2015 witnessed a surge in funding in Virtual Reality Gaming with ~$268M being invested across the year
Considering VR technology is now going mainstream, investor interest in VR Gaming has been high, especially during the last year, if funding activity is to be believed. To take a step back, over $500M has been invested in the VR Gaming space in the last 4 years. During this period, Oculus stood out as the sector’s most prolific company, raising $2.4M through crowdfunding in 2012, and subsequently raising a total of $91M in 2013. The company was eventually acquired in a high-profile $2B deal by Facebook in 2014.
But with Oculus now making its move to the mainstream arena, there are signs of a shift in sight. Interestingly, in spite of all the big players such as Oculus, HTC and Playstation entering the HMD market, but failing to keep prices low, companies which are developing HMDs at much lower prices and with innovative UI have gained investors interest, and this has translated in the funding wherein 2015 witnessed a surge in funding with ~$268M being invested across the year.
Funding activity in the sector is currently at a stage wherein highly experienced teams received a majority of the funding. Notably, CCP Games attributed to a significant portion of the funding, raising $30M during the year.
Currently, it must be noted that in terms of gaming content, most of the major game developers & publishers have taken a wait and watch approach for VR. As penetration of VR HMDs increase, and the VR games market gets validated, more acquisition and funding activity can be expected in the VR game development space.
In terms of hardware, companies developing moving platforms, wearables and controllers with innovative ergonomic design have been gaining investors interest and the trend is expected to continue.
Display Devices have received most of the funding
Out of the total investment, Display devices accounted for the major portion (~65%), however, developers & peripherals saw a significant funding surge in 2015 and is expected to continue in 2016. In terms of display devices, there is a shift in terms of funding stages, with the segment receiving only early stage funding In 2014. However, in 2015, 35% of the funding rounds were Series B or late stage rounds indicating the growth stage of the display devices market
On the other hand, Pureplay game developers started garnering increased popularity from investors during the last year as well, with 90% of their funding rounds being in the early stage.
Number of Companies Increased in 2014, riding on the Oculus Wave
While, a total of 175 companies founded in last 4 years, the VR Gaming arena clearly moved from a sci-fi concept to an actual mainstream business in 2014, where 75 companies were founded.
This can be attributed to the increasing attention garnered through the acquisition of Oculus VR by Facebook, which caused a sudden increase in the number of studios founded during the year. Over the last few years, with the concept of VR going mainstream imminent, the focus now is towards gaming. As a matter of fact, casual gaming has been seeing more focus considering, the VR game market is an unproven segment, and developers are looking to ease into the space through casual games rather than core games, especially due to their lower development costs.
But today, there is a constant push in the game development industry, especially for core games, to make games more immersive. With the high immersive capabilities of VR, it can be a great platform for highly immersive games, and we should see more companies coming out from this segment.
Moreover, as the technology evolves, companies which develop eye tracking technologies for HMDs can redefine the user interface in HMDs which in turn may open up more options for game developers to experiment with different genres.
Rothenberg Ventures is Virtual Reality’s most Active Investor
Rothenberg Ventures has been extremely active in the VR space as a whole, considering the firm has launched its River program where it funds startups at a very early stage. In the VR Gaming space, the VC firm holds a portfolio consisting of Reload Studios, Fove, Innerspace VR, Merge VR, and Retinad VR
Boost VC follows with investments in Ease VR, Pixel Ripped, and Ralph VR. Other marquee names among the sector’s most active investors are 2020 Ventures, Andreessen Horowitz, Intel Capital, NHN Investment, Shanda Group, and World Innovation Lab
Check out the VR Gaming Report here: