#1314: Cloudhead Games CEO Denny Unger on the Need to Support Indie Devs to Push Limits of VR & Mixed Reality

I interviewed Cloudhead Games CEO & Creative Director Denny Unger at Meta Connect 2023. See more context in the rough transcript below.

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Music: Fatality

Rough Transcript

[00:00:05.452] Kent Bye: The Voices of VR Podcast. Hello, my name is Kent Bye, and welcome to the Voices of VR Podcast. It's a podcast that looks at the future of spatial computing. You can support the podcast at patreon.com slash voicesofvr. So this is episode 9 of 12 of looking at some of the interviews and coverage that I had a chance to do at MetaConnect. Today's episode is with Denny Unger, who is the CloudHead Games CEO and Creative Director. And Denny is someone who I've had a chance to do a number of different interviews over the years. He's always a very deep thinker of what's happening in the broader trends of the immersive industry. And also, CloudHead Games produces Pistol Whip, which is one of the most popular games that's out there on all these different platforms. He's actually got a lot of deep insight for the health and vibrancy and a little bit of a state of the union of what's happening with the XR industry, but also giving a little bit more context for what's happening with other developers that are out there and what developers may need. And so this was just an opportunity to take a bit of a step back and talk about the broader ecosystem of XR, some of his thoughts about mixed reality and what's it going to take to really develop it. Spoiler alert, it's going to be independent developers and a lot of the folks that are maybe outside of the walls of meta headquarters who are able to maybe unlock some of the deeper potentials of what mixed reality is able to actually achieve. And so a common theme, I think, is what's it going to take to be able to support the broader ecosystem of developers who are such a vital part of creating the different types of experiences that are actually driving headset sales. And I wanted to read a passage from a memo that was published by TechCrunch. Actually, it was first reported by Blake Harris as part of his book, History of the Future. But Lucas Matney published a article called Facebook Mold Multi-Billion Dollar Acquisition of Gaming Giant Unity Book Claims. This was published back on February 13th, 2019. So Mark Zuckerberg had sent out a VRAR strategy and one back on June 15th, 2015. And this was published by TechCrunch. And I haven't personally verified that this is an actual memo, but based upon what I've seen from Meta's behaviors over the years, it feels like this is a part of their strategy. One of the things I said to Denny is like, what is Meta doing? And one of the things he said is that it's really quite difficult to know what Meta is actually doing because some of their strategy is just a little bit opaque. And what they say isn't always the full driver of where they're actually spending the money and what they're investing in across their huge pivot into spatial computing that they're really going all in into XR in a lot of ways. But exactly how that's playing out is a little bit difficult to suss out when they have all these different priorities for how they're spending their money. So, Mark Zuckerberg in this memo is saying, quote, I think you can divide the ecosystem into three major parts, apps slash experiences, platform services, and hardware slash systems. In my vision of the ubiquitous VR, AR, these are listed in order of importance. Although it's worth noting that Apple has built the world's most viable company with high end vision, reversing that order. So again, that order is that meta really wants to create their own first party apps and experiences as their first and top priority. The second priority being the platform services. And then thirdly, they're not as concerned as making money on hardware and systems, whereas Apple is prioritizing hardware and systems, platform services, and then the apps and experiences. So I wanted to read that passage just because I think that's actually held true to a certain point, because it kind of explains why Meta has continued to invest so much money in trying to make the Meta Horizons really work for them. And it's still a little bit of an open question as to whether or not the amount of money that they've invested in something like Meta Horizons is going to pay dividends into really cultivating this broader vision for wherever the XR industry is going to go. And this is something that I talk about in the context of this interview with Denny is that just kind of reflecting upon like how the broader software ecosystem could be supported by Meta and how in a lot of ways, a lot of the money that they've been investing has gone more into their own initiatives rather than cultivating a broad and healthy ecosystem. So that's kind of like the tenor of some of the different discussions that we have throughout the course of this conversation. So that's what we're covering on today's episode of the Voices of VR podcast. So this interview with Denny happened on Thursday, September 28th, 2023 at MetaConnect at Meta's headquarters in Menlo Park, California. So with that, let's go ahead and dive right in. So yeah, why don't you go ahead and introduce yourself and tell me a bit about what you do in the realm of XR and gaming and immersive entertainment.

[00:04:37.753] Denny Unger: I'm Denny Unger, Cloud Head Games, CEO, Creative Director. The honest answer is we're doing a bunch of things, and most of them I can't talk about, I think is fair to say. That's the worst answer to give you.

[00:04:50.315] Kent Bye: Well, maybe you could give a bit more context as to your background and your journey into working with virtual reality, since you've got a long history of working on both games. And yeah, just kind of your arc and your trajectory going all back to the MTB 3D forms, and you're kind of an OG in that sense. But yeah, just a bit more context as to your background and your entry into this XR space.

