Valve’s Gabe Newell talks about VR and its mass appeal

VR is an industry in its infancy. After several years of promises followed by Kickstarter projects, 2016 became the year of VR. Oculus Rift was released into the wild, and so was HTC Vive, but there was trouble brewing within the industry right at the beginning.

Oculus Rift was initially crowdfunded as a Kickstarter project. The company’s founder Palmer Luckey promised to bring a VR experience that has never been possible before, as the technology to achieve an ideal one was now affordable.

It took Oculus about five years to go from a concept to something it could sell, but a lot had changed in that time. Valve, the company behind PC’s leading game distribution platform, Steam, was inspired by the response Oculus had received, and started working on an internal prototype for its own VR solution.

Valve is different from a typical company: there are no shareholders to answer to as it is a private company, and the Valve handbook for its employees throws the common workplace rules out the window.

Employees are encouraged to experiment, and thus it surprised nobody when Valve claimed that its VR solution was built simply to explore the boundaries of what is possible with VR. Valve, at the time, said that it had no plans of turning its prototype into a commercial product.

Assured by that, several industry big-names, including Luckey didn’t hesitate when Valve invited them to try out what it had built. Valve even gave away some of its technology to Oculus in those early days. At Valve’s Steam Dev Days in 2014, Palmer Luckey called Valve’s prototype “the best virtual reality demo in the world right now.” Clearly, the industry was in a happy place.

That was until Facebook acquired Oculus for $2 billion, and shocked its crowdfunding backers. Facebook’s sudden presence in the VR industry – part of the gaming industry – made many nervous, perhaps including Valve.

It could be a mere coincidence, but Valve decided to dust off its prototype and build something out of it – in came the HTC Vive. HTC announced its VR headset at its MWC keynote in 2015, along with a surprise partnership with Valve.

HTC Vive incorporated many of the ideas explored in the initial Valve VR prototype and turned them into a commercial product, that managed to launch just a week after Oculus Rift. While HTC was working on the headset, Valve worked on the software.

Oculus, meanwhile, developed its own store and SDK for the Rift. Valve’s solution was an open VR platform: SteamVR. In theory, Valve’s platform supports more than just the HTC Vive. It does, however, rely on Valve’s Steam distribution platform for its core functionality.

Today, it’s Valve vs. Oculus. Gabe Newell, Valve’s president, and founder has now opened up about his opinion on VR and what the future might look like for the industry.

The Interview

In a round-table interview, Gabe Newell discussed VR and its mass appeal, among many things. According to Newell, the future of VR is more power.

“VR is going to drive much higher computational and GPU loads than we see out of existing desktop games. […] I would argue that the smartest thing AMD and Intel and NVidia could do is give away VR development systems to software developers, because we’re going to consume the shit out of Intel and AMD CPUs! Much more so than high-end games are doing right now.”

That’s an opinion everyone can agree with. VR is no easy work – even the most high-end PCs of today can often struggle to pull enough frames per second. That’s important, as an inconsistent framerate in VR can lead to severe motion sickness for many.

Newell continues:

“If you took the existing [PC-driven] VR systems and made them 80 percent cheaper, there’s still not a huge market. There’s still not a really incredibly compelling reason for people to spend 20 hours a day in VR.”

The upcoming VR headsets from Microsoft’s OEMs will utilize the Windows Holographic platform, and intend to be affordable – starting at $300. An HTC Vive or Oculus Rift starts at $900.

Microsoft’s OEM’s have managed to reduce the cost of VR by about 66% compared to the HTC and Oculus high-end solutions; Microsoft expects this to push VR into the mass market. It’s certain that Microsoft sees a huge market to tap into.

Is there a compelling reason for anybody to spend 20 hours in VR? Probably not, but then again that’s probably not healthy either.

Some have tried to create virtual workspaces in VR, where employees could work in a virtual office environment. That’s one way to keep people glued into the virtual world, but the idea has its own problems. HTC Vive and Oculus Rift, both headsets are not good enough for such a use case. The resolution is too low, making text hard to read, for example.

If that’s the case with these high-end VR solutions, then cheaper headsets are only going to be worse. Newell realizes this.

“We actually think that if anything, most of the interesting stuff is going to be happening on the high end. That we’re actually resolution-constrained, we’re CPU-constrained, we’re GPU-constrained. That’s where the interesting stuff is gonna happen, not on the low end of the market. Once you’ve got it, once you’ve got something and you can say okay, this is the thing that causes millions of people to be excited about it, then you start worrying about cost-reducing.”

“There’s sort of an old joke that premature cost reduction is the root of all evil,” he added.

Nobody really knows what Microsoft intends to do with these headsets. For all we know, the Redmond giant could be gawking at a colossal failure with this push for VR.

The HoloLens mixed-reality headset by Microsoft starts at $3,000. It’s not cheap a solution, but it’s not a conventional one either. HoloLens has found its place in the lucrative enterprise business, with use cases ranging from elevator repairs to museum exhibits and construction planning to going as far as use in the military.

The VR headsets, however, are meant for the masses. These headsets by Acer, Lenovo, HP, and others, are commercial products that would saturate the market with VR solutions cheaper than the HTC Vive and Oculus Rift.

Whether Microsoft, or the industry, can build something compelling to use on these headsets remains a mystery as of yet, but if not, the cheaper VR experience might end up hurting the industry.

Newell acknowledges during the interview that the VR industry is still volatile, with many game developers still struggling to generate profits.

