Virtual Reality is on the Rise in 2021 as Investors Continue Pumping Money into Studios
The success of the Oculus Quest 2 headset and a slew of other positive factors have injected a fresh lease of life into the immersive world and this is reflected in the scale of investments that have flowed into the industry in 2021.
The success of the Oculus Quest 2 headset means that Facebook could soon realize its long-cherished goal of a stable virtual reality ecosystem. However, it is not just Facebook that is sinking millions of dollars into virtual reality investments. Sony is continuing to show a strong interest in the VR environment and continues its tryst with VR with its PlayStation VR. Sony is set to release the VR headsets for its PlayStation 5 next year.
Although HTC is almost beating a complete retreat from the end-user market, Valve is likely to top this off with its standalone PC VR headsets. There are numerous patents and comments from Valve to suggest that this will actually be the case.
Apple is also embarking on an immersive voyage. According to company insiders, Apple should soon launch new breakthrough VR headsets onto the market that could take virtual reality technology to the next level.
VR Industry is Seeing Lots of Optimism
The first five years of the immersive industry were characterized by lots of experimentation, unrealistic hype, market fragmentation as well as sluggish demand for VR hardware. In 2021, the forecasts for the VR industry appear to be much brighter.
The VR industry has largely learned from its past mistakes and has now laid out strong foundations for a new and more productive phase of growth. Facebook has shown consistency in its VR investments, even in the toughest of times, and it looks like some of those investments are now beginning to bear fruit. The success of the Oculus Quest headset along with the prospect of lots of new and better VR hardware, and the pandemic-induced upheavals in the industry all worked in unison to create a general mood of optimism in the industry which has rubbed off on other investors, many of whom are now willing to throw some money into the industry.
This is clearly reflected in the slew of investments that have flowed into the industry over the past year, along with the many VR studio acquisitions which have occurred since mid-2020. Substantial amounts of investments have flowed into the coffers of VR hardware manufacturers as well as the disparate providers of VR arcade infrastructure (both software and hardware). A lot of investment is also going into VR training and collaborative applications.
Below is a look at some of the investments and acquisitions that have occurred over the past year: –
- June 2020: Facebook acquires Ready At Dawn, the studio behind Lone Echo and Echo Arena.
- July 2020: A $7.5 million Series A funding for FitXR
- July 2020: $9 million Series B funding for Polyarc, the studio behind Moss.
- September 2020: Embracer Group acquired Vertigo Games (the studio behind After The Fall, Arizona Sunshine) for $50 million.
- October 2020: A Series D funding for Survios -the studio behind Westworld Awakening and Creed: Rise to Glory– in a deal valued at $16.8 million.
- October 2020: A Series A funding for Thirdverse, the studio behind Swords of Gargantua, valued at $8.5 million.
- October 2020: Thunderful Group acquired Coatsink (behind titles such as Jurassic World Aftermath and Shadow Point) for $25 million.
- December: Rec Room gets $20 million in a Series C funding.
- January 2021: Kuato Studios receives $6 million investment.
- March 2021: Rec Room receives a $100 million Series D funding.
- April 2021: Downpour Interactive (the studio behind Onward) acquired by Facebook.
- June 2021: Facebook acquires BigBox VR (the studio behind POPULATION:ONE).
- June 2021: VRCHat clinches a Series D funding valued at $80 million.
- June 2021: An $11 million Series A funding for Tripp.
- June 2021: VR Education (behind Titanic VR and Apollo 11 VR) secures a $10 million investment.
- July 2021: Fast Travel Games (behind Apex Construct, Wraith: The Oblivion-Afterlife) secures $4 million in Series B funding.
- July 2021: Resolution Games (behind Blaston and Demeo) secures $25 million investment in a Series C funding.
- August 2021: Thirdverse (behind Swords of Gargantua) secures $11.5 million in a Series B funding.
- August 2021: $2.1 million worth of investment in XR Games (Zombieland: Headshot Fever).
- August 2021: $7 million worth of investment in ForeVR (behind ForeVR Bowl)
Further Factors Driving the VR Investment Boom
It is generally accepted that the increased investments in VR have been driven, to a large part, by the internal market success seen over the past year or so. This premise is, however, relativized by other external success factors.
Facebook, for instance, has been planning VR studio takeovers from as far as mid-2019, even before the upturn of its Quest fortunes in 2020 so these investments would have happened either way. Facebook’s aggressive studio acquisitions (the company has acquired five VR studios so far) somehow ‘distort’ the real market situation and are sending a huge signal to many venture capitalists who prefer investing in virtual reality studios, which ends up distorting the real market situation. They paint a bullish picture of the VR market which may not actually be the case. They also send out the signal to venture capitalists that whoever snaps a good VR studio in time may end up offloading it to Facebook for a premium and this further drives an avalanche of investments in VR studios.
Two investments made over the past year are ‘special’ due to their magnitude and the market they target: These are the $80 million investment in VRChat and the $100 million investment in Rec Room. Both of these apps have metaverse ambitions and are available on platforms that are not tied up to VR headsets. The fact that they have attracted so much investment is, therefore, not just a factor of the positive outlook of the virtual reality market but is representative of the current metaverse hype and metaverse boom.