[00:05:11.347] Denny Unger: Sure, man, that's a long story. I've tried to find ways to summarize that so that I don't bore people to death. But basically, I was a VR garage hacker in the mid-90s to early 2000s and built collimated displays and all kinds of weird stuff like that. Ended up meeting Palmer Luckey on the MTBS 3D forums in the old days and he was just a young kid cobbling together VR headsets. We all know that story. He met Carmack Carmack introduced him to a bunch of people showed him his latest cell phone based VR headset with leap optics I got excited because I'm like, oh that's a combination of things that will really work for this industry Took the money I had from my prior business, which was like a board gaming company I was working in mobile games at the time like we're gonna put all our money in on the first VR adventure game ever made it for a commercial market, right and for the Oculus. And so that turned into a 10-year journey, effectively, into VR and all its ups and downs and ugliness and joy. And we ended up innovating a number of things in the early days. Snap turns for comfort turning, teleportation, figuring out room-scale bounds, a bunch of stuff that everybody takes for granted now for comfort affordances, essentially. So from there, really, it was a progression of reading the market and where the market was moving. And this market has had so many ups and downs and swells. Like, what's performing? What's going to keep my studio healthy? And there was a real dark period around 2018 in VR, and everybody was struggling, and no one was funding. And we just had to look at the market, and we're like, well, adventure games really aren't hitting a big enough genre right now, because the market itself is so much smaller, just in general, right? What is working and what isn't working? We were big fans of John Wick at the time, and we recognized, obviously, Beat Saber. Everybody wants to be a Beat Saber, but Superhot was also trending. And we're like, well, why hasn't anybody done a rhythm shooter? And, well, boy, we found out, because it's really hard to do a good rhythm shooter, to make it feel good. But it was a great confluence of design and a great team that had been in the industry for a long time Coming together and finding something really simple But the simplicity was kind of an illusion like it's really a deep game actually when you play it mechanically but it's the kind of thing you can just pick up and learn very quickly like within 30 seconds you understand what pistol whip is and how to do that game and And so that gave us a foundation for success to start actually self-funding projects. So we spilled up a labs department where we did a number of things. We even did a work from home app at one point, which we haven't shown anybody, really, except for internal partners.

[00:07:49.629] Kent Bye: And there's some screenshots I've seen that you posted to Twitter, but no demo or anything yet.

[00:07:54.613] Denny Unger: Yeah, in the end it was something that we couldn't finance or support structurally. It is a huge play to dive into the work-from-home market and having a Salesforce team and server infrastructures, the whole thing is monstrous, right? So it would really take a monstrous investment to make that work. really interesting and compelling it was fitting our need for like a lockdown and COVID and everything and trying to drive a connectivity that just didn't exist and that was done at a labs it was done with like three people like and we got somewhere really interesting and compelling but we just couldn't finance that. But in labs we did a bunch of experimentation with different game prototypes and every time we find a little nugget of something that spools into future product and thinking about what to build next. So with Pistol Whip we've supported it for over four years now with free content. We're always giving free content away and I'm sure many developers hate us for that because it sets a weird kind of precedent like we're just going to keep giving you things. We're just going to keep making this better and we don't want your money. But that's worked for us, like it became a much beloved property, evergreen title that developed a really strong community because of that, right? And we got a lot of goodwill from our community and we are going to use that goodwill with our next two things that we're building right now. they want to give us more money, well, we're going to give them the reason to give us more money. Yeah.

[00:09:16.400] Kent Bye: Yeah, that's great. I know that you've certainly been an early pioneer and innovator in terms of a lot of the core mechanics of what the functioning of room-scale VR and being able to locomote through spaces and, you know, you're also sitting in a unique position of having, like, such a vast insight around the XR industry at large in terms of, like, just having such a popular game. You could see so many of the different dynamics of where the medium is going. So we're here at MetaConnect 2023, and we just had all the different announcements around. We've already known about the Quest 3, but also, like, the smart glasses and the AI, a lot of these types of announcements that, you know, the future of how that is going to interact with XR, I think, is still, like, a bit of an open question. It seems like a play to maybe prototype and develop it in the suite of apps that are more 2D-based rather than what's actually native to XR just yet. So that's still, for me, a little bit of wait and see how that develops. But what I am excited about about the Quest 3 is that it's got a new Qualcomm chip of the XR2 Gen 2. It's got new neural capabilities baked into the Silicon that, as we've seen on the platform, there's been improvements to what originally was the Quest 2. The Quest 2 when it originally came out versus the Quest 2 now. in September 2023 is a much superior piece of hardware and software integration because of the innovations and continuing improvements to the software layer. So I see something very similar with the Quest 3 with all the hardware technologies that's going to be this platform to build upon over the next two to three to five years. But yeah, I'd love to hear some of your initial takes of what gets you excited about this new technological possibilities for what you're excited of starting to explore.

