Polyarc, the creator of the virtual reality game Moss, has raised $9 million as it expands beyond VR to augmented reality games. The funding was led by Hiro Capital, with contributions from Vulcan Ventures and Galaxy Interactive via its Galaxy EOS VC Fund.
The Seattle-based company will continue to make VR games, but it is now expanded to add AR game production to its core business competency, Polyarc CEO Tam Armstrong said in an interview with GamesBeat.
Moss starred a cute mouse named Quill who goes off on an adventure through a kingdom. The game was beautiful and it used Epic Games’ Unreal Engine. It debuted on the PlayStation 4’s PSVR in February 2018, and later on the Oculus Quest, HTC Vive, and the Oculus Rift. It received numerous accolades, including a 90/100 score on GamesBeat.
VR hasn’t really lived up to its original sales projections, and AR can access a much larger audience across a variety of devices, including ordinary smartphones. Armstrong said he liked AR because it can offer strong emotional reactions to characters in the same way that VR can.
“We’ve been interested in the game design and character interaction implications of physical interaction and the ability to reach into the world and get emotional feedback — the ability for the characters in our games to directly acknowledge the player and convey thoughts and feelings to them,” Armstrong said. “We started doing that in VR because it was the technology that was available to offer those solutions. We started looking at AR because it shares those features.”
Polyarc was founded in 2016 by Chris Alderson, Tam Armstrong, and Danny Bulla to pursue the unique opportunity to contribute to the design of a new fundamental form of games, VR. This is the second round of funding, as Polyarc raised $3.5 million in 2016 to fund the development of Moss. Ian Livingstone, a founding partner of Hiro Capital, will join the Polyarc Board of Directors.
Livingstone, former head of Eidos and founding partner at Hiro Capital, said in an interview with GamesBeat that this is Hiro Capital’s sixth investment. He said the $117 million fund is named after the lead character of Snow Crash, the 1992 science fiction novel which coined the term “metaverse.” He and his cofounder Luke Alvarez wanted to create a fund that could provide follow-on capital to European game companies seeking new rounds of capital, so that those studios didn’t have to be owned by foreign entities when they sought late-stage capital. In this case, though, Hiro Capital is investing in a Seattle company because it also decided to invest in the best companies that it could find, anywhere, Livingstone said.
“The most exciting thing about the game system is that it is constantly changed by evolving technology,” Livingstone said. “And each time that happens, it is additive to the markets. If you look at music, every new format is substitutional. And the revenues don’t grow. But with games, each new platform brings new revenues. A long time ago, VR was very clunky. But now everyone is talking about the metaverse. Polyarc has demonstrated its expertise in a phenomenal way, and we are absolutely delighted to be helping them get to the next stage.”
Armstrong said the company is working on both VR and AR projects.
“There’s a continuum between the two media,” Armstrong said. “They’re not perfectly overlapped. But there are certain games that fit on multiple platforms, and in other spaces, like mobile and in console. I’m personally very excited about designing against the constraints of these different platforms.”
As for the disappointing size of the VR market, Armstrong said his company was always careful to scope its projects to fit the size of the opportunity in VR.
“We didn’t want to go too big, too early, with VR games,” he said. “We sized our teams based on the reality that we were seeing. The thing that excites me about AR in particular is that it is a blended space and that it’s a way for more people to be introduced to our characters.”
Polyarc raised the $9 million after the company evaluated the needs for a project currently in development, as well as other projects beyond that, Armstrong said. It was difficult to finish the funding arrangements during the pandemic, but the coronavirus did not otherwise affect the deal, he said.
“We persevered through it, and in the end, we had come up with very reasonable terms beforehand, and we double-checked them the entire time to make sure that as conditions change, we are still talking about a fair deal,” Armstrong said.
Armstrong is more bullish about VR going forward because platforms such as the wireless Oculus Quest provide a much better customer experience.
“In terms of VR tech, I feel like we’ve just recently crossed the first really significant threshold for your average consumer,” Armstrong said. “As soon as it became untethered, I think that was really important. And then to have it be tracked inside out (with internal sensors, rather than external cable-connected sensors) was super important. It’s hard to overstate the friction of having cables in your home and having to install hardware on your walls and keep extra things on your desk. That’s real friction that causes real people to look at what their alternatives are for their entertainment.”