“Yeah, the people who [build for] VR, it’s sort of this trade-off. You say ‘okay, how much risk am I taking on, and how much of an opportunity am I giving myself. How long is the runway gonna have to be before I really start to see explosive growth.’ And each developer has to decide that.”

Newell, however, is also confident that this volatility isn’t affecting developers – at least for now.

“I’m pretty sure there are almost no developers who are working on VR titles who are like saying ‘Oh, I’m going to back off.’ They’re all coming back and saying ‘Oh, I’m gonna do more VR!'”

Cheaper headsets might bring these VR experiences to the masses, but they might also spoil them. That’s not an issue for many, but with VR being a complex solution that – if not done right – can cause motion sickness and other issues; it might actually push people away from VR.

The Technology

As Newell pointed out, high-end VR is where the interesting stuff is going to happen. The high-end, therefore, must evolve as time goes on.

One of the biggest gripes about VR at the moment is its tether. The present high-end VR solutions require a wire connected to the PC, and so do the lower-end VR headsets by Microsoft’s OEMs.

Newell says that it’s a solved problem.

“My expectation is that [wireless] will be an add-on in 2017, and then it will be an integrated feature in 2018.”

He’s not wrong – the HTC Vive already has an add-on that makes it free from the bounds of a PC. Though, other issues still exist.

The HTC Vive’s wireless accessory, for example, can only deliver 1.5 hours of use with its battery. That’s the issue with wireless – batteries are not good enough to power the headset for longer sessions.

The rate of improvement in battery technology has stagnated over the past decades. However, there’s one place where Newell thinks VR will lead.

“We’re actually going to go from this weird position where VR right now is kind of low-res, to being in a place where VR is actually higher res than just about anything else, with much higher refresh rates than you’re going to see on either desktops or phones. […] You’ll actually see the VR industry sort of leapfrogging pretty much any other display technology in terms of those characteristics. It’s probably not obvious from the first generation of products, but you’ll start to see that happening like in 2018-2019.”

It’s an outright prediction by the Valve founder, but one that he admits may be wrong.

The VR industry practically jumpstarted the resolution war on mobile devices. Today, we have Ultra HD 4K displays in 5″ phones, all because Oculus and HTC needed these small panels for their headsets.

Samsung even used these screens on their phones and paired them with the Gear VR, developed in partnership with Oculus.

It’s obvious that VR will push the boundaries of technology once again, what’s not clear is how far it may go.

The Walled Gardens

It’s no secret that Valve doesn’t like the several closed ecosystems that exist today. Oculus Home and its own closed-source SDK has been an issue for Valve ever since it was announced, but Windows Holographic might become a bigger one.

“One conversation we have with some developers is around how they manage their risk, right. It’s like you’ve got people building proprietary walled gardens who say be exclusive to us and we’ll give you this bunch of money. And we’re like, we hate exclusives. We think it’s bad for everybody, certainly in the medium- to long-term, and I’d probably argue in the short-term as well.”

Windows Holographic is a closed ecosystem that’s going to come pre-installed on every Windows 10 PC. Microsoft’s HoloLens, and the upcoming VR headsets from its OEM’s, both rely on it.

It not only acts as a Windows UI for VR but also provides a platform for apps to work on. But of course, these apps need to be on the Windows Store. That’s not something Valve likes.

“[…] we’re happy to say to people, look, you need to figure out how to manage your risk so you can develop the title you want to build. So, let’s have a conversation where we can help you manage your cashflow over the course of the development so you can go and build the thing you want. And get it out to market and start getting your money from where you should be, which is from your customers, rather than somebody else. We’re perfectly willing to help people do that.”

“And then they say well, does that mean we have to be exclusive to Steam, or exclusive to the Vive, and we say oh hell no, you guys should be making the best decisions for your customers, not having somebody else steer that. That’s when we have conversations about that, it’s usually around ‘how do we pay the bills while we’re building our next VR title.’ And that’s usually a pretty productive conversation. But it’s really about smoothing out risk over the lifetime of VR investments.”

That’s certainly a generous solution to the problem of supporting the VR industry, but there are still developers who go the other route.

Oculus has paid for – and still does – timed-exclusivity deals with developers; Jason Rubin, Head of Content at Oculus, said in an interview that exclusivity deals were “the only viable way to jumpstart the market.” Newell would likely disagree with that statement.

It’s not clear whether Microsoft plans on making exclusivity deals like Oculus, but if the company’s history with Xbox is anything to go by, there’s going to be exclusives, and some of them even high stakes.

If Microsoft does make exclusivity deals; many of the VR applications and games might end up becoming exclusive to the Windows Store and Windows Holographic platform, causing trouble for Valve and its Steam distribution platform.

The Long Road

“There’s that little bit of tension between some people going out and saying oh there’ll be millions of these, and we’re like, wow….I don’t think so.”

Microsoft’s VR for the masses might not seem like a sane idea right now, but nobody really knows what the plan is. The VR industry is not going to explode suddenly because Acer, Lenovo, and others made some cheap headsets for the PC. It’s going to explode when there is a reason to buy these headsets.

The average consumer is willing to spend money – the iPhone and other high-end expensive consumer products have proved that – if the product seems worth it. The challenge for VR is to build something worthwhile for the masses, and the masses might just spend $900 on an HTC Vive or Oculus Rift.

“[…] I can’t point to a single piece of content that would cause millions of people to justify changing their home computing at all. It’s like a great thing for enthusiasts and hardcore people, and where we are today is way further down the road than we were a year ago, but it’s just going to be this slow, kind of painful, fits and starts kind of thing.”

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