Virtual Reality Gaming: Alive, But Facing Hurdles

In Steven Spielberg’s 2018 film Ready Player One, humanity spends its days entertained in a massive virtual reality (VR) game called OASIS. 

But in 2025, Spielberg’s dystopian vision of a VR future is far from reality.

Virtual reality games are still an entertainment niche, with manufacturers reducing prices to clear unsold VR headsets, VR software publishers laying off employees, and many development studios closing their doors.

While concerns remain around motion sickness, social isolation and the lack of a “killer app” — a game so enjoyable that it drives up VR headset sales — Australian gamers, developers and researchers insist VR games are “not dead”.

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They say there are still many possibilities for VR games, including in therapeutic settings, with Australians making unique contributions to the medium.

Anais “Naysy” Riley, a Queensland content creator, says the immersion and physicality of the games are a great part of the appeal of VR for Australians.

“When you play a game, you’re still controlling a character. But when you’re in VR, it’s a lot more immersive and you are that character,” she says.

“It used to be quite expensive to get into VR and you used to need … an expensive PC and all these external sensors. But now [VR headsets] are cheaper than ever.”

‘Stable niche’ with persistent problems

According to James Birt, Associate Professor of Creative Media Studies at Bond University, VR games have “not hit the mark” of traditional video game formats, even with streamlined and “reasonably priced” headset technology.

“We’re looking at about 5 per cent of Australian households owning a [VR] headset … and about 50 million headsets [sold globally] across all the different brands,” Dr Birt says.

“[Nintendo] sold 100 million units of the [interactive video game console] Wii … I think that’s what the VR companies were really hoping they were going to get.

“But it’s a magnitude below what one would consider as mass adoption and certainly tiny when you look at PlayStation or Xbox or PC or the [Nintendo] Switch.

Dr Birt believes a “stigma” around VR games causing motion sickness was created by people who felt sick playing in earlier, less advanced VR headsets.

“It’s a real shame because there are some absolutely incredible VR gaming experiences available that are so engaging and engrossing,” he says.

A lack of multiplayer experiences that can be enjoyed socially also hurts their mainstream appeal.

“VR is considered isolating because you’re within the headset, you’re by yourself. Beat Saber is a perfect example of that … it’s an individual experience within an immersive world,” Dr Birt says.

For many players, the lack of a “killer app” is the biggest obstacle to buying a VR headset. 

But Ms Riley says finding a “killer app” depends on individual tastes.

“I found my killer app, it was Beat Saber. We’ve had some great games like Half-Life Alyx … that was the killer app for some people,” she says.

“I think it’s just finding the game that gets you into VR, and that’s going to be different for everyone. How do you define a killer app?”

Australian studios close

Justin McArdle, the founder of FrameLabs, a software development studio based in Fremantle, Western Australia, says working in VR is an opportunity to be at the cutting edge.

But this opportunity comes with significant challenges for Australian studios.

“In Australia, [we are] very lucky to have government support, but you do get the feeling that if you actually look at the metrics on how many VR games have been supported across all those initiatives, it’s low,” Mr McArdle says.

“You can see that there is a kind of reticence about [VR games], you feel they don’t really understand … we’ve had indie game studios going under [in Australia], which has been heartbreaking for the community.”

In February 2025, Toast Interactive, the Gold Coast-based development studio that developed Max Mustard (2024) and Richie’s Plank (2017), closed down.

According to Mr McArdle, Australian studios contribute “incredible creativity and energy” to the global VR development scene.

“[Richie’s Plank] is the go-to for so many people who want to demonstrate the power of VR,” he says.

“They think it’s a really creative, really innovative development community with really cool ideas.”

Future uncertain, but many possibilities

Mr McArdle says Australian developers are adapting to an emerging younger audience and focusing on creating free-to-play, multiplayer experiences in VR.

“They are a teen audience … they haven’t got money to pay for [games], so they’re looking for free-to-play and they’re really into the social aspects,” he says.

He remains optimistic for the future of VR games and his studio has diversified into developing VR applications for the education, health and training sectors, including in therapeutic settings.

At Bond University, researchers have trialled using a VR version of Minecraft to help children overcome anxiety when seeing a clinical psychologist. 

Patients can interact with therapists in a virtual world before meeting them face to face.

The trial has been well-received by both parents and clinicians.

“It’s a really big win for youngsters who look at it as not about going and seeing the psychologist, but about playing with somebody because that person is doing what their friends would do in Minecraft with them,” Mr McArdle says.

He believes VR games are “very much not dead” but evolving in a way not previously envisaged.

“I think we are on the cusp of a whole new wave that, over the next five years, you’ll see feed into [the] mainstream.”

He says Australian development studios are working towards making VR more accessible but need government support to continue “during this difficult period”.

“We don’t want Australia to be left behind because of spatial computing, artificial intelligence … they’re all game-driven technologies and skill sets that can be deployed across any industry.”