[00:10:58.118] Denny Unger: It's a really interesting, challenging, weird space right now because I think there's still so many unknowns around MR, AR, just in general. A lot of design unknowns. So, you know, Apple and Meta are both taking the right approach in that they're trying to get the hardware out there in two different ways, but they're both very clearly in a development stage. My personal belief is that MR, AR, it's mostly about utility. That's where people will find the most value. It goes without saying that both of these things are leading towards, you know, how do I replace my phone? Can I get this into an augmented reality device that eventually does everything? So I think that kind of phone utility is where Apple's focus is most certainly. They didn't focus on gaming at all. They're not shipping with controllers and that comes with a whole set of other concerns for developers because, you know, 99% of the software built in VR uses controllers of some kind. Meta's take it's definitely exploratory. They want to lean into it seemingly want to lean into entertainment and gaming Into that space, but I think it's still a big unknown like that MR market I think is still like a three to five year market like before it really makes sense as a market and Certainly they would like to accelerate that, but that's really going to come down to devs and will they find the fun. You're seeing a lot of tabletop representations of games in MR or things flying out of your walls. I think, unfortunately, my gut read on that is that consumers will be pretty tired of that kind of thing in a year. or less, so it can't all be that, right? There's some other way to approach the medium, I think, that is more inclusive of VR, actually. I often say, like, MR's a gateway to VR, is what my feeling is. I think that once these devices become more pervasive and more affordable and more comfortable, over a long period, so if we go 10 years to the future, maybe a bit more, and we have AR glasses that can do both modes, they're modal, they can do VR and AR, That will be the first time most consumers actually try VR. And then they'll realize how great VR actually is. AR, again, is utility-based. VR is entertainment. Like, it is the best way to fully engross you in a completely, wholly other different experience. And that's powerful. Really powerful. And, you know, things flying around your room in AR, not as powerful. Like, it's neat. It's a neat gimmick. But those things have to have real-world utility to deserve a place in your real world. So it's interesting in the presentation they showed, they're doing some widgets. I can't remember what they called them, but they're AR widgets that you can anchor in your space. And they have different functions. I think that's actually really smart. Initial step into getting consumers to understand like, oh, this is how you spatially anchor objects that have value, right? And being able to replace even trinkets in your real-world space with virtual ones is really interesting. But I think that eventually leads to, once users get used to that kind of idea, it leads to them re-skinning their entire environment. Like, I don't want to see my dirty apartment. I want my apartment to look like a gorgeous palatial pad on the ocean, you know, or on Mars or whatever. I think people will push further into VR because of MR, not the other way around.

[00:14:18.030] Kent Bye: Yeah, I tend to agree with that. And I personally get much more excited about the VR side than anything I've seen in mixed reality or AR so far. At least, I haven't seen anything that's really captured my imagination. But I was just talking to Scott Stein of CNET and saying that we've had the dev kits that came out in 2013, and we didn't have the Beat Saber that came out in May of 2018. So that's a five-year window that you didn't have what may be the first killer app in the context of what is an experience that's going to, drive people to buy the headset that took five years so it could be something similar with mixed reality and Starting from the adventure genre and moving into something that's a little bit more like there's a fitness aspect There's also like very much embodied gameplay there's a spatial storytelling where you're like telling stories through space and the different interactions and all the advancements of like dynamic interactions, being able to kind of dial in based upon what difficulty level you want to have. So there's been a lot of stuff that's been in Pistol Whip that you've been dialing in and as you've been releasing that new content, is there anything around like immersive storytelling or experiential design or just like other innovations of XR design that you've been tinkering with as you've been continuing to push out content? Like what's been the thing that's been Is it just respond to the demand of what the users want? Or is there other things that you feel like you're growing as a designer to continue to use this as a platform to expand out what's possible with the medium?

[00:15:40.336] Denny Unger: What's interesting about that question is that, so Pistol Whip was very much our studio looking at the market in a cold way and going, look, we have limited runway, and at that time we were quite small, like how do we get through this dark period of VR? And so we're like, fine, that's what you want, consumer, we'll build that, right? And it's a good thing we did, because again, we got to explore. The downside of being able to explore is that, like for us, it's always about what can we build that will attract non-VR players or gamers because we're in entertainment and gaming. What will attract those players into VR? How do we drive adoption from the flat screen side? The answer to that is that there are answers, and there are things you can build, but they are very expensive. For VR, comparatively to 2D, all of these things don't sound like much. But in VR, these are big budgets, like 10 to 20 million dollar games. And that's still not even broaching real AAA budgets, but you're not seeing 10 to 20 million dollar budgets in VR, because the margins are still too tight. So it requires a lift from partners to help you artificially get that kind of project going and off the line. So I'm saying it in that way because we've had at least two different titles that have not launched, gone anywhere, paused production on because they cost too much for the current market, yet they are exactly the thing that this market and industry needs to drive adoption. We're stuck in a cycle right now of two to three million dollar projects. That's all anybody can afford to build and you tend to get shallow, small content out of that cycle, right? Small teams, small content, typically shallow content. Of course the excuse is, well, but then you've got the Beat Sabers and Pistol Whips, and we've kind of stabbed ourselves in the eye by doing Pistol Whip in a way because we proved that, yeah, you can do a small budget project that actually pays dividends, right? However, those are really rare and really hard to find, and I don't believe that they drive a longer, deeper engagement with future VR, XR audience. So we've been trying for the last few years to build those bigger things, but it's been really challenging to the degree that we've had to pivot a couple times to rethinking, okay, how can we make the biggest impact with sort of medium-sized budgets, right? And are we going to get the right buy-in from partners to do those things? Because you're always trying to align to platform wants and needs, right, as well. But there's also this desire from that side to, OK, well, the bigger budgets need to go to licensed IP. Or it's that kind of storytelling from them, consistently, pretty consistently. So it makes it really difficult. Licensing rarely works in VR for studios our size, because licensing terms are exorbitant. And the numbers just don't work out. And that said, our own created IP, it brings a lot of value to the market, right? So I'm trying to illustrate just the struggles that we've had, and I think this is pretty common for the few studios that are doing well in market. That's a whole other thing is like there's really like there's ten studios I could kind of think about that are Doing well in VR in terms of supporting their studios and their output But the truth is is that a lot of them are VC funded or they've been acquired and they're hemorrhaging a lot of money They're putting a lot of money out and on the surface. It looks like success and But when you actually dive into their title success, the products that they're putting out there, they're making fractional sales. They're not bringing in enough to support insane $300 million burns or whatever they are. Once you get into the 350-person team size, the amount that they're hemorrhaging for their burn is insane. And they're certainly not making that in our market. Our market is still relatively small. CloudEd's in a really weird position that way, in that we are completely bootstrapped, self-funded, tightly held. I actually don't think there's a studio our size, like we're 55, that can say that. But that's a problem all on its own, because I would love that to be the case more often in our industry, but it's not. It just simply isn't.

