After Greg Enell left Double Down Interactive in January 2014, he got about halfway through a self-imposed year off before he started to get bored and restless. Now, more than a year after quietly starting a new virtual reality company called Presence Labs, Enell is far from bored, but he is restless as he eagerly awaits what he hopes will be a massive consumer market.
Enell previously found success in starting his own company as the co-founder and CEO of Double Down, maker of online casino-style games. Double Down sold to casino game giant IGT for $500 million in 2012. With Seattle-based Presence, Enell saw a chance to get started early in a medium that was just emerging.
“I got pretty excited about the VR stuff that I was seeing on the [Oculus] Rift DK1 and some of the really early Gear VR stuff that had come out,” Enell said. “I thought, ‘I don’t really want to go back into mobile, don’t want to go back into Facebook. I would love to try something completely different.’ It just became clear that VR would be a great thing to jump into.”
Presence is part of a growing wave of virtual and augmented reality startups in the Seattle area, driven in part by the region’s heritage in video games. Enell said he started getting things organized in October 2014 and had the first five people of his team together in about March of 2015. Today, Presence Labs has 26 people, working out of a studio in Seattle’s Pioneer Square neighborhood.
A special fireworks experience for the Fourth of July was released last week, but the company’s main product was launched on Christmas Eve. GrooVR is a music-driven VR experience available on Gear VR, which uses Samsung smartphones in virtual reality headsets. In fact, Gear has been the primary focus for Presence thus far.
“It was the first to market, for one, and secondly I’m a big believer that mobile VR will be where the mainstream audiences will gather in the future,” Enell said. “With kind of a casual/social/mobile development background, I am always more interested in the mainstream audience and where the masses will be, because that’s where you tend to find the casual gamer.”
Enell said he thinks the casual gamer will ultimately consume VR on mobile, and figuring out how to put together a compelling product there was important for the new company. He said he hopes Gear can do well and sell a lot of units and start the process of building the audience.
So far, GrooVR has done as well as it could with what is a small Gear market. Enell said the freemium app, which is free to download and features premium content that can be purchased in-app, is “in the six digits with the number of users.”
“The conversion rates into that premium content have been great — better than I expected,” Enell said. “So we’re optimistic with that. We continue to invest in GrooVR. We’ll continue to add premium content.”
With an eye toward diversification of platforms, Presence is building two more apps right now that will not go to mobile.
“We’re going to have a desktop app or maybe two desktop apps — we’re evaluating the console now with the PlayStation 4 and the Morpheus [VR headset],” Enell said. “One of our apps may end up going to Morpheus and the other one going to desktop. We’ll see. But the idea there is just to diversify across the three platforms, and as those three platforms come into the market and start to build audience, have data coming back from all three to help us understand really what the opportunities are with each of the platforms to help us make smart decisions in the future about where we want to invest further.”
Enell said it’s all unlike anything he’s ever done before.
“I felt like we’ve been trying to read the tea leaves for the last year and predict what’s gonna happen and where we should make our investments based on our predictions,” Enell said. “That’s super challenging. That’s been really difficult.”
The nascent technology and chipsets in phones that lack sufficient power have also created challenges that force Presence to find a balance between quality and performance in the mobile space. But Enell said there are rewards to running in an “entirely new frontier.”
“We’re doing things that have never been done before,” Enell said. “And I think that it creates a lot of opportunity that you just wouldn’t find in traditional gaming markets, whether it be mobile or social or even console. So we’re excited about being out on the front end of this, of investing early, of having a really great team in place. And now we’re just focused on making the right decisions to put ourselves in a great spot when the market really hits and we start seeing tens of millions of consumers flowing into it.”
More than midway through 2016, Enell said Presence had remained stealthy in an effort to get into a position where they feel comfortable. There was a lot to learn and understand in the first year. But he still doesn’t see the market arriving for perhaps another year and a half.
“The faster it comes on the better, for all of us developers that are trying to get content together,” Enell said. “We need the audience to drive the revenue to support our business, and the audience isn’t there now. You’ve got the Gear the VR, you’ve got the Vive and you’ve got the Rift all in market. But the combined volumes that they have at this point just aren’t meaningful.”
Enell said the arrival of Google’s Daydream by the end of this year and PlayStation’s Morpheus in time for the holiday will help. But he’s hoping Apple will enter in some capacity in 2017, so that by the end of next year Presence will be in a good spot.
The company is actively recruiting to add to its team of artists, animators and game developers with 3D backgrounds. That effort went well early on, Enell said, when Presence was one of the first VR companies in town that was offering basically market rate salaries, equity and benefits.
“For folks who were interested in VR, and maybe had been doing skunkwork stuff at night at home or whatever, we were one of the first to represent an opportunity in town where they could go get paid to work on something that they were passionate about,” Enell said. “So we did well in bringing in the first 20 people. Since then it seems like it’s become a little more competitive and we’ve been a little more picky about who we’re hiring. We’re 26 people. I don’t want to be 50 people in a year. The burn would get out of control. We’ve got to control the burn while we wait for the market to come into place.”
Enell is funding Presence himself right now, and said he looks forward to the prospect of getting things into a position where the company would either support itself or it generates enough value to put it in position to raise money with favorable terms, as he put it. And with a nod back to language that was familiar in his Double Down days, Enell acknowledges it’s all about trying to “make the right bets.”
“We hope there’s a little skill in our reading of the tea leaves, but sometimes it feels like it’s just a big chance-based game and we’re hoping it works out well in the end.”