Sponge Bob

      well, you buy smartphones for 700$ to browse web on tiny shitty (although hi-res) screen, straining your eyes
      do you expect to pay less for hi-res headset you can also use to watch movies and do most of other things you do on your smart phone ?