[00:19:55.592] Kent Bye: Yeah, it's a bit of a feast or famine that we have in all the other dynamics of VC funding and whatnot, but I wanted to also get your take on some of these ripples throughout the ecosystem of game development with the Unity runtime fee announcement and then walk back, but yet there's like implications of what that means for anybody who's built on Unity to kind of Spring on to people all these retroactive costs that you know at the time when it was announced not really bounded by You know how you would even accurately measure all these things But you know they sort of came back to what seemed to be somewhat of a revenue share after a certain amount of money But also moving forward rather than retroactive, so there's it seemed to be getting a place that folks still were Less concerned around these changes would potentially completely bankrupt people but it certainly broke a lot of trust with the game engine of unity and where it's coming in the future and And I think one of the things that I saw that you said is that, OK, it's great that we've been talking around these 4% or 5% cuts. Now let's talk about the 30% cut that the platform providers have been taking, whether that's Steam, or whether that's from Apple, or whether it's even from Meta that's taking these 30% cuts. So I'd love to hear some of your reflections on, as someone who's running What is a bootstrapped, very successful game design company? And how some of these different types of announcements with what may already be margins that you can sustain your existing company and future projects. And this disruption that's put on, but also these larger discussions of what is the value that's being added by these platform providers? And is that something that needs to also be reconsidered as we move forward?

[00:21:32.477] Denny Unger: Yeah, the Unity thing obviously was distressing for a number of reasons. It's punishing in VR particularly because we fight for every dollar and we reinvest in ecosystem every time. We don't buy sports cars. We're not rock stars, right? We reinvest and all VR studios are like this. It's always a reinvestment in ecosystem. What software can we build to make a compelling use case to users to buy hardware? That's always the reasoning. and I see it over and over again. So the unity thing, it really punishes success, especially in VR because our numbers are smaller. Getting over that million user threshold or whatever it is before certain percentages kick in, that hurts quite a bit. I think that's going to hurt a number of studios. And really what Unity has forced is a number of individual negotiations, because I don't think we're going to accept those terms. And I've heard this over and over again with other peers, like, they're going to go to the table with Unity and say, look, this doesn't work for us, but this might. So there is some back and forth. And Unity themselves have said they're going to have to do some of that. So anyways, it just complicates matters greatly with what they've done. Also, there's a huge amount of uncertainty in the industry. Is Unity going to go bankrupt? Are they going to sell? A year from now, what is the certainty for platform stability just in general? But in the meantime, you've got teams of people who have used this engine for a decade or two decades. And getting projects off the ground quickly and effectively is all part of budgeting. And if we have to do an engine switch, that's devastating. Wait, we can't afford that. So it's not just a simple matter of, oh, well, let's just retrain and jump to Unreal. Well, no, you're throwing out a decade of learning how to optimize that engine for VR. And to be frank, Unity's capabilities in VR, they greatly outmatch what Unreal does, just in general. So for a lot of studios, it's not even going to be an option to pivot away from Unity without hurting themselves, without hemorrhaging money. So it's likely we'll stay with Unity, even with all the uncertainties, right? But yeah, an interesting thing I noticed happened after that was people started talking about, well, what about store marketplace percentages? You know, the Steams and the Metas and the Sonys. Like, is that a fair price? Is that a fair percentage for the services that they offer? I'm not the one that started that conversation, by the way. But I think it's really fascinating that that is the next thing, because all game developers are being squeezed to some degree. because the economy is... I mean, we are in a recession, whether people want to admit that or not. And it just makes building games that much more difficult and less cost-effective. So everybody's being squeezed. So it makes sense that now this conversation is pivoting. In a kind of unstructured but structured way, it's almost like game developers are unifying under some ideals and saying, well, wait a minute, is 30% really okay? Is that fair?

[00:24:35.519] Kent Bye: This is also in the context of the strikes that are coming from the WGA and the SAG and there's a Auto workers that are striking. So there's this whole labor movement that's starting So there's a part of the game developers that are also like by having this collective outcry They were able to actually bring about some change So there's a bit of like well, can there be more of like a leverage of some of these things?

[00:24:54.396] Denny Unger: But yeah Yeah, I I mean to be clear and I've not I've never shied away from saying it. I've never thought that the 30% take on storefronts, Steam, Sony, Meta, everywhere was fair for VR because our margins are so much tighter. The number of people in market is so much smaller. So the metrics are very different and I don't think it's fair to use the same metrics you would use for a flat screen market. I think there's some really smart solutions that could be put in place. I understand the model and the business model of needing that 30% to cover marketing costs and all the different things, the server load, the infrastructure to support your titles on platform. I get it. So it seems it would be more fair to me to have kind of a scaled percentage system where if you're a super indie developer and you don't exceed 20,000 sales, well there is no percentage because you're really not putting a massive burden on their storefront. But it should scale. It should be incremental. It should be 15% if you hit this threshold. It should be 30% if you start hitting in the millions threshold. I think that could work and that feels a lot more fair. Yeah, I think there's a whole conversation across the industry that should be had about that, and it is going to take the might of all game developers talking about it together to make that change, especially in VR, because it does feel punishing to have that percentage floating over your head.

