Featured Listing: A Virtual Reality (VR) Game

About the business

Tell us a little about yourself. What’s your background? How did you start the business?

I started experimenting with programming in 2012 in an attempt to develop my own video games at the age of 12. After several years of development outside of school, I picked up a virtual reality (VR) headset and it completely blew me away. It was one of those feelings where I knew that something new was happening. I was invigorated to see that all the previous programming knowledge I had learned previously would be applicable to VR.

From there on, I became obsessed with developing VR which filled nearly every waking minute of my life. “Crunch Element” (the title of my first game) simply started as a project to make something that I wanted to play. By the time the project started gaining traction on social media, I was working towards getting a Software Engineering degree and I was interning at a large aviation company. I saw the kind of monotony that can happen at a large company in a highly regulated industry. I had experience working for startups in high school, so I knew I needed the speed and action of being on the frontier of something.

Things really started to grow with the game and the fanbase since every hour outside of my full-time job was dedicated to VR development. When I could afford it, I used the money from my job to hire developers to help out with the game so things could be done in parallel. By the time school started back up again, all bets were off since I was completely obsessed with developing the game. It was arduous having to sit through classes when a large YouTuber would make a video about the game, further validating the opportunity. By the time the next semester ended, I knew I needed to pursue this full time since I couldn’t bear having the opportunity slip away after seeing the growth in VR as a whole so I dropped out, put my head down, and have been going full time on this project since January 2020. I funded a Kickstarter campaign to get some extra hands on the project. More importantly, the success of the campaign got the attention of HTC, which has an aligned incentive for VR as a whole to succeed. They were extremely supportive and sponsored the launch phase of the project. I then put together a team of four developers from around the world to build out the foundation of the game, which was successfully released in December 2020. The title is currently in “early access” meaning it is a living, breathing project that is guided by player feedback. This feedback has proven critical in gaining a competitive advantage by amassing knowledge of what players enjoy in VR.

On launch night, the project reached #1 on new and trending on Steam for both “Virtual Reality” and “Early Access”. It also found a place in the top 5 “VR top sellers” on Steam, reaching #2 on launch night just under Beat Saber. Crunch Element is in a prime position to scale up based on player feedback to dominate the VR gaming market and capitalize on the first-mover advantage.

The amount of learning and growth I’ve experienced is orders of magnitude larger than if I had stayed in my comfort zone in school, and I look forward to continuing the journey and inspiring others to challenge the notion of conventional wisdom and push the envelope of what’s possible, especially for the next generation of innovators. I learned more in the last two years starting my first business than all my other years combined. Throughout this process, I also learned what kinds of work I enjoy doing. This process of self-discovery is what’s now calling me to work on new opportunities in another industry.

As an eCommerce business, where are your products made?

Sales are all digital downloads, as the software being sold is a game.

What can you tell us about your Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC)

Since the game is fixed price, it is listed for $19.99. After Steam’s cut, it brings it to $13.99 per sale. Customer acquisition cost is negligible as there is no active paid advertising campaign.

How have you marketed the product and where are your customers originating from?

Crunch Element is strongly positioned in the virtual reality niche due to its unique mechanics of destruction in VR. This has resulted in many viral Reddit posts in the top VR communities. Most customers originate from Steam’s algorithms that show the game to customers as they shop. 97.3% of customers come from Steam, the others come from social media posts that go viral.

Is the asset on your listing owner-operated, how much time does it take to run the business, who else is needed on the team, and what is automated?

There is zero overhead besides software subscriptions that are used only during periods of development, but these aren’t required after the sale. You can simply take access, run discounts, or you can hire new developers and marketers to take revenue to the next level. The game is categorized as “early access” which means that new updates can be sent out that customers can access. These are great opportunities for adding value, creating new excitement around the game, and increasing revenue.

Orders are automatically processed through Steam, and earnings are deposited via bank transfer at the end of the following month.

What does someone need to do to continue operating the business in its current form?

Minimal work is needed to operate the business in its current form. Easy-value added work would include marketing and scheduling discounts.

Growing the business

Can you list a few opportunities for a potential new owner to continue growing the business?

1. Increase profit by reducing the refund rate by updating the game to address player feedback. This can be delegated to any one of the great game development agencies who are eager to work on VR titles. Hiring developers to implement feedback would also boost reviews even more, driving additional organic growth.
2. Increase revenue by running new marketing campaigns, sending free access to YouTubers, and getting featured on VR press sites.

What has been the evolution of this asset since its launch?

It launched in December 2020 and has evolved since then to pivot based on user feedback which has been a large success. Several updates have gone out since then which addressed player feedback, boosted reviews, and acted as marketing events to strategically send to VR press sites.

How does this business make money? What are the current revenue streams?

The business makes money through sales of the game on retail platforms such as Steam, Viveport, and GMG.

What marketing channels are most profitable for the business?

Although an overwhelming majority of sales come from Steam, the highest ROI marketing has come from Reddit, with posts consistently going viral when its core mechanics of VR destruction are shown.

Some examples:
https://www.reddit.com/r/oculus/comments/hpuy25/wrecking_buildings_with_explosives_in_crunch/
https://www.reddit.com/r/virtualreality/comments/k058jz/playing_around_with_a_grenade_launcher_in/

How does the business currently acquire customers and what is your breakdown for marketing costs?

97.3% of customer traffic comes from Steam organically. Organic reach through Steam has been a massive driver of growth, especially during seasonal promotions and discounts when the game is featured.

The game presents a strong offering to the virtual reality niche, which is relatively small with no other games with mechanics like Crunch Element. Because the game excels within this niche, it is commonly shown as a featured title on Steam and Viveport which drives organic growth.

Other customers discover the game through posts on social media, through official accounts or when the game is covered by VR influencers. Early adopters of virtual reality are extremely enthusiastic about a game like Crunch Element, due to its fresh mechanics of destructible environments in VR.

How big is your current team? How many people does it take to run this business?

At a minimum, it is just me since the business is automated. During periods of development, I outsourced work to anywhere between 1-5 developers and paid others to create a video of content as needed for promotions around updates.

What’s the reason for selling your business on Flippa?

After a couple of years of work, I’m extremely proud of the growth so far and now I want to create some liquidity for the value created up to this point. I’ve always been passionate about starting new ventures the most, and new opportunities are calling me which require more capital upfront.