As of this week it’s officially official: the United Kingdom is leaving the European Union. Last year’s historic referendum might have come to a close in June, but it’s taken nine months for the British government to ready itself for triggering Article 50, the document that was yesterday handed to Donald Tusk, President of the European Council, to begin the long process of revoking the country’s membership.
It will be a long time yet before the UK is actually separated from the EU, but Brexit’s effects are already being felt in the UK VR industry. Shortly after the referendum result was announced the value of the pound plummeted as the country’s relationship with the rest of the world — not just European countries — was called into question. In the following weeks and months HTC raised the price of its Vive VR headset, from £689 to £759, and that price remains today.
Oculus, too, quietly raised the price of its Rift from £499 to £549 when it launched at domestic retailers. Since then the Rift has had an official price cut, but that only brought the price back to £499 for UK customers, making it neck-and-neck with the $499 US price tag. $499 converts to £401.60, so Britons are now paying nearly £100 more than the US for the same product.
But hardware is only part of the equation, and the long-term impacts of Brexit on the VR industry remain to be seen.
The first, most obvious aspect to point to is prices, and the knock-on effect more expensive headsets might have on the software that supports them. As a niche technology, VR is already a risky industry to be a part of, so introducing new barriers to entry surely isn’t a good sign for developers the world over.
But it might not actually be all bad from a sales standpoint for UK teams. Along with other developers, Sam Watts, Director of Immersive Technology at VR and AR production studio, make[REAL] points out that digital VR content stores pay in US dollars, “so we see higher sales revenues after currency conversion currently.” It might be a short term side-effect, but selling products in dollars means you currently get more than you would have a year ago in the UK.
For Simon Barratt from Raiders of Erda developer Cooperative Innovations, the potential of redirected funds for government schemes could also be a benefit. “There are a few opportunities if more money is made available to the games industry potentially through existing schemes like UK Games Fund or whatever the UK replacement of programmes such as Creative Europe might be!” he says.
Other developers, like Fierce Kaiju’s Paul Colls are also concerned it could go the other way. “It could mean less funding opportunities,” he explains, “Fierce Kaiju recently received support from Creative England which is funded in part via the European Regional Development Fund. How Brexit will effect fantastic initiatives such as this remains to be seen, but it’s a concern regardless.”
With Brexit in place, hopping between the UK and other European countries may well could become a bit more complex. Right now, you can fly from London to Amsterdam, Paris, or anywhere else in Europe and stay there pretty much as long as you please. It’s quite possible that Brexit could bring an end to that agreement and people living abroad might need to go through some processes to stay there. At the same time, anyone looking to work in the UK might face similar complications.
In Barratt’s mind this is a key concern. He says that “it’s unclear right now what will happen in terms of EU citizens which are a major part of the UK industry workforce. We need this issue resolved as soon as possible.”
At the same time, it’s not going to stop Barratt’s team from reaching far with its recruitment: “We’re pushing on with recruitment of UK, EU and International talent for Raiders of Erda and our other projects,” he says.
Watts, however, has another angle. “Brexit will likely mean it’s harder to employ the best talent in the UK from abroad, especially in the area of VR development where there is a shortage of skilled developers with relevant experience to draw upon,” he says.
Dan Tucker, Curator of the Alternate Realities programme for Sheffield Doc/Fest, share similar concerns: “It would be easy to point at tech funding from the US and China as the biggest enablers, but what about the vibrant artistic and auteur scene which currently benefits from the ease of movement, collaboration and co funding across European border? The removal of access to Creative Europe for one will be a huge blow to the entire media landscape.”
Esper and Augmented Empire developer Coatsink is perhaps most alarmed. The team’s Tom Beardsmore tells me that the company is even considering shifting location based on Brexit. “We’ve thought about it a lot, we’ve discussed it a lot,” he says, saying that company could consider an office on the west coast of the USA or even up in Scotland if it was to splinter off from the UK as cries for a second independence referendum are asking for.
“We want as big as a talent pool as we possibly can,” Beardsmore states. Brexit might take away from that.
Lots of developers are applying a simple model to make money out of VR in creating and selling products, but others rely on key partnerships to make branded content as a major source of income. These are global partnerships that affect brands and products the world over, and larger clients often have their pick of who to source. With Brexit plunging Britain into uncertain times, are those business strategies at risk?
Tim Edwards of newly-established VR/AR innovation studio Giznode doesn’t think so. “Typically we create experimental applications and prototypes with mostly finance companies,” Edwards says. “We haven’t yet been given any reason to assume that our clients would cease development with us because of Brexit.”
Key to that remaining the case, though, will be support from the UK government. “As the government work out how to make us more competitive globally I would like to see a ramp up in subsidies and grants for VR developers,” Edwards adds. “The UK now leads the way in VFX for films thanks to government support and it would be good to see that strategy used to help make the UK one of the leaders in VR development.”
Other studios we talked to pointed to the fact that many of the partners they talk to are in the US, and thus don’t expect to be affected.
So what does Brexit mean for the VR industry? Like many other elements of UK business, it’s unclear right now, but our main takeaway is that the creators and companies here are doing their best to see the upside in the brave new world the UK is about to face. Colls, perhaps, puts it best: “We may see a stronger Britain emerge, our games industry is already respected the world over and we have associations like UKIE and TIGA that will continue to work with government to cement this. We have to be confident in our proven ability to innovate, but we need the support to continue doing so.”