Uppföljning Beyond Frames

I början av sommaren gjorde jag en intervju med Ace St Germain som är VD på Beyond Frames. Du kan läsa den intervjun här om du missade den eller vill fräscha upp minnet. Bolaget bevakas av TradeVenue och du kan läsa en rapportkommentar kring bolagets Q2 rapport här vilket också är en bra grund inför den nya intervjun som kommer nedan.

Det är verkligen vind i seglen för bolaget. Mycket hög tillväxt och dessutom ett positivt kassaflöde i senaste kvartalet. Detta samtidigt som det händer mycket i branschen i stort med lanseringar från både några av världens största bolag som Meta och Apple. Det gör att vi i dagens intervju kommer titta lite mer på de stora trenderna samt avsluta med lite kortare del om den starka Q2-rapporten.

Hi again Ace. The last time we focused more on your business, your first year as CEO and the Q1 report. This time we will look at the AR/VR market in general. Because it seems to happen a lot right now. Maybe we should start with the basics. Can you tell us the basics and differences between AR and VR? Are Beyond Frames active in both segments?  

We’re technically active in three segments if you include Mixed Reality (MR). Mixed Reality is an important bridge between VR and AR, so let’s spend some time there as well. 

Augmented Reality is the visual augmentation of your physical space with digital elements. As an example, imagine simply looking at your refrigerator and having a list of your available ingredients and recipe possibilities automatically appear next to you for easy browsing. Hardware-wise, the goal is to eventually complement or fully replace our mobile phones with AR glasses no larger than your everyday pair of sunglasses. Progress is constantly being made in this area, but we are not quite there yet due to current hardware limitations. Microsoft’s Holo Lens and Magic Leap’s devices are examples of AR-only hardware currently in the market. 

Mixed Reality, often named “pass-through” or “spatial computing,” is the bridge between VR and AR that allows users to interact with digital elements in physical spaces. This is made possible by taking VR devices and pairing them with high-resolution outward-facing cameras. The real world is “passed-through” these cameras to the user and augmented with digital elements, which can be made interactive. It’s possible today for consumers to experience MR using newer generation hardware such as the Meta Quest 2, the Meta Quest Pro, or HTC’s XR Elite. Meta’s upcoming Quest 3 is said to excel in the MR space at a consumer-friendly price point. 

Virtual Reality replaces your physical space. One second, you can be in your living room; the next second, you could transport yourself to fully immersive virtual environments to explore Mars or play padel with a friend across the ocean. The intent of virtual reality is to immerse you to the point where you lose yourself in a new or different reality. Current hardware devices are the Meta Quest family of devices, Pico’s headsets, and a plethora of PC-tethered VR devices such as the Valve Index and HP Reverb etc. 

There is a lot of nuance in these definitions and a much longer conversation to be had around the differences in hardware to power each technology, but hopefully, this helps separate the concepts for anyone reading. 

What is your reaction to Apples launch of their AR/VR-headset Apple Vision Pro? For me it looks like the biggest Apple launch since Steve Jobs days? 

It’s an incredible leap forward for AR/VR/MR and computing in general. Apple’s efforts in silicon development have shown how powerful their M-line of processors can be for laptops and towers, and now we have one in a headset. Miniaturization and efficient power consumption are two of the industry’s main challenges for future development, and Apple has really shown that their bespoke hardware and chipsets can be extremely efficient in this area.  

To help put this in perspective for those new to the VR/AR/MR headset market: for a long time, VR headsets used to have to be tethered to a PC using a cord, which would use the processing capabilities of that PC to power virtual reality experiences. We call this PCVR. Then, “standalone” hardware like the Oculus and HTC Vive headsets entered the market, which are powered by mobile chipsets similar to what you would find in your smartphone. Mobile chipsets are fantastic but still far behind chipsets available to PCs and Macs when it comes to graphics and general processing.  

With Apple Vision, I joke that we’re exiting the era of “phones on our faces” to the era of “laptops on our faces”. While this might be tongue in cheek, you can imagine the implications for developers and consumer experiences with this jump in power, untethered from a computer. 

Another big player in AR/VR is Meta. They have less expensive product in Meta Quest. What are the biggest differences between the products and is there any big differences in Meta and Apple over all strategies in the VR segment?  

