As long-time VR developers reel from a lack of viewers for new consumer hardware over the Christmas season, a new era seems to be dawning on immersive hardware.
UploadVR spoke to a number of developers who are facing varying degrees of anguish over the overall direction of their VR investments and the sheer cost of communicating their products to people using headsets.
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“We are definitely seeing a shift in the market and a need for platform diversification,” said Tommy Palm, head of Resolution Games. “We’ve been preparing for this for a while now, with the goal of making our game available to players on as many platforms as possible over the past few years. Releasing a game like Demeo x Dungeons & Dragons: Battlemarked on Quest, PlayStation, and Steam is no easy task, but we have a goal of releasing more platforms in the future, and this game exceeded our sales goals over the holiday period. Being cross-platform helped with that.”
Led by Doug North Cook, Creature has released several projects in 2025, along with releasing new games and downloadable content at a regular pace with its label partners. Maestro continues to release some very engaging DLC content, and our reviewer found Creature-related Flat Head Studio’s Deadly Delivery to be “a hilarious piece of horror perfect to play with friends.”
“The current state of the industry leaves no margin for error,” North Cook wrote. “With no new headsets, sales this holiday season were up during the holidays but not as good as the era of new devices. With industry trends, lack of investment, and declining revenue per developer hitting all companies hard, I fully expect most studios will struggle to find a positive path forward this year.”
“That said, Creature is in no way slowing down. We have some big titles in development across multiple partner studios, including our most ambitious yet. We also had a positive holiday with our entire catalog performing very well, with Deadly Delivery ranking as one of our best-selling titles heading into the holiday season.”
Cloudhead Games has laid off 40 people after years of teasing development of a major title following the outstanding release “Pistol Whip.” In a comment to the original article about the layoffs, the studio confirmed that both versions of the game (one for Intel machines and one for ARM systems) will be packaged for sale on the upcoming Steam Frame. Founder Denny Unger, who now employs 16 people, reset Cloudhead’s strategy in the first week of 2026, “reverse hiring” dozens of former colleagues looking for new remote jobs.
Some VR game developers are buoyed by revenue from Sony and Meta’s subscription programs that let them download their games. However, some developers see these subscriptions becoming a larger portion of the overall small revenue pie. With no new VR hardware coming from Meta in 2025 and confirmation that the third-party Horizon OS headset program has been shelved, developers who have become overly reliant on subscription revenue may face difficult decisions about whether to remain independent or continue VR development.
Input branching
Will VR developers build games for controller-less hand tracking, or will they build games for Valve’s new set of controllers, which have a different number of buttons than Meta Quest?
Will we build a volume that floats in space alongside other volumes and windows, or will we build a fully immersive virtual world?
Can we expect VR developers to target eye tracking in all future headsets to build more responsive software?
With no third-party Horizon OS headsets to differentiate the experience within Meta’s ecosystem in the short term, and management negotiating with partners like the UFC and James Cameron in the long term, VR game developers are left wondering what kind of space Meta will create for their future endeavors.
AR glasses with a 50-degree field of view with a wristband on the dominant hand for navigating menus or handwriting would certainly be of interest to those who perform tasks within the physical world. But it’s far from immersive VR.
Platform focus
Consider the next two years as we face two of the best games made for VR: Batman: Arkham Shadow and Half-Life: Alyx. In the near future, pirates may try to run Batman: Arkham Shadow on Frame headsets before Meta decides to sell it on the Steam Store.
Meanwhile, Valve is working on bringing Half-Life: Alyx to performance on a standalone Steam Frame. If that happens, will there be the same demand to run that experience directly in Meta standalone?
What I’m describing is that some of the biggest budget, purpose-built software products made for VR headsets (games that are 100% owned by the platform) are realizing that virtual worlds are just the opposite under pressure to deliver.
Alyx faces developer-led optimizations to ensure that the experience that runs on high-powered PCs also performs well on low-powered standalone headsets. Batman faces demands from PC buyers who want higher-quality content than the market can produce, and from publishers who are motivated to resist competitors’ in-store software sales.
Nintendo will release an improved version of the Virtual Boy next month, and I’ll be interested to see if Sony can come up with a coherent strategy after PlayStation VR2. Meanwhile, Apple is chipping away at a major software update for visionOS and plans to review Steam Frame once it receives the completed headset from Valve.
For now, multiple long-time VR development studios are still focused on the medium and working on new software, but they’re also recalibrating their expectations for a shrinking market in the short term and making difficult decisions about future focus and differentiation.