[00:26:17.543] Kent Bye: Well, especially as there's been certain interactions where, as a company, Meta owns Facebook and then has had to be on platforms like for Apple's iOS and Google's Android. And Zuckerberg has explicitly critiqued these 30% cuts in that context. But yet, in the context of his own platform, he's taking those 30% cuts. So it feels like there's a bit of like he's suffered from what that means as a business to do that. But also, he's at the same time doing that. I mean, I just had an interview with Dean Takahashi, and he was talking about the differences of, like, Unreal Engine just laid off a thousand people today, and, like, just the different dynamics of how neither Unreal Engine or Unity have really fully figured out their way to be vibrantly sustainable as a game engine company, where a lot of stuff from Unreal's been bootstrapped from their gaming side, but Yeah, and like unity's not been able to take this market share of like the the smaller, you know democratizing of the gaming But yet not taking enough revenue from the beginning to be able to really sustain that as a business so it feels like we're in this weird place where there's like instability on both sides and Some people going to, like, Godot, or some people building onto the OpenStack to have a completely different pipeline that's recreating, like, through WebXR and OpenXR. But yeah, I don't know. I guess in some ways you're committed to Unity and just hope and a prayer that it doesn't implode. Because if it does, it'd seem like that would be, if Unity did go away, that would be pretty detrimental to the entirety of the XR industry.

[00:27:46.663] Denny Unger: It'd be devastating, I mean, I heard at one point that over 70% of all games are built in Unity. It would be absolutely devastating to the whole gaming market if they completely crashed. I mean, I'm assuming they would be acquired, and hopefully whoever does that doesn't completely mess up their terms worse than they are, and supports the engine. or at least maintains the engine at some kind of stopping point. Yeah, I don't know. The future is so uncertain with that. But going back to what you said originally, though, is just there's a broader XR industry conversation around the economics of trying to get product to market, having skilled, experienced studios building the right content fit for market to help sell hardware. That's really what we're doing. We're trying to grow the ecosystem by getting people in headsets. because we still haven't crossed that mainstream threshold in many ways. So there needs to be some kind of economic rebalance, I think, there to really push the right software towards people. I do actually believe that We're seeing kind of like a tapering off in some ways in terms of hardware advancements. There's a lot of things that you or I might be critical about or want to see happen with new hardware. But from a consumer lens, there's a lot of stuff happening right now that they probably don't even care about or understand. I think you can get away with slowing down certain aspects of hardware development and pushing more resources and funding into software development to get us over this weird hump we're in right now. Like, I'm not sure that pancake lenses make that big of a difference to the end consumer, really. Like, I have nephews that play Quest 2 all the time. I'm sure they don't really think about it. You know what I mean? The extra power is great. There's certain smaller gains happening right now that are nice to see from a developer's perspective, but I don't know that consumers really care all that much. What they do care about is playing great, fun games in VR. And I boil it down to gaming because that is where all the money is being made. And that is where XR is sticky. That is our market. Like, yes, there's a million other use cases, but that's what's driving market right now. So it's an important thing to just keep your eye on.

[00:30:01.806] Kent Bye: Yeah, and I've noticed that on both your LinkedIn as well as on ex-formerly Twitter, you've been posting these string of hot takes of different things around what you see is happening in the industry. And I'm not sure if there's been an increase of that over the last six months or so, or if this is just something that you've always been doing. I just haven't come across it. But you seem to be having a lot of these deeper reflections about the industry. what's happening in the industry, and it's also probably the reason why I wanted to catch up with you is because it feels like you have all these deep thoughts, these nuggets, and what's been the catalyst for you to start to broadcast some of these different reflections around your takes of what's happening in the industry? Like I said, you have quite a unique position of understanding where the industry is at on many different layers that you're obviously not at liberty to talk about at great detail, but it's driven by a deep amount of insight from both your own experience of the games, but also, like, what you see in the broader ecosystem. So, love to hear any reflections on what's been the catalyst for you to start to make some of these reflections.