With Apple still at the beginning of their journey and Meta launching V3 of their Quest line of products, it’s difficult to compare. Going solely off Apple’s presentation, a focus on Vision being an evolution of your day-to-day interactions with screens is much different than Meta’s focus on gaming. The Meta Quest has controllers, which allow for haptic feedback and much more precision required of gaming experiences, whereas Apple’s focus on hand-controlled gestures doesn’t preclude gaming but assumes not much of a gaming focus in these early days. 

This is just one example of their differences. There are some clear trade-offs in their respective designs when it comes to AR/MR-focused tech versus VR-focused tech, and I’m waiting to see consumer feedback to see where Apple takes Vision in its next phases.  

In general, we’re thrilled about Apple’s entry as it adds a very strong competitor to the market and one which has an extremely deliberate and laser-focused distinct strategy in putting the user experience first. It’s a much-needed energy injected into our market.  

Will you be able to deliver games for both Meta och Apple VR products? If so is there one of them or maybe a third company that will fit your games and products better and will be your main focus?  

Yes, we will be able to deliver games for both Meta and Apple. Unity, the primary game engine of our studios, is already supported by Apple Vision, and our team is well-versed in Apple’s tooling due to previous experience with iOS.  

We will definitely spend cycles figuring out how to best approach this new hardware, but for the near future, we plan to keep a majority of our resources building games for the large market share currently held by Meta, PCVR, PlayStation, Pico, and others.  

Apple Vision Pro will cost about 40 000 SEK. Do you think it´s possible to be a mass product with that price or should we expect the price to come down in a few years? 

I think Apple purposefully labeled their debut hardware as a “Pro” at a high price point to get developers and enthusiasts involved early so we can build the roadmap and products for a far more consumer-friendly version in the not-too-distant future. 

Does the high price tell us that the product mainly will be used as a work tool for professional users, or do you think is it realistic to except people to buy Apple Vision Pro just for fun and playing games and entertainment?  

One of Apple’s underappreciated USPs is their loyal and affluent fanbase. I believe there are enough Apple enthusiasts out there to sell through a surprising amount of units even at this early phase. Definitely not a mass-market level of users for this version of the hardware, but enough to lay a strong foundation for the future of the Apple Vision platform. 

How big in the market today in number of sold headsets and what in the “official” market forecast or best guess for example in 2025 or 2030?  

While I can’t divulge any proprietary information, research companies like Newzoo forecast 46 million active headsets in market by 2024 with a 42% CAGR between 2019 and 2024. 

Now over to your Q2 report with really strong numbers. The revenue is for example up 847% compared to Q2 2022. Are the drivers the same as in Q1 when the revenue was up 110% (compared to Q1 2022)? 

Yes, the performance of our new publishing titles, especially Ghosts of Tabor, contributed a significant amount to the increased performance of Q1. These same publishing titles contributed to Q2, and we also began to recognize revenues from the project funding deals we closed earlier in the year. 

Is there something else in the report you would like to highlight? 

We also mentioned the expansion into PC and console games. While we plan to stay the course with our XR efforts, our overall plan is to move the development and acquisition of intellectual property to the center of our strategy regardless of the medium and distribution platform. 

So the revenue is up 847% in a year, but the share price is flat compared to the beginning of September 2022. And the number of owners on Avanza is down about 20% from beginning of 2022. Do you think your company is a bit misunderstood and forgotten considering the hype in the AR/VR general market and your strong numbers? 

I think what we’re experiencing is industry-wide, and not just to AR/VR, but the video gaming market in general. Without naming the share performance any other games companies, it seems we’re not alone in seeing little to no movement despite positive performance. Investors across the board seem to be allocating elsewhere outside of games. 

That said, I believe these rough times in the market present a great opportunity for companies to prove themselves on the merit of results. We strongly believe in our strategy and our ability to execute. I suspect Beyond’s stock won’t go unnoticed by investors as we continue to deliver. 

Med det tackar vi Ace för de utförliga svaren och jag ser nu fram emot att följa bolaget under de kommande kvartalen. Det skulle även vara intressant att höra vad ni som läsare tänker kring att hela spelsektorn nu verkar lite bortglömd efter att ha varit stekhet under 2021.