Epic Games is still working on its first full-length virtual reality game: an arcade shooter called Robo Recall for the Oculus Rift. But the studio best known for Unreal Tournament and Gears of War has already made a huge impact on VR through its popular Unreal Engine, which is being used to create games like space simulator Adrift and Myst successor Obduction.

Last year, Epic CEO and co-founder Tim Sweeney predicted that between three and five million VR headsets would be sold in 2016, calling it the “most revolutionary change that’s happened in the history of computing.” While nobody has exact numbers for the first wave of consumer VR headsets, sales seem to have been lower than expected for some. But Sweeney remains a prominent supporter of the medium, which he says is just getting started.

Now that people no longer have huge hardware launches to look forward to, what should we expect from the next year in VR? How should early VR developers, who have jumped on board a nascent platform where sales are often scant, support themselves? As VR reflects more of our physical bodies, will this humanize our online relationships, or will we still find ourselves boxed in by hostility? We asked Sweeney these questions and more about how VR will shape up in 2017.

Interview has been condensed and lightly edited for clarity.

Did virtual reality live up to your expectations of where it would be this year?

Yeah, you know, I think it’s been a big success among early adopters. I’d compare this to the first year of the personal computer industry, in which a grand total of 23,000 personal computers were sold. Virtual reality is a completely new market with no precedent. And so we’ve always expected it to grow slowly, especially in this early stage, as developers are learning the ropes of it.

I think what’s happening this year is, we’re building a foundation of almost a million really hardcore, dedicated VR gamers and tens of thousands of VR developers, which will grow by a factor of three or four every year for the next five to seven years, until we eventually reach a billion users with VR and augmented reality. So I think it’s a good start.

How do we set expectations for the next year, now that the hardware hype has died down after all 2016’s headset launches?

I think all developers are making early investments in VR right now, and they’re building up products, ideas, names, and brands that will be incredibly valuable as VR grows. They’re not making a lot of money — I think there are some small VR development teams that are paying their costs by releasing small VR apps on Steam, and that’s a great way to get started. I think really what we’re looking at now is forward investment that’s going to pay off really big as there are tens of millions of VR units adopted. And right now it’s a time for invention rather than profiting.

In the meantime, how should developers stay afloat? There are definitely independent developers who have been sort of disheartened by how little money they’ve been able to make.

Well, I think there are lots of sources of project funding available. I think Oculus is one; I hear rumors that Valve is also giving developers grants to help build their apps. Epic is giving out Unreal developer grants to worthy projects using the Unreal engine. And there are also the possibilities for early VR game developers funding their early VR efforts by consulting, and other projects with the other industries that are adopting VR. There’s going to be huge industry-wide adoption of VR outside of the game industry, and I think there’s a neat opportunity for game developers who are proven as great 3D content creators to participate in that as a way of providing early funding.

It seems like there are at least two distinct parts of the VR entertainment ecosystem. There’s live-action and animated film VR, and game VR. Do you see those merging more?

I think they are merging. If you look at the absolute best storytelling experiences, like Oculus’s Henry demo, it’s not completely like a movie, because there are parts of the demo where the action will wait until you look in the right area so that you don’t miss what’s happening. There are also parts of the demo where the characters will look at you and make eye contact with you wherever you are, and it’s something that couldn’t happen with a pre-recorded linear medium. And if you look at [VR] survival horror games, they’re kind of a hybrid between a game and a movie. I think the most interesting things happening in VR are going to be somewhere in between what you call a traditional game and what you call a traditional movie.

If VR is starting with “hardcore gamers” as its core base, a small number of them have been very critical of anything they see as not being game-like enough. Is that a problem going forward?

I think that will change over time as the audience widens. I think it’s necessary for VR to start with an early adopter audience that’s highly engaged, and I think that means gamers. They’re the ones who have the high-end hardware and the expertise and the patience to sort through the uncertainty of it all. But I think over time, more and more of those transitional experiences in between games and movies are going to get more traction. And even if a hardcore gamer doesn’t like it, when they bring over their real-world friends to try out different VR experiences, I think they’ll find their friends like those things and are much more open to them than maybe even the gamers themselves.

My father, who is 86 years old, has a Samsung Gear VR device, and he’s tried a lot of things. He’s never played a VR game, but he’s done a lot of these interactive movie experiences and found them quite interesting.

How do you think that VR games are going to change the way games fit into people’s lives? I spend shorter sessions playing a physically active game like The Climb, for example, than a console shooter. I can’t sit next to my husband and play some games because I’ll accidentally hit him.

Well, that’s evolving quickly. Right now, VR games are for the most part a solitary experience. It seems almost anti-social. But the next step with the VR hardware is to have cameras pointing in toward your face and out to pick up your body motion, and picking up all of your facial and body motion and being able to replicate it in real time over the internet to other VR users.

And so I think in a few years we’re going to see a very rapid emergence of social VR experiences that are incredibly compelling, that enable you to get together with friends and do things that are completely impossible in the real world. I think it’s going to change really rapidly over time, and we can’t really predict all of the ramifications of it, but I think it’s going to be a much more positive social experience than a multiplayer game today, where you can’t really convey your emotions.

There are a lot of people you don’t want to interact with online, though. The more self-expression people allow in multiplayer games, the more toxic and hostile people often seem to get. How is VR going to deal with that?

Well, both multiplayer games and online forums have this property of virtual anonymity. Other people can’t really see you, they don’t really know who you are. And so the sort of social moderating mechanisms in real life, and your desire not to offend people around you, don’t really adjust. I think that’s the root of the toxic behavior.

Once your VR avatar really looks like you, and people can see you, and you can see them and their faces and emotions, I think all of the normal restraining mechanisms will kick in. If you insult somebody and you see that they have a sad look on their face, then you’re going to feel really, really bad about that. And you’re probably not going to do it again.

And so I think VR might be something that’s humanizing, as opposed to forums and multiplayer games today being dehumanizing. But I think we also have to consider that with VR, the experiences may be so intimate that you will choose instead of playing with random strangers on the internet to only play with people you know.

So far, harassment has definitely still been an issue in VR social spaces. Is that just because the technology’s not advanced enough, or is it a fundamental problem?

That’s a good question. I think that’s one of the big burning questions of the day that nobody really knows the answer to. But in AltspaceVR and Pool Nation and other apps, you see the other player’s head positions and hand positions and rotations, and that’s all. I think as soon as you can actually see the human emotional reactions, that may change the equation really significantly.

Do you think there was common wisdom about VR that we got really wrong over the last few years?

For the most part, I think the software predictions were pretty solid. Everybody recognized very quickly that the type of entertainment experiences that work well in VR are not going to be exactly the same as the genres of games that are popular today.

I think the only [wrong] thing some pundits were predicting was that in the first year VR would sell many millions of units, and of course that didn’t happen. And that causes some people to say “Oh, VR has failed, it’s not going anywhere.” But I think what really matters with VR isn’t the smallness of the starting point, but the exponent it grows by every year. Because if it doubles and triples every year, it’s not going to matter that it’s small today. In a few years, it’s going to be huge.