[00:30:58.873] Denny Unger: Yeah, it's a number of different things. The economy being more challenging just in general, and I see a lot of studios struggling, especially smaller studios. Again, we do sit in a privileged position where I can look at it coldly and go, well, obviously this is wrong and that's wrong, right? I see a lot of studios struggling, and they're talented studios that shouldn't struggle as much as they do, because they're all working towards the same goal, which is to bring new users into VR, right? So we need to support them in every possible way. I think that's part of why I go on tirades, I guess, about my opinions, my hot takes. Depending on the week, looking at even the Steam storefront and how it functions. Just one of the common things we see now is when you head over to the Steam store, you jump into the VR section, and what do you see? Well, it's 90% flat-screen games with VR support, and unfortunately, the numbers there are the thing muddying up the metrics for what you see on the store. So it's, yes, it's a racing game that has three million users or whatever on the flat-screen side, and a few might buy it for VR, but that's not why it's on the VR storefront. It's there because the metrics are saying, oh, well, this is a popular game. So when you go to the SteamVR storefront, all you see is flat screen ports, flat screen games with porting, and that's not helping developers who are actually investing money into our ecosystem to grow the VR ecosystem. You see that, you see adult porn VR, you see a lot of shovelware. Everything gets buried very, very quickly. There are so many diamonds in the rough on the Steam marketplace for VR, but you have to actively dig to find them. And that's a travesty for our industry. Especially when you understand the kind of intent and spirit of what the studios who are building this stuff are trying to do. Everybody's collectively pushing the boulder up the hill and trying to get us over the hill. And we're constantly being punished by these systems that just need a few tweaks to make them work for us, right? In Steam's case, it's largely a structural problem. It's hard for them to change the normal operating mechanisms of their 2D market to make it work for VR. But the truth is, VR does need curation. It absolutely needs that, especially because the stakes are so high, especially because when a user first goes to a VR storefront, picks their first couple experiences, Is it going to make them sick? Is it a terrible VR experience? Are they going to play a couple things and go, oh, this isn't what I thought it was? And they're going to put that headset down forever, is what's going to happen. So not that these are easy things to solve, but curation I think is really important. But I also think there needs to be better platforms for surfacing new VR content that isn't necessarily curated. There's like a democratic process and there's also a high-level curation process and they should both be happening simultaneously. I think Meta's done a good job with curating. I do think App Lab should be better surfaced within that ecosystem because then you kind of have the best of both worlds, right? if it was front page surfaceable, even just one line of App Lab, so that you could search through, that's all that's really required to make both of those things work. And then on the Steam side, you need anything than what they have right now. Anything's better than what they have right now. Some kind of, I don't know how they would handle it, but some kind of curation. It goes against their DNA in a lot of ways, because they like to let the market decide what is popular and what isn't. However, in the VR filtration, It's so problematic. It doesn't actually express what's popular and what isn't. All it ends up really doing is regurgitating a sort of top 10 VR titles that sit in their top 10 area forever in memoriam. And it doesn't help other developers surface their titles. There's so many problems there. I'm just bringing that up as an example of the things that kind of irk me. It's like, we're all fighting so hard to push into mainstream. And if the base storefronts aren't supporting that endeavor, they're not supporting themselves. They're not supporting the hardware.

[00:35:00.744] Kent Bye: Yeah, I see a common theme that I hear in a lot of your critiques is that what is the new user experience around VR? And this is something that you've done a lot of thinking around in terms of your locomotion techniques, the snap turns, and comfort levels. And coming up here on January 1st of 2024 will be my 10-year mark from when I bought my VR headset. And I know from my own journey from motion sickness I had a huge amount of sensitivities at the beginning, but I think there has been a certain amount of the so-called cultivation of VR legs, which I was actually very skeptical as an idea at first, but I think I've experienced that there has been some level of accommodation where, like, I know there are things that still make me motion sick. I have motion sickness triggers. But there's also things that I know that I am comfortable doing, like, smooth local motion, whereas I was not able to do that at the beginning. So I feel like there's this progression of, like, people have different tolerances. Sometimes people can just jump into smooth local motion and they're totally fine without having any type of accommodation period. But this is something that I've seen you critique around this larger movement of folks who are doing these ports of taking these existing IPs that are these big AAA games and creating a way for you to have some sort of plug-in or find a way for you to actually have an immersive VR experience. So there's been a lot of emphasis of existing content that was made for 2D, but people are having the immersive 3D. And I think you kind of alluded that that's detrimentally harmful for companies that are designing for VR natively. But I'd love to hear some of your reflections on that, because that seems to be a pretty big trend that I see. People getting excited about these existing games that are much more high fidelity and richer gameplay and experiences that they may have played in 2D but want to immerse themselves in? And what are some of the positives or negatives about that movement?

[00:36:45.299] Denny Unger: Well, I think a lot of this comes from enthusiast VR players who have been around for a decade playing VR games. They're like, well, OK, where's my bigger, meatier, deeper VR things? And yeah, of course, a lot of them have accommodation. They've acclimated to VR. So they can handle those 2D ports. And it's fine. And that's great. I don't think that drives mainstream adoption, mainly for the reasons that we've just talked about, which is you can't put a new player in that type of experience unless they're very young. There is some data to suggest that younger players are less susceptible to vexation and any kind of vestibular issues. But are we playing to very young crowds now only and only enthusiasts? Is that really what we're saying? I don't think that's the answer. I think it's a blended answer. I think those are all valid, but they don't encapsulate the entirety of a mainstream market. So I still think there needs to be a safe on-ramp for new users. It doesn't matter if they're young, old, experienced, or not. I think comfort ratings are extremely important, and we should be segmenting software into very obvious comfort ratings. Give people a safe on-ramp of quality content in all of the categories. comfortable moderately comfortable Intense or whatever. Yeah, you could you could replace any of these words to be more market-friendly but just give consumers information and then fill those buckets with the things that make sense because an intense VR game can be an incredible game, but you have to build up to that and And we're not doing that right now as an industry. We're just throwing everything at the wall and hoping. Like I still can't play Boneworks. I can play it 15 minutes, 20 minutes at a time to get through it. And I mean, I've been doing this forever. I feel like I have a pretty strong stomach and I'm not just trying to pick on Boneworks or Bone Labs. There are many things like this. I love diving into the 2D ports and playing them, but I always hit like a 20 minute wall of like, Nope, the camera's rotating or moving me in a way that isn't anchored to my real world space. Whatever, there's a million things that are done wrong there, but the experience itself is cool. You know, oh, this is what a big budget game could look like in VR, if only all of the mechanics made sense for the format, right?

