Having started production on its first title even before the original Oculus Rift DK1 development kit was sent to developers, Canada-based Cloudhead Games is one of the world’s most veteran game studios dedicated to virtual reality. The studio has staked its very existence on its ability to build compelling VR games. With three prior games under its belt, Cloudhead poured its hard-won expertise into its latest, Pistol Whip, which has propelled the studio new levels of success.

The 2016 launch of Cloudhead’s first game, The Gallery – Episode 1: Call of the Starseed couldn’t have been under more ideal conditions. The studio was among a handful of developers which received access to early to HTC Vive development hardware, allowing the game to launch side-by-side with the headset. Call of the Starseed was lauded and promoted at the launch of the Vive by Valve and HTC as one of the first VR titles to take true advantage of VR’s capabilities.

Image courtesy Cloudhead Games

Critics praised Call of the Starseed’s polish and scope as a departure from other early VR titles which felt more like demo games. In the following years, Call of the Starseed and its sequel, Episode 2: Heart of the Emberstone (2017), would see regular mentions in discussions of top VR games.

Despite the praise and momentum, the success of Cloudhead’s latest title, Pistol Whip (2019), has positively dwarfed what the studio earned from its early entries in VR.

Data courtesy Cloudhead Games

On top of this exclusive look at the studio’s relative revenue, Cloudhead also shared that its sales in December 2020 were up 60% over December 2019. Further, the number of users that have played the studio’s games increased by 131% from 2019 to 2020.

Image courtesy Cloudhead Games

Cloudhead CEO Denny Unger tells Road to VR that Pistol Whip’s success has come from both by a growing VR market and a major pivot in the studio’s approach to VR design, which was driven by Cloudhead’s hard-won VR expertise and the frightening state of VR in 2018—when the studio came uncomfortably close to being forced to abandon VR altogether.

The Storm

Art promoting Pistol Whip’s ‘2089’ update | Image courtesy Cloudhead Games

“2018 was a really terrible year for VR. Most of the major OEMs were waffling on what they were going to do, the numbers weren’t great, a lot of our peers were closing up shop… no one was giving money for projects… investors weren’t investing,” Unger said. “There was a bunch of things happening in 2018 that were really dire for VR. The growth was really, painfully slow. That also coincided with a bunch of decision making about what our next project would be.”

“We had a really short [financial] runway at that time and we had to look at what was working on market. We knew it had to be accessible. It had to be really easy to share and compete with friends. You had to look good while playing it—we thought about how influences would look while playing it. It had to have high replayability, it needed to be a games-as-a-service model, and, really importantly, it had to be targeted toward the Quest.”

Pistol Whip was thus conceived and launched, at a pivotal moment for Cloudhead and the industry as a whole.

“At this time we knew three things: we knew Quest was coming, we knew that Valve Index was coming, and we knew that Half-Life: Alyx was coming. […] if those three things did not drive a turning point in the VR market, then nothing would. And at that point then we would have to pivot away from VR.”

The turning point the studio was betting on finally came, largely driven by Quest in 2019 and bolstered further still by Quest 2 in 2020. In relatively short order, the studio has gone from staring down the end of its financial runway to laying down strategic plans years into the future.

“This, to me, is definitely a turning point in the market—a serious one—this is not a ‘maybe’ thing. It’s the first time, over the last eight years, that […] we’re now profitable to the degree that I can confidently say that we’re gonna be here for a few years,” Unger said. “And we’re a 25 person studio—that’s no small thing—I don’t actually think many VR studios can say that. We don’t have VC funding, we don’t have a board of directors, we’re completely running on our own steam. A big portion of [this success] is coming from the Quest market.”

Cracking the Code

Art featured in Pistol Whip’s ‘2089’ update | Image courtesy Cloudhead Games

A growing market is great news for all VR developers, but few apps are seeing Pistol Whip levels of success. What’s different about it?

“Retention and time played have both been really important metrics [for Pistol Whip], and we’ve seen massive spikes in that with Quest and Quest 2. People keep coming back, over and over and over again,” said Unger. “[…] Oculus made a point of letting us know how amazing that specific aspect to our game was, that it just has this really sticky quality that keeps people playing, and that it’s not slowing down.”

Compared to The GalleryPistol Whip is a radically different kind of game. Rather than a linear narrative adventure, Pistol Whip is a replayable shoot’em up which couldn’t be easier to pick up and play. Unger said that while Cloudhead still has ambitions to build the third episode of The GalleryPistol Whip was built for the needs of the VR market as it exists today.

In deciding on the pivot, the studio reasoned that the breakdown of consumer interest in various genres—shooters, platformers, simulation, strategy, narrative adventure, etc—is roughly the same in VR as it is outside of VR. So to build a VR game in a genre that’s already niche outside of VR would be building a niche in a niche—not a recipe for success.

