Main image of article Valve's Gabe Newell Discusses Vive Progress
Valve co-founder Gabe Newell, who recently discussed everything from “Half-Life 3” to virtual reality (VR) on Reddit, is prepared for his company’s VR efforts to fail. “We’re optimistic. We think VR is going great. It’s going in a way that’s consistent with our expectations,” Newell told Polygon. “We’re also pretty comfortable with the idea that it will turn out to be a complete failure.” In conjunction with HTC, Valve produces the Vive, a high-end virtual-reality headset. If the Vive fails, of course, Valve has lots of other revenue streams to see it through, including the Steam digital-distribution platform. Its popular games, including the “Portal” and “Half-Life” series, continue to draw millions of fans. As with the Steam platform itself, the growth of VR as a medium will hinge on buy-in from third-party developers. Valve told Polygon that, at this early stage, there are 1,300 VR apps available on Steam, but that only 30 of those apps have earned more than $250,000 on the platform. While that’s potentially a lot of money for a single developer, it’s not very much for even a small team, especially when you factor in development costs in addition to salaries. In terms of the uneven distribution of revenues, Steam’s VR ecosystem sounds a lot like the ones surrounding mobile devices, in which a relatively small number of developers make a lion’s share of the total revenues from app downloads. In his previous interview on Reddit, Newell offered some useful advice for developers looking to build something new. “The most important thing you can do is to get into an iteration cycle where you can measure the impact of your work, have a hypothesis about how making changes will affect those variables, and ship changes regularly,” he wrote. “It doesn’t even matter that much what the content is—it’s the iteration of hypothesis, changes, and measurement that will make you better at a faster rate than anything else we have seen.” That advice holds especially true in the realm of VR, where developers and companies are still figuring out how to evolve the technology in an optimal direction. The fact that only a narrow subset of VR developers seem to be making money, at least in the context of the Vive, is potentially worrisome; confronted with the idea of making zero cash for their efforts, some talented developers might opt to not develop for VR, choosing instead to devote their limited resources to platforms such as mobile where the odds of going revenue-positive are a little better. But it’s also early days for the medium. The Vive and its main high-end rival, the Oculus Rift, are still very new; and companies such as Google are still feeling out the possibilities of VR. It’s possible that the market for games (and thus for developers) could shift over the next year or so, opening up new opportunities. In any case, Newell and Valve seem determined to ride this particular wave until they win or the proverbial wheels fall off, whichever comes first.