[00:39:00.853] Kent Bye: Yeah, one of the demos that's showing here on the MetaQuest 3 is Roblox and I feel like I get some of those similar experiences where these are 2D games that are built in Roblox and now all of a sudden I'm in this either omniscient third-person perspective playing some of these different games or I'm in the first-person perspective, but there's also this kind of like disconnect between things that may have worked in 2D but don't quite work as well in the immersive 3D. So I wanted to get some of your take on some of these broader pushes for these platforms like Roblox and Metas, Horizon Worlds. There's this memo that Mark Zuckerberg sent out while considering whether or not they were going to buy Unity. You can go back and look up this memo. And he said, here is our priorities. For number one, we're going to be developing our own experiences. And number two, we're going to be developing these platform services. And number three, we're going to be profiting from hardware. So Apple is kind of inverting that and maybe profiting from the hardware first. Well, actually, since that memo was written, Apple may have actually been reordering how some of those things that they're doing themselves. But point being is that Meta has this fundamental conflict of interest where If they are wanting to make their first party apps, then to what degree are they investing in their first party initiatives versus investing in different things of supporting the platform? Whether it's investing in companies, whether it's in like there's a whole wide range of things that they could be doing. their number one priority was to support the platform ecosystem. But based upon that memo, based upon their behaviors, it seems pretty accurate that that's a little bit of their behavior, that they still feel like there's a first-party application desire and aspiration with MetaHorizon Worlds versus the platform services and then the hardware. So I'd love to hear some of your take. Obviously, you've been working very closely with Meta, and maybe constrained in how openly you can critique some of these decisions. But I'd love to hear some of your reflections on that, because it seems like there's a bit of this tension and conflict of interest of, to what degree have they been either investing in their own stuff that has been, let's say, not as inspiring for the amount of money they may have been investing in something, versus what that money could have done to be able to support the broader ecosystem.

[00:41:09.587] Denny Unger: Man, it's really hard to speak to the complete meta strategy because most of us don't know it, is the simple truth of it. And I think some of the discord might be around how big meta is, even though they've gotten leaner and they're trying to be more focused on a number of different things. But it seems like, from the outside looking in, it seems like the Horizon Worlds play is coming from one side of the company. And on the other side, there are a number of different innovations happening, but it's almost like the departments don't talk. right? Or there are problems with communication. And yeah, I think consumer expectations around what a metaverse would even look like are pretty high. So there's a lot of optical friction happening with consumers looking at what they're doing. I think structurally or foundationally, the things they're doing under the hood are probably way more impressive because they are legitimately trying to build out an infrastructure for a operable metaverse. And that's things that consumers won't see, right? So I see what they're doing right now is baby steps to something much bigger and better over time. I don't know if that answers your question though.

[00:42:18.257] Kent Bye: Yeah, and also just in terms of, like, what are the types of things they could be doing to support the broader ecosystem? I just look at something like Unreal has, like, these grants that they put out, so they give these grants to be able to have people develop stuff, and that seems to be driving innovation, so... And I know that they've been having their own ability to produce a lot of these different experiences and apps that are out there, and so they are helping to produce and publish, and they've been acquiring these different game companies as well, so... I don't know, I guess I'm just kind of like wondering if there is this fundamental conflict of interest of like these aspirations of whether or not they're really going to make their MetaHorizons world play work. And yeah, they are a big company being here on the campus. I could see, I get an immersive experience of just how large of an institution it is and getting a lot more insight into that. When I think about the XR ecosystem, there's trying to get things to go to the consumers. And then what are the ways that have technology progressed through an iteration of academic innovations and ideas that then get into enterprise bespoke applications? And maybe kicking up of their enterprise ecosystem is actually going to have something that's going to more sustainably fund these different types of innovations, rather than putting a lot of money that's into the consumer plays that may or may not be ready for the mainstream play. This vision of the Horizon worlds feels like this trying to force this into a mainstream scale and market, whereas as a game developer company, I think you may have actually mentioned this of saying that like you're an iteratively designing something, whereas the meta approach seems to be like engineering something. They're coming with the top-down hierarchy of how things are designed in a product space versus how game developers go from the bottom up. And I think you were the one that I saw mention that. And I was like, that seems exactly right, that you as a game developer have a way of organically understanding the medium and iterating, whereas Meta's approach seems to be in a way that doesn't seem to be resonating with how experiential design is actually done.

[00:44:15.956] Denny Unger: I think it's just that we can move faster. It's the old thing of the smaller your organization, the faster you can typically move. I think that's a big part of it. But also because studio culture-wise, we're all experienced developers that grew up together over 10 years and just kind of have a shorthand with each other on what should be done. I think you lose that the bigger your institution becomes. So I do agree, it's probably driven top-down and that causes slowdowns and miscommunications and a bunch of things. I have a more, I guess, controversial take on what they could do. Going back to what I was saying before about hardware iteration and the little accommodations that develop the headset over time to make it better and how frequently that happens, I think that we could slow all of that down, actually, and reinvest. If I was, let's pretend I could, sit in that seat of power and say, OK, we're going to slow down hardware launches so that they're not so frequent, but we're going to reinvest the money that would have gone into hardware R&D on some of these projects. We're going to stretch that out, and we're going to reinvest into software, into the developer ecosystem, because Those developers are actually trying to help us sell hardware. So because the market, just in general, isn't big enough to support their ambitions, we are going to invest. We are going to put money into them, into their companies, into their projects. And we're going to help raise this ship together. And we're still going to get great hardware. It's just not going to come out so quickly in such a tight cycle.

