What's Behind the Rise of Enterprise Game Studios?

Enterprises of all shapes, sizes, and industries are building internal game studios. The thought “enterprise game studios creating enterprise games” is perplexing and might cause your head to tilt and your nose to scrunch. However, they are the new incarnation of the innovation lab, building spatial computing applications instead of Web 2.0, touch interfaces, and mobile apps. Spatial computing, alternatively known as extended reality (XR), faces more significant challenges than other technologies due to its entangled relationship and shared technology stack with the video game industry. Resolving this inelegant pairing is imperative to realize the potential value spatial computing inarguably offers enterprises.

Spatial computing is impacting industries such as construction, energy, mining, manufacturing, transportation, medical, and pharmaceutical much more than retail and general consumer products (e.g., video games and social apps). Spatial computing has much greater adoption and momentum in industrial and enterprise use cases than in general consumer-directed products. Judging the success of spatial computing solely by consumer adoption metrics is misdirected and fails to acknowledge a vast set of use cases and the most extensive user base within enterprise companies.

Companies are finding meaningful and impactful uses for spatial computing. Enterprises predominantly use the technology to improve operational efficiency by reducing costs, streamlining workflows, and analyzing data in new and never-before-possible ways. Spatial computing is rarely incorporated directly into an enterprise’s core products and services. Instead, spatial computing is becoming compulsory for business operations.

Corporations are building teams of Unity and Unreal developers to build apps that are, in effect, enterprise games. Employee training games are overwhelmingly the primary use case. Themes range from maneuvering heavy equipment to putting out fires on an oil rig, practicing medical procedures, and resolving uncomfortable HR scenarios.

Regardless of the use case or purpose, these game studios fit awkwardly within corporate hierarchies and face obstacles created by ambiguous stakeholders and disjointed goals. These dynamics compound the natural incongruity of game development and enterprise software – dramatically different cultures, production costs, workflows, software practices, and software development tools. Just like pushing together the same pole of two magnets, it can be done, but it takes some force.

The challenge is that spatial computing requires skills and expertise currently only found among game developers and designers. The tight coupling between extended reality and the video game industry is because of the technology’s 3D’ness and tooling—game development tools are the overwhelmingly dominant way to create spatial computing experiences. Further, there are not enough independent solution providers or products to meet enterprise demands, leaving companies little choice but to assemble internal game studios or risk missing out on the technology’s value.

In short, the enterprise spatial computing space has skill and market gaps. Successfully closing these gaps will determine the fate of spatial computing as a meaningful and viable technology.

Closing The Gaps

Game developers may temporarily work for enterprises, but only out of necessity. They will leave without hesitation if given the opportunity to work on a game. Do not judge them for this. Their passion is making games and not improving the operational efficiency of an industrial company. Conversely, a company must strongly consider the value of upskilling their existing employees because these skills do not apply to any other aspect of the business.

New enterprise-specific tools are needed to solve the skills gap. Currently, game developers are necessary because they are experts with the dominant spatial computing authoring tools: Unity and Unreal. These tools are optimized for creating games and do not fit the needs of enterprise software. The game engines are complex and complicated, and attempts to provide features for non-game applications have a Frankenstein-esque elegance. Enterprises need tools for building enterprise spatial computing apps, not games.

A few companies are trying to solve the tooling problem. Their products are either great first attempts but are still too close to being gaming tools or nothing more than features in need of a holistic product. Either way, they are inadequate and still far from viable enterprise solutions. There should be a class of tools comparable in complexity and accessibility (user skill level) to a spreadsheet or presentation tool and another more sophisticated class where junior and senior-level technologists can be experts in this tool while also being experts in other technologies. An apt comparison is being a web developer and expert in AWS or someone who is a Service Now and Salesforce technician.

Enterprises bear a responsibility to have a spatial computing strategy. Too often, emerging technology initiatives are hastily and cavalierly constructed. A well-defined strategy explicitly defines how you expect spatial computing to affect your business positively. Such a strategy would set clear expectations that your game studio is experimental and should not be expected to release a product or achieve an ROI in 6-12 months. There must be a plan to transition or sunset the team. At some point, you will achieve your goals and transition to a formal product group, not achieve the goals and move on, or replace the team with a third-party product (i.e., the market gap closes and enterprises can buy the right solutions).

The explicit takeaways are:

Enterprise leaders with a strategy focused on business outcomes with spatial computing as the solution technology will be successful.
Enterprise software differs from game software even when the technology stack is similar. There is a need for enterprise spatial computing developers.
Product companies and solution providers have a great opportunity to build better spatial computing tools for enterprises. There is no declared winner in this space.

Spatial computing’s success or failure in enterprise applications hinges on the emergence of special tools that target the use cases, unique requirements, and available skilled talent needed for enterprise applications. Such tools will catalyze enterprises to move beyond gaming’s influence and create successful enterprise applications leveraging spatial computing, not games. The available tools do not meet businesses’ needs, and there is a great opportunity for one of these vendors to step forward or for a new entrant to capture the market. Hopefully, spatial computing continues to grow within enterprises; regardless, enterprise gaming studios will fade away and become something we remember fondly, like innovation labs and maker spaces.

Jarrett Webb is an author, speaker, and technology/product director at argodesign.