That meant setting aside the narrative adventure of The Gallery, and picking something with wider appeal. At the same time, the studio made a conscious choice to focus on ease of use.

“[…] one of the pillars for Pistol Whip was that we want to engage the ‘lizard brain’—the reactive mind. Not the mind that has to be deeply analytical about things. And the way we do that is we put you in a situation that’s threatening, and you just react. So there’s a lot of movement that happens in Pistol Whip—physical movement—that’s just driven by these underlying subconscious systems,” Unger said. “And that was a really important breakthrough for us. Like, ‘how do we tease out people moving or behaving in this specific way’ without them even having to think about it? And I think that’s where players get a lot of enjoyment out of Pistol Whip, because they’re active, they’re moving around in the environment, and they’re only focused on shooting and survival.”

Interestingly, the realization that ease-of-use should be a key pillar actually came from fizzled business pitches between Cloudhead and Hollywood studios.

“[Development of Pistol Whip] came off the tail of doing—god I don’t even know how many—pitches with Hollywood. They were really desperately trying to wrap their heads around how they could utilize VR,” said Unger. “[…] even though most of those things fell apart—and Hollywood kind of dropped the ball on VR in general—the benefit of doing that exercise for us was that we really had to ask ourselves some tough questions about how complicated you can really make a VR experience for Joe Blow consumer. And that led us to some assumptions about about what we had to nail on Pistol Whip.”

One of those tough questions was how the game should handle locomotion. While The Gallery, and plenty of other VR games, have ported basic stick-based movement from the non-VR games that came before, Cloudhead had other plans for Pistol Whip.

“[…] one of [our key lessons] was recognizing […] that actually locomotion is something that kind of needs to ‘go away’ in VR. And I don’t mean that you stand in a room and just stand there—that’s not what I’m talking about. The cognitive load of thinking about how you have to move needs to go away,” said Unger. “[…] It should still happen in an experience, but you need to totally remove that cognitive load from the user so they can focus on the other things they’re doing in the virtual environment.”

The same concept of ‘low cognitive load’ carried into the game’s interaction design too.

“[…] this is a bit old school but, in a way I don’t like that there’s so many buttons on modern VR controllers. I actually appreciated the [trackpad on the original Vive controllers] because it forced designers to think more VR-centric… like ‘how do I make my hands do the thing in the experience [instead of using a button]’? For me it’s going back to simplified input. Again, the user shouldn’t have to think about how to do a thing. It should just be a natural organic thing that they already know how to do.”

Continue Reading on Page 2: “The True Starting Point of Modern VR” »

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Ben is the world's most senior professional analyst solely dedicated to the XR industry, having founded Road to VR in 2011—a year before the Oculus Kickstarter sparked a resurgence that led to the modern XR landscape. He has authored more than 3,000 articles chronicling the evolution of the XR industry over more than a decade. With that unique perspective, Ben has been consistently recognized as one of the most influential voices in XR, giving keynotes and joining panel and podcast discussions at key industry events. He is a self-described "journalist and analyst, not evangelist."
  • Rogue Transfer

    It’s worth noting that the article doesn’t [at time of writing this comment] provide any evidence to support its claim that 2018 was such a terrible year for developers.

    That is, Cloudhead games didn’t have any new game then and were essentially surviving on their titles from 2016 & 2017, until 2019 when they launched their next game. So, their revenue graph showing a gradual decline from 2017 to 2018 makes sense and doesn’t necessarily reflect the rest of the market back then.

    Though, there’s no doubt that the results of Pistol Whip show that it as a title was successful. That, combined with the limited Quest & Quest 2 library also no doubt helped it. As that market matures with more competitive titles, it’ll likely require more to stand out, than just stripping down the cognitive load and relying on primal reactions.

    Repetative games only appeal for a time, look at the Wii, most people eventually got bored without the cognitive depth, after a few years, the market was saturated with repetative reaction/party games. The same happened with VR with too many wave shooters killing(ironically) interest in similar indie titles.

    There is a silver lining and advantage though with the casual VR market having so much room to grow and people have yet to experience much of it. That means there should be continued success for a few years at least, but eventually the market will demand cognitively deep titles and the action/party games will struggle more, as people by then will be tired of simplified titles.

    • cleaverboy

      The types of games that people play on flat screens vs on VR will converge more and more, i would think. E.g. Fortnite -> Pop: One. The different VR inputs (i.e. movement) and output will hopefully create brand new genres of games. Just as different input types on PC allow for different types of games than on consoles.

      Pistol Whip is just scratching the surface with this, i think.