[00:45:46.883] Kent Bye: When I was editing my episode 1,000, I was going through all of my answers of folks that were answering the ultimate potential of VR. And I remember I had asked you a version of that question all the way back when I first started back on May 19th and 20th of 2014 at the Silicon Valley Virtual Reality Conference and Expo. And your answer was so prescient that I included it in my episode 1,000. And you basically, in essence, said, Well, the real innovation that's going to happen here in this industry is going to be from independent game developers. And the thing we don't know is the role that Oculus is going to play. You had some sort of ambiguity for how Oculus is going to play there, but just how much the innovation is coming from these independent developers. And I feel like there's a certain kernel in that that I point back to this memo that was written, where there is this top priority of first party apps rather than the platforms. If that was their top priority, that would have, to have that type of investment into the broader ecosystem. And what Dean Takahashi was saying is that the spear of innovation is coming from these gamers. For any new platform that's made available, game developers will always find a way to take advantage of those new affordances to play with games. And I feel like there's something around that spirit of independent game developers that has been the true kernel of all the biggest innovation that I've seen in the industry. And that I feel like that core truth is something that even still to this point, there's big forces within the context of Meta that don't believe that. I think there are certainly some that understand that core kernel of truth and that are actually helping to fund a lot of these really innovative projects. But like, on large, there's this insight that seems to still kind of go over the heads of a lot of folks at Meta.

[00:47:28.261] Denny Unger: Yeah, I agree. I think we're seeing that happen all over again. I guess that was part of my takeaways from the conference was, this is great, you know, they're offering a competitive product to what Apple's doing in a bunch of interesting ways, but it's like we're starting over again. Okay, so mixed reality is the big push, right? We get it. But OK, that could be a longer cycle than anybody wants it to be to find the things that are cool and fun and have great utility there. And the only way you find that is by funding developers. That's really the only answer, because you want small teams that can iterate fastly and break things and be OK with that. And out of that, you are going to find the utility and the fun, and you're probably going to find it a lot faster than you would in a very complex machine of corporation, right? It's an investment. I keep coming back to that word because they should look at it as an investment. We are investing in developers to find these answers for us, and we're not going to punish them with our terms. We're going to help them. We're going to help them, and they're going to help us because they're going to find the ultimate meaning and utility of our hardware.

[00:48:36.487] Kent Bye: Yeah, I was talking to Alvin Graylin of HTC. And HTC has actually made a lot of investments in companies. And they're a considerably different size and scale of what Meta is. But yet, the types of companies they've invested in, they've been able to almost disproportionately have an impact on the industry. So yeah, I totally plus one that as an idea. And someone at Meta listens to this and seriously considers that.

[00:48:59.022] Denny Unger: Yeah, and don't get me wrong. I mean, Meta does obviously support products and services, and so does Sony, and so does... I don't know. Any major platform that launches, there's always some kind of initiative to support developers to some degree. I just think that there is some higher structural things that could be done to be more aggressive about that, and that's how you move faster. If you want to move this ship faster, you've got to double down on support for developers.

[00:49:24.882] Kent Bye: Great. And finally, what do you think the ultimate potential of virtual reality, mixed reality, and spatial computing, and where this is all going in terms of immersive experiences, what's the ultimate potential of that and what it might be able to enable?

[00:49:40.419] Denny Unger: I hate this question. It's the same one every time, right? My answer changes every time, too, which is why it's a good question. That's why I keep asking it, yeah. Yeah. At this point, I'm a little uncertain what it ultimately means. I hope what it means is that we have ways to filter information that make life more pleasant. So ways to engage with experiences and content in a way that doesn't feel as chaotic as it does right now.

[00:50:09.322] Kent Bye: That's it. Awesome. Is there anything else that's left unsaid that you'd like to say to the broader immersive community?

[00:50:15.627] Denny Unger: Keep killing it. Keep working. Let's all raise the ship.

[00:50:20.078] Kent Bye: Awesome. Well, Denny, always appreciate all your deep insights into the industry. You've certainly been a veteran and pioneer in this space, and looking forward to what other future projects that you've been baking and cooking on and the next innovations that you have in the medium. It's always interesting to see what you're doing and also to hear some of your thoughts and reflections of how we could live into more of an exalted potential for what's possible with this medium. And yeah, just really appreciate all your deep thoughts and reflections. So thank you.

[00:50:45.203] Denny Unger: Thanks, Kent. Appreciate it.

[00:50:47.410] Kent Bye: So thanks again for tuning into one of my dozen episodes about MetaConnect. There's lots that I've been unpacking throughout the course of the series, and I'm going to invite folks over to patreon.com to be able to join in to support my work that I've been doing here as an independent journalist trying to sustain this work. Realistically, I need to be at around $4,000 a month to be at a level of financial stability. I'm at around 30% of that goal. So I'd love for folks to be able to join in and I'm hoping to expand out different offerings and events over the next year, starting with more unpacking of my coverage from Venice Immersive, where I've just posted 34 different interviews from over 30 hours of coverage. And I've already given a talk this week unpacking a little bit more my ideas about experiential design and immersive storytelling. And yeah, I feel like there's a need for independent journalism and independent research and just the type of coverage that i'm able to do and if you're able to join in on the patreon five dollars a month it's a great level to be able to help support and sustain it but if you can afford more than 10 20 50 or even 100 a month are all great levels as well and will help me to continue to bring not only you this coverage, but also the broader XR industry. I now have transcripts on all the different interviews on the podcast on Voices of VR and in the process of adding categories as well into 1,317 interviews now that have been published after this series has concluded. So yeah, join me over on Patreon and we can start to explore the many different potentialities of virtual and augmented and mixed reality at patreon.com slash Voices of VR. Thanks for listening.

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