I’ve struggled the last two weeks to make time to write about creative tools and volumes. The subject still fascinates me but as I said at the start of this series it was a brain dump before lessons learnt paged out of my brain now I’m no longer at Adobe or thinking about Dreams. Well the brain was not fully dumped the hectic business of running a new studio has meant that it has been thoroughly paged out to long term storage. So while I’m sure I will return to the subject matter for now I need to pause and talk about where my current focus is.

Talk about the deep technical things you are doing, it is more interesting and the details are informative in a way a long term reflection or abstract could not be.

All of us in the VR industry and especially the UK have been rocked by the recent cutbacks at nDreams and the more severe cutbacks at XR Games. The truth is the VR market, much like the wider game market is doing great but the waters are shifting and this means change and it’s hitting us as well.

High Level VR Trends

• Largest VR budgets have increased and more AAA funding is on the table
  
• Indie VR is booming but results are fickle
  
• Many established safe bets have failed
  
• VR Ports are the new hotness, again
  
• The market favours anything that appeals to a 14 year old demographic
  
  

Now this is a tricky one to talk about without talking about sources and I don’t do well convincing people and instead I want to talk about how this is affecting my studio and thoughts I have in this direction.

Larger Budgets

This one has hurt us the most, as well as other small players looking for funding. Start of 2025 the industry was in the lurch. Financing and investment which is always the puppet hand behind creative industries was experiencing the most expensive credit for over a decade with most capital allocated and stretched onto the Covid big spend. Delayed budgets and lower than expected returns meant that almost everyone including the big players like Meta were looking to make more diversified smaller bets with a potential higher ROI.

It is important when thinking about ROI it is not the return on investment vs the money doing nothing but rather the comparison against a stable index fund or safe investment. This means even modest ROI becomes more difficult in times of inflation and raising costs so this pushes expected returns way up.

This coupled with a large amount of startups funded by redundancy money, more entrants into the VR market, over 50% of active developers have entered the VR market since April according to Meta at last week’s Connect, means that competition has heated up. With a wide crop of funded small teams producing quality content the market has heated and discoverability has become a bigger issue. Also for the last four years the market has been begging for larger titles and with more headset competition on the way providers are looking for their system sellers.

This led to a bit of a rug pull I did not predict in the last three to four months of smaller budgets being cut out. Projects being cancelled and funding consolidated into larger bets many of which are driven by established IP. This is great for consumers as we can expect some larger, more complete premium titles on the market, and good for developers as it raises the price expectation and quality bar of VR craft. Though it does pose a serious risk as a failed larger budget project can sink a studio single-handedly.

Indie Random Toss

The breakaway success of “I am Cat” and “I am Security” as well as a range of other small titles which have had great returns even with more modest sales has put people back in the mind of breakout success. Though when I sat down with some others and did the numbers recently the failure rate has gone up in the market in recent days.

With chart driven sales we are seeing dynamics very similar to the iPhone 5 era of app development with kingmakers grabbing their chart spot and hanging onto it. Algorithmic discovery is still largely unknown and marketing budgets being small. The days of releasing a game and if it’s good it will be discovered are ending for VR. I expect we will get to algorithmic recommendations sooner than we did for the mobile market but I also expect discovery to take a short term hit.

Immediate appeal and marketing plans are now key factors for indie devs in the VR space, not yet to the competitiveness of other markets but it is increasing fast. By January I believe the Meta Quest store will be a completely different animal. Quality still matters but immediate visual appeal and chart position are increasing in importance fast.

Sidenote: I am Cat while a polished game takes a lot from a Ludum Dare game which was later reworked into a full VR game and published on Steam and PlayStation called Catlateral Damage. I highly encourage you to look at this earlier work.

VR Ports

The amazing rise of Flat2VR is welcome and long overdue. The truth is that many flat games with a small amount of effort make great VR games. The largest barrier being standalone performance. Though I would encourage more devs to explore PCVR and PSVR2 ports of their titles. Smaller ports can even be sold as DLC addons.

We saw this effort originally on PSVR1 as a common tactic but the lukewarm status of the market, the underdeveloped support of VR in the big engines and lack of market understanding led to poor adaptations for the most part.

Now with a mature VR market, with a settled and common control scheme and high enough resolutions to avoid the need for large scale UI reworks we will see a huge rise in this area.

Additionally the support of Flat+ style applications on Meta and Apple headsets means we will see many titles present mostly as flat and only going 3D when it works for the title. This combined with the value of IP recognition and development costs means that I expect more ports in the VR charts from mid 2025 onwards. I know of at least ten developers actively considering VR ports at the moment.

The key barrier which might stifle this trend is down porting to mobile hardware required for Quest support is a huge technical ask and many won’t want to make it. Though on the flipside I think changes in the next year will make PCVR a much more appealing market which should also help mature the console VR market.

18 Rated built for Teens

Rough as this sounds, we need to look back at the 90s PC market. The truth is that the bulk of time spent in VR is by teens who drive market adoption, even if their spending power is reduced their impact is mighty.

EVERY SINGLE TITLE IN THE TOP 20 ON QUEST APPEALS TO A TEEN

While some of them may have higher ratings they all market and present in a manner I can convince a 14 year old is cool. The possible edge cases being Golf+ and Table Tennis though sports are easier to sell because of real world recognition.

The industry has a “problem” most of us are older and more mature and to be blunt burnt out. We have developed a taste for comedic self questioning and deriding humour as well as a broader aesthetic appreciation. Sliding through the top games in a year is a delightful and broad palette of complex flavours from high art to deranged comedy with our fantasy often being as simple as cleaning, running a small shop or escaping from a traumatic relationship with a goblin racoon.

Due to the younger demographic however VR needs to be more sweet and simple in flavour. This does not mean underestimate your audience but imagine walking into a classroom of 14 years olds and pitching your game. What excites that audience is the spectacular, simple humour and empowering fantasy. They want the explosions and dumb much like we did when the game industry was younger. We want the simple premise of King’s Quest or Duke Nukem.

You can build complex games which have interesting depth but your pitch needs to be robust to the younger demographic which dominates the VR market.

What does this mean for Flammable Penguins Games

Well the main project which has a more nuanced appeal has been put on the shelf for more concept development and thinking about how we could sell that fantasy better. In the meantime we are pushing fast on a smaller title to prove out our technical pipeline. Though to be honest I don’t think it will appeal to the core demographic I highlighted above but I do think it will find its audience.

The project is a small work of passion because I want to play it in VR and I think it’s time for a title like this. Also it has a small budget with simpler tech which provides a strong basis for our console porting work. I’m not yet ready to announce that.

Finally the game we return to might not be the shop game as originally intended but instead one of our concepts which might be better suited. I hope to announce our smaller title this month and launch it before year end. So wish us luck and let me know what you think about these thoughts on the industry.