      • gamechanger

        Thrill of The Fight is an interesting example. Boxing games in general are super popular in VR and I can’t even recall the name of that flat screen boxing game from EA. I’d say boxing in VR is a brand new genre.

    • benz145

      I think most VR developers would agree that after the 2016/2017 launch hype, VR entered a period where it was struggling to achieve a stable launch trajectory. 2018 saw many studios and hardware makers biding their time or dropping out altogether.

      • As a consultant, I agree. I can’t say exactly the date, but from end of 2017 to all 2018 I had huge problems in finding customers, too, and I thought about changing my job, too. Now it’s much better

    • jimmy

      Shut up soy boy I was there in 2018 and it was awful for vr that when everyone started saying vr is dead

  • cleaverboy

    Very interesting article and a look into the design philosophy, especially in regards to locomotion! I’m glad the studio survived and hope that they create many more interesting games in the future!

  • Douglas Harrison

    Glad to hear they are doing well and seems like they get the issue with VR. I know most VR enthusiast are not looking for another “party game” or whatever you want to call them but for now that might be the best option. Pistol Whip is very similar to Beat Saber you can just jump in and play and it’s fun. I didn’t buy Beat Saber or Pistol Whip for a long time because the screen shots looked bad, it didn’t interest me. I thought I wanted zombie and other first person shooters. But I finally broke down just to see what all the chatter was about. The first time I played Beat Saber I played for two hours. I have never played VR more than 30 minutes at a time. It really blew me away that such a simple looking game could be so fun. Games like Pistol Whip and Beat Saber could only be fun in VR, if you played them on a console or PC they just wouldn’t work at all. I think for now studios should focus on what would be fun in VR and not fun on a console or PC. VR seems so focused on first person shooters, and I’m not sure that will ever completely work. Alyx was great, definitely the best FPS I’ve played in VR but I still only played it one time through and I never showed it off to friends or family. You can’t just jump in and play. My go to games to show off to friends and family is Beat Saber and The Blue even after all this time. I’m rooting for VR but I’m nervous it’s going down the path of Wii, Kinect, home 3D, etc.. I’m hopeful studios like Cloudhead get the dilemma and will help pave the way to get VR more mainstream.

  • wheeler

    These kinds of low friction games aren’t the sort of content I’m personally interested in–I can probably count on my fingers the number of times I’ve loaded up Beat Saber and Pistol Whip, but I’m glad to hear they are finally having success. They also ranked as a “platinum” Steam VR game.

    It’s disappointing though to hear this is the direction a good number of devs are headed in because what I was personally hoping for was more depth in VR games rather than less. Things like HLA are what keep me interested, and my interest in many existing titles has also begun to wane because for the past few years the focus of many devs has been porting existing content to much more limited hardware instead of expanding on and adding more depth to their games. However, that should create opportunities for other developers.

    • benz145

      There’s a reason that the gaming industry started with arcade games—nobody knew how to play (or make) modern games out of the gate.

      It took 14 years to go from Pong (1972) to The Legend of Zelda (1986). It wasn’t just that the technology needed to advance, it was also that the art of game design needed to advance. You can’t just go right from zero to Legend of Zelda.

      Even though it was significantly deeper than Pong, The Legend of Zelda is not a very deep game by modern standards, because since then the game industry has evolved and built on those concepts.

      VR is no different. It gets to lean on some of the ideas and lessons from the non-VR landscape, but so much of what it can do is brand new.

      The arcade games like Beat Saber, Pistol Whip, Superhot, and others are clearly working. Over time, game developers will start to internalize the lessons about why these games are working, and will expand and build on those ideas to bring us deeper and deeper games.

      • Jistuce

        Legend of Zelda also isn’t really viable as an arcade game. It requires a large time investment, and arcade games are very much dependent on the average run being quite brief. Can’t take in more quarters if everyone plays for a few hours.

        And excellent point on knowing how to play modern games being as important as how to make them.
        Atari made the Computer Space arcade before the Pong arcade. While it did well in college campuses where students were familiar with Space War on their school’s mainframe, it did miserably with the general public, because it was too complex. A few years later, a more complex version of the same game would become a massive sensation as Asteroids.

      • Amni3D

        I think the “iterative game design over time” sentiment could be brought up for arcades and console games, but not quite VR if you’re looking at a zoomed out sense. Game design is still game design, and VR isn’t *that* out there to say “we’re starting from the Atari days”. It’s more accurate to say most studios don’t have the resources to make console scale titles.

        Do note in terms of VR currently, “high budget” is less than how much money went into Street Fighter 3, and the kinds of games made will reflect that.

        As far as indie goes, 3D indies are rare, and VR indies are a subset of that market. So “small scale game design innovation” will happen less frequently than flatscreen. For studios, they usually don’t have the budget to make a game comparable in scale to a 90s PC game.

