The XR Week Peek (2021.07.05): Facebook to have $6B of losses for the VR business, investments in XR are on the rise, and more!
It’s summertime, and as usual, during this part of the year, people think about going to the seaside more than about VR, and so the news to talk about are always fewer. So expect this and the following weeks to be a bit calmer for the XR ecosystem.
I have some news to share about me if you are interested:
- Threedium has put me in the list of top 50 XR voices, I think based on the Linkedin following. Thanks to every one of you that has made this possible, I’m there only because of your huge support!
- I have been featured on Unity’s website! I am super happy about it, it’s like a dream coming true…
- On Wednesday 7th at 11:15–11:30 am CEST I will (remotely) speak together with Massimiliano Ariani at the famous Laval Virtual event, in the fitness track, where we will speak about HitMotion: Reloaded (btw download our game now!)
- On Saturday, 10th at 19:00 CEST I will virtually be at XReality’s Meetup talking about VR events, and what I do together with VRrOOm
But enough talking about me, now let’s dig into the news!
Top news of the week
Facebook losses in the VR sector will be around $6B in 2021
The most interesting insight of the week comes from analyst Mark Mahaney, that, among other things has analyzed Facebook’s Virtual Reality business, and has reported very interesting data.
The first interesting forecast is about the number of sold Oculus Quest 2 headsets. According to Mahaney, the headset has sold around 5–6M units until now, which should grow until 8M before the end of the year. These numbers are coherent with the ones of other analysts, that seem to agree that the Quest 2 will be close to the 10M units this year, and will cross that number next year. 10M is the magic number for a self-sustaining ecosystem, and 2022 seems to be the year when finally Quest will take off and can start chasing other home appliances like gaming consoles.
The revenue from the sold headsets is so around $2.4B and this is a solid number. But actually, the virtual reality business is far from being profitable for Facebook.
In fact, Mr. Mahaney reports that due to the huge expenses for R&D, deals with game studios, and hardware sold at loss, “[Facebook] will generate between $5.4 billion and $6.4 billion in operating losses this year on its virtual reality business”. Yes, you’ve read it well… they will lose around $6B only in 2021, to carry on their XR ecosystem dominance goal. It is a huge number, and thanks to it, you understand how it is possible that other companies can’t compete with Facebook (how many companies can afford to lose $6B in only one year?), and also why the $2+B investment in Magic Leap was not enough to bring it to success. Creating a successful hardware and software ecosystem may require losses in the dozens of billions of dollars. Microsoft too had to lose $10B to let Xbox enter the gaming console market and compete with PlayStation.
More info (Link to original article)
More info (Article on this report not behind a paywall)
Other relevant news
US judge dismisses antitrust case against Facebook
Facebook is not the most loved company, we all know it, and among the shady practices it is accused of, one of the most frequent is that it has monopolistic practices. We see it also in the VR ecosystem: it is gaining enormous shares of the VR market, it acquires the best gaming studios and competes directly with its own applications with other indie companies (e.g. VR Desktop), etc…
Facebook, together with the other tech giants, is currently under scrutiny from some US judicial institutions, and it had been sued for antitrust violations by the FTC and also some individual states of the US. If Facebook had lost the case, it should have probably had to split Instagram and/or Whatsapp into separate companies. This could have had also a ripple effect in VR, where the company had to be more careful in its actions, especially its deep integration between Oculus and Facebook services.
But actually, this has not happened. Judge James E. Boasberg for the U.S. District Court for the District of Columbia has dismissed both cases. The one from FTC has been rejected because the FTC has not been able to demonstrate that Facebook has an actual monopoly in the “Personal Social Networking (PSN) Services”. While the case started by the joint states about Instagram and Whatsapp acquisition may have some foundation, but the acquisition has happened too much time ago, so it is too late to investigate it.
The FTC has 30 days to refile its complaints, but this is for sure a huge win for Facebook and the Zuck. Facebook won’t have to divest its assets and can so continue with all the practices that have carried on until now. So it won’t take steps back in virtual reality too and will continue going forward with its master plan with even more confidence now.
Investments in VR companies are on the rise
It’s a good moment for VR: thanks to the strong sales of the Oculus Quest 2 and the rumors of Apple entering the space soon, there is much more confidence in the future of immersive technologies. And this confidence also regards investors.
In the last weeks, we have seen huge investments happening in the space: last week I reported about ENGAGE getting $10M and VRChat $80M, but there other success stories also from this week: the game studio Fast Travel Games has just got $4M, the meditation app Tripp $11M and the training solution Virti $10M. And these ones are just a tiny part of all the news I’ve read.
Investors are pouring money into the XR market like in 2015–2016 when there was the hype for VR, and many XR companies got investments just because investors wanted to put some fiches on the technology. After the winter of VR, now we are growing towards a mature stage for the tech. If you look at it closely, XR has followed the typical Gartner Hype Cycle: now we are probably on the slope of enlightenment before going to the plateau of productivity. That is, we are growing fast before technology becomes mature.
Investors know that it is a great moment to invest, because now immersive realities are in a growth stage, and is growth not due to hype like some years ago, but by the fact that the technologies have real use cases and a real market. And it is still early enough that some first comers can grow fast and have a big advantage on the companies that will come when the technology will be mature.
If you have an XR startup, this is the right moment to look for investments.
