Gabe Newell Talks VR

Gabe Newell Talks VR
February 16, 2017

Valve is a private company that's sitting pretty, generating oodles of cash from Steam. These revenues, and the energies of the people who work at Valve, are largely being channeled into VR, and this is the topic that animates Newell the most. It's almost like the company's mission is to push VR as hard as possible, to get it where it needs to go.


Valve, along with HTC, launched the Vive VR platform last year. It's an impressive piece of kit, albeit one with limited appeal, given its high price and the experimental nature of its software. VR is in its early days. It's a work in progress.


Newell sees it as analogous to the arrival of PCs in the early 1980s. PCs were viewed as a cool manifestation of the future. People bought them without really knowing what they were for.


"It's like 1981 and the PC has just come out for the first time and everybody's going to use it for recipes. [laughs] And then it was like this other weird spreadsheet thing which nobody had ever used before. And suddenly it turned out to be a really compelling argument for businesses to start having these PCs, even though the IT guys hated them."


That said, he's happy to confess to a history of really getting these hardware prognostications completely wrong.


"You can always be surprised. I personally thought the DS was kind of stupid. I thought Sony was going to crush Nintendo in that generation of handheld devices. Clearly the DS ended up being the winner.


"The flipside was the first time I played Wii Sports. I thought, my god, there's so much potential for us to discover. Then it turned out that Wii Sports had pretty much nailed it and that was it.


"So even when you're doing it, even when you have a really good initial instance proof, there's a potential that there isn't as much there. Or there's a lot more there but the only way you get to it is by a bunch of people experimenting and taking risks."


If there's a pitch somewhere in these musings, it's to the development community, to keep the faith in VR. Despite the insignificance of the installed base, Newell believes in VR as a sustainable business right now, and one that will grow at a steady if unspectacular pace for the foreseeable future.


According to Valve, there are around 1,300 VR apps on Steam right now. The second half of 2016 saw an 86 percent growth in monthly active users (against a small starting point.) The company says that 30 VR apps have made over $250,000 each from Steam. Still, that's a lot of apps making seriously insignificant revenues.


"We're optimistic. We think VR is going great. It's going in a way that's consistent with our expectations," says Newell. "We're also pretty comfortable with the idea that it will turn out to be a complete failure.


"If you don't try things that don't fail you probably aren't trying to do anything very interesting. So we hope that we'll find stuff that gamers will say is awesome and is a huge leap forward."


Unlike public companies, Valve can afford to be cautious about VR's potential. In a clear jab at rival Oculus, he pooh-poohs overblown expectations of a mass market any time soon.


"Some people have got attention by going out and saying there'll be millions of [VR unit sales] and we're like, wow, I don't think so. I can't point to a single piece of content that would cause millions of people to justify changing their home computing.


"It's a great thing for enthusiasts and hardcore people. 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, painful fits and starts kind of thing. So while we are really happy with how things are going, yeah, it doesn't match up with what other companies are saying."


The big obstacle is price. A Vive currently costs $800 and requires a high-end PC to work. Despite expectations of first-year price decreases, this does not presently look likely.


"If you took the existing VR systems and made them 80 percent cheaper, that'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.


"We think most of the interesting stuff is going to be happening on the high end. With CPU or GPU constraints, the interesting stuff is going to happen at the higher end of the market. Once you've got something that will really causes millions of people to be excited about VR, then you start worrying about cost reductions. There's an old joke that premature cost reduction is the root of all evil."


The focus right now is on improving the hardware. Newell says the early-market reliance on mobile phone-based display technology is a barrier that's about to be broken.


"There are a bunch of obvious things coming down the technology pipeline. Headsets are going to get lighter, they're going to get smaller, the resolution is going to go up. These aren't speculative things, these are all basically finished in terms of everybody in the headset industry knows how to do them. It's just a question of getting the products out.


"The current headsets are essentially piggybacking off phone panels. Now people are looking at display technologies that aren't bastardized phone technologies. Once you start building something just for a VR headset you can go much faster than the phones.


"We're going to go from this weird position where VR right now is kind of low res, to being in a place where VR is 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 see the VR industry leapfrogging any other display technology. You'll start to see that happening in 2018 and 2019 when you'll be talking about incredibly high resolutions."


Valve is working on three VR games right now, which Newell says are all different from one another, and which are much more like full games than the quasi-experiments we've seen to date.


He won't talk about the games themselves, although he seems to indicate that they won't be based on current franchises. "We got Half-Life 2 and Team Fortress running in VR. It was kind of a novelty, purely a development milestone. There was absolutely nothing compelling about them. Nobody's going to buy a VR system so they can watch movies. You have to aspire and be optimistic that the unique characteristics of VR will cause you to discover a bunch of stuff that isn't possible on any of the existing platforms."


A YouTuber at the meeting, clearly well versed in the many conspiracy theories and conjectures that surround Valve's activities, takes an admirable shot at asking Newell about “Half-Life 3,” but it doesn't really go anywhere. Everything Newell is talking about here suggests that his company is moving on, that energy spent on not-VR is energy wasted. But I may be wrong about this. We’ll see.


Other Valve employees come and go, telling us about tweaks and updates they are making to older games, changes that are coming to Steam. But this is all customer service stuff, and not terribly interesting.


For now, Newell is putting his faith in his own experiences of VR, that it's a significant technology that will change the world. He clearly wants to be a big part of that change.


"Customers are actually pretty rational. Customers say, my friend has one, I saw this new game or other piece of content and it now makes sense for me to buy it.


“Developers are super excited. There's nobody who works in VR saying, 'oh I'm bored with this.' Everybody comes back. For every idea they had in their first generation product, they have ten ideas now.


"So to me, that feels like the kind of fruitful, frothy excitement that you want to see when you're aspiring to build something that’s going to be worth more and more."

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