        There’s a bit more to this, but I think this is the true reason VR games are so rudimentary right now, not that “everything’s starting from zero”. No one is complaining that Doom 1 released with “mouse strafe”. It’s not like everyone needs everything to be utterly future proof to release, it’s just only certain games are being made due to the industry’s circumstance.

        • psuedonymous

          “and VR isn’t *that* out there to say “we’re starting from the Atari days”.”

          VR – specifically motion-controlled VR – really IS ‘that out there’ when it comes to game design.

          Take for example the standard two-ticks-plus-face-button control of every first and third person videogame: left stick controls avatar translation, right stick controls viewport look, shoulder buttons/triggers controls fire, face buttons and Dpad command ancillary operations (e.g. door open or object interaction) and modal selection (e.g. weapon/tool changing). It’s ubiquitous now, but didn’t become standard or even commonplace for YEARS after the Dual Analog controller was released Even into the PS2 era you could still find games that did not use this control scheme.

          VR is still in the same sort of fundamental how-do-we-interact-with-the-game phase. It’s very, very early days yet, and basic paradigms have not been nailed down. Not to mention the amount of trash ports (e.g. Skyrim) muddying things up.

          • Amni3D

            I think it’s worth noting Doom 1 shipped with mouse strafe, and the concept of a WASD control scheme didn’t even exist for its sequel, or their next IP. In addition, trash ports are bad because they’re bad ports.

            You can’t convince me that you can’t make a Fallout 3/ New Vegas scale experience with the framework of Walking Dead Saints and Sinners. It’s just not happening because no one’s making it.

            Also Alyx is a pretty good counter point to the sentiment that “you can’t make VR games large scale right now”. I mean, they’re clearly pulling a profit, and it’s clearly making the players happy.

        • benz145

          The concepts are there, but we don’t necessarily know how to execute them very well in VR yet.

          Even though we know that ‘inventory’ is usually an important and beneficial concept, few games have figured out how to have an inventory of the scale that we see in non-VR games. More importantly, we also have to ask—do we *need* and inventory that can hold hundreds of items in a VR game? Is collecting those hundreds of items even fun in VR?

          While HLA and Pavlov *work*, I think their design will look very dated in 5 years. In non-VR you can go back 5 years and games have hardly changed in design and mechanics. I sometimes play Battlefield 4 (2013) online and it feels like a modern shooter.

          • Amni3D

            True, but I think a lot of these can be answered with existing solutions in flatscreen (like the radial wheel taking off in VR games recently). Ultimately these solutions depend on the game, and will be naturally figured out per project, with time.

            My theory is that to play to VR’s strength, you need to play to at least one: the control scheme or the immersion factor. The small scale VR R&D will help you make use of the input, but classic flatscreen game design will drive the long form immersion. That’s my view anyway.

      • Lulu Vi Britannia

        Good point. I’ll also add that devs can’t make high budget games in a small market: you need return on investment if you want your business to be sustainable. Small budget games have a much quicker return on investment, therefore they’re the way to go for most devs.

  • Beautiful interview! It’s good to discover the process that lead them to success with Pistol Whip

  • Gonzax

    Personally I am more interested in games like The Gallery Ep. 2 than Pistol Whip, though I own and like both very much, but I am very glad for them and their success with the latter.
    Hopefully not everyone will go for the quick play style of Pistol Whip and make deeper games with more narrative. HL Alyx has proved it can be hugely successful too, otherwise everyone would be trying to clone Beat Saber and similar games which is not the type of VR that made me fall in love with the technology at all.
    It’s a growing market so I believe we’ll see lots of great things in very different genres coming out in the future.

  • I love the game, but I actually wish it had a bit more a traditional comic book or cartoon/illustration look to the visuals rather that what they went with that’s all kinds of neon disco or something. Maybe something similar to the look used/seen in Jurassic World Aftermath would have been right on the money: Styled such that is just works really well in VR, but not sooo stylized that it might put a lot of people off who might have been interested otherwise. Like I say, I actually really love the game, but that’s somewhat in spite of the aesthetic rather than because of it. Not that it’s ugly, but just that it’s not quite a look I find particularly appealing and I think they could have picked something a bit more universal in that regard (although, like I also said, that still works really well within the limitations of VR at present).

  • Lulu Vi Britannia

    Their comment about the buttons is pretty stupid. Buttons not only become instinctive after a while (people don’t think about them when playing any console and they’re used to it… it’s the same for VR), it’s also mandatory because you can’t do everything without them. Many games have their controls actually limited because they were thought for the Vive’s shitty controllers.

    It’s nice to see their success story though. It was an interesting in-depth analysis of their road!