More info (Fast Travel Games gets $4M funding)
More info (Tripp gets $11M funding)
More info (Virti gets $10M funding)
News worth a mention
VR is already working on Windows 11
Famous VR YouTuber Tyriel Wood has tried Windows 11 Insider Preview and tested it with all the most famous VR runtimes: Oculus, SteamVR, and Windows Mixed Reality. All headsets it tested were working with exactly the same performances that they had on Windows 10. This is a great piece of news because it shows that when there will be the transition from 10 to 11, it will be smooth for VR users.
NVIDIA releases CloudXR 3.0
You know how a big fan I am of NVIDIA CloudXR, the solution that lets you perform cloud rendering of AR and VR applications. I’ve so been happy to discover that at Mobile World Congress, the company announced that its CloudXR 3.0 release will include bidirectional audio support. This means that finally, you can now also use your microphone in a cloud-streamed application, and this will be very important to implement cloud rendering also for Social VR experiences like VR Chat.
Unity releases free guide on mobile development optimization
Unity has just released a free guide that teaches you how to optimize your game so that it can run smoothly on mobile devices. The guide is meant mainly for flat games, but its content can be applied also to VR games.
Developing games for Quest is very complicated, so I’m sure this guide will be useful to many developers!
Facebook and Matterport release free scanned environments for research purposes
Facebook and Matterport have partnered to create a dataset of scanned 3D indoor environments. Datasets are fundamental to train AI systems and these indoor environments will be useful to train robots or AR assistants that have to understand how an environment around them is made.
This dataset has also been published, and it can be used for free for educational and research purposes.
Brickit is the dream app for all LEGO fans
The most viral video of the week is the one by startup Brickit, which made an application that uses AI+AR to make sense of a mountain of LEGO. You let the app scan a pile of LEGO bricks, and it understands what blocks you own and proposes different constructions you can do with the blocks at your disposal. It is overly cool.
More info (Brickit app)
More info (Viral video of Brickit app in action)
PhotoCatch makes photogrammetry on iPhone easy
At WWDC, Apple has announced Object Capture, which is a photogrammetry engine built in the iOS runtime. This week, a developer has released PhotoCatch app that adds an easy UI to this engine, and so lets every person with an iPhone create a 3D model of a physical object with his/her phone very easily. And if you don’t have an iPhone, you can use PhotoCatch Cloud: you upload some photos of the object in the cloud, and the Object Capture engine will be run on the cloud and create the 3D model for you!
More info (PhotoCatch)
More info (PhotoCatch Cloud)
Downpour Interactive is working on a new game
Downpour Interactive, the studio behind Onward, has just hired Mitch Dyer, who worked as a writer on Battlefront II’s campaign. On his website he has confirmed the news, stating that he is “currently working on an unannounced project at Downpour Interactive.”
Downpour is so working on a new game, and given the fact that Mark Zuckerberg spoiled that he was excited about Onward 2, this makes us think that this unannounced project is indeed Onward 2. If this is true, the need for a writer suggests that the title could feature a story, and so maybe also a single-player campaign.
Gorilla Tag developer is struggling to make money
Gorilla Tag is the story of a VR game developed for fun that has exploded in a way that no one was expecting. And this is a good but also a bad thing.
The game has seen 675,000 unique players to date but it is completely free (because its success was unexpected), so every new user actually just means cloud costs for its solo developer. He has added addons to support the game on Steam, so now thanks to the support of the community, he can at least pay for the costs of the cloud.
But on Quest, where it has the biggest growth, it has no monetization options. App Lab games can’t offer DLCs, so the game can’t be monetized in any way. This shows once more how unfair is the treatment for indie developers on the Oculus platform. I also find it a bit absurd that with those numbers the game is not on the official store yet, but someone suggested that maybe it is in the middle of the QA process. I really hope so.
Some news on content
- Chess Club VR has been released on Quest, and reviews talk about a great way to play Chess in virtual reality
- Upload VR has published some minutes of gameplay of Sniper Elite VR and it looks super cool
- Madrid Noir, a short VR movie by the talented studio Atlas VR, has been released on Oculus Quest
- The Secret Of Retropolis, a game that reminds LucasArts’s point-and-click adventures, is releasing on July, 21st
- Samurai Slaughter House, a splatter physics-based fighting game, is coming in 2022
- I have reviewed Virtual Becomes Reality, an experience that lets you enjoy the famous Stanford VR lab by staying at home
More info (Chess Club VR release)
More info (Chess Club VR review)
More info (Sniper Elite VR)
More info (Madrid Noir)
More info (Secret Of Retropolis)
More info (Samurai Slaughter House)
More info (Virtual Becomes Reality)
News from partners (and friends)
Play our game HitMotion: Reloaded on SideQuest and stay fit while having fun! (A positive review if you liked it is also highly appreciated…)
Play HitMotion
Cybernaut Enea Le Fons has created an amazing world in Mozilla Hubs that shows Venice’s most famous plaza with a fluo style. He is going to host there his famous UXR ZONE events and meetings.
Visit it
Some XR fun
You thought that Half-Life: Alyx was expensive, but actually…
Funny link
Is this homeless person really playing with the Quest?
Funny link
You know who is awesome?
People that donate to this blog to support it are!!
This is the list of people that are making my work in informing the community possible:
- DeoVR
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Even the great Jeremy Dalton joined my family this week, what are you waiting for to join you too?
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