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The State Of The Virtual Reality Business


When I first started this article, my original title was “if virtual reality is so great, how come you don’t have one?” I’ve been alternating between great optimism and pessimism on the virtual reality (VR) market for the last year and, while I lean toward the optimistic view, it’s also clear the market has not crossed the chasm into mainstream adoption (see Geoffrey Moore’s book for a description) despite plentiful investments in technology and content development.

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The Who’s Tommy

It’s been over a year since HTC introduced the production Vive headset and Oculus launched Rift. Later in 2018, Sony shipped the PlayStation VR headset for the PlayStation 4. On the mobile VR front, there have been three generations of Gear VR headsets, and Google has both the entry level Cardboard and the more advanced Daydream headsets as well. In addition, there are a number of smaller vendors with PC connected headsets and smartphone “drop-in” headsets. Yet, with all this variety of hardware and a fair amount of content as well, why don’t more people have and use VR on a regular basis?

For example, I have yet to see one person on an airplane or train or waiting at an airport or train station using a VR headset. Why is that? Why have we not seen more mobile VR in public spaces? After all, mobile VR is inexpensive and it should be a great way to kill some time. Certainly the more advanced PC and console tethered VR headsets are not for transportation, but it’s harder to judge how many more people are using VR headsets at home.

There are number of factors why I believe VR has not become more pervasive today, despite many enthusiasts. For mobile VR, I think the greatest failing to date is that smartphones are not been designed for VR. The displays and electronics on recent smart phones are not optimized for continuous, graphics-intensive VR action that stress system-on-chip (SoC) in the handset. Rather, most phone SoCs are optimized for long battery life, web browsing, image processing, music playback, and other more mundane tasks. This may be changing with the recent release of the Samsung Galaxy 8, which uses the newest Qualcomm Snapdragon 835.

Still, mobile VR is a compromise between the function of a smart phone handset as a smart phone and the function of mobile VR. Today most smart phones will overheat or drain the batteries too quickly when running intense VR modes because of the stress it places on internal components to render stereo images at high frame rates. Yet without high refresh rates (over 60Hz), mobile VR doesn’t work well and can cause people to become nauseous due to the lag between movements and image update.

PC-tethered VR headsets such as the Oculus Rift and HTC Vive require pricy high-performance PC’s, which push the cost of a VR set up over $1500, including the headsets and controllers. At these high prices, only a few dedicated fans of VR have been willing to invest in such a setup. I happen to be one of those people, but at the same time I was able to build a VR-capable PC using parts I already had. Yet even with my VR setup sitting right next to my work desk, I do not feel compelled to strap into VR on a regular basis. The experiences in VR are interesting and immersive, but I have not found them to be so compelling that would spend time in VR on a daily basis. It is often easier to play a regular video game on a regular 2D monitor. My personal experience is that to date, I haven’t found the “killer app” for VR. No one has created content that has generated such wide enthusiasm or a regular AAA gaming title that has created the need to migrate to VR. AAA gaming titles often drive video game console sales, but those titles are expensive to produce and require a wide distribution to pay back the development costs. So far VR does not have its Call of Duty or World of Warcraft title. There are some titles such Robo Recall, Job Simulator, SUPERHOT VR, and Arizona Sunshine, though, are getting some traction with their fun and immersive game play. But in a recent interview, the head of VR and AR for game engine maker Unity, Tony Parisi, said “We believe in the long haul, we don’t know how long it’s going to take, we believe in the long-term success of this technology. But, in the meantime, I can’t make an economic recommendation.”

Many people believe that the PlayStation VR headset would be the volume leader in high performance tethered VR. And so far, that appears to be correct – with Sony revealing in June that it had sold over one million units. Consoles are the most cost-effective way of getting into a tethered head-mounted display, especially if you already owned a PlayStation console. Unfortunately, the PlayStation 4 console was not originally optimized for VR, but appears to have been adapted well enough for lower quality content. That said, I believe there is still a social stigma of wearing a VR headset in your living room (unless you live alone), because it indicates the wearer is simply excluding others from their experience.

Usually only one person can be in VR at a time, making it poor social game solution. Plus, VR headsets are expensive, so most consumers can’t afford more than one, even if there were more social VR games. There are exceptions – Don’t Stop Talking and No One Will Explode mixes the game play between the person in the headset and the rest of the crowd to solve a puzzle. It will take more content like it to make VR an acceptable social gaming experience. And this is where I have the most hope – the more inventive and experimental games will come from smaller studios (“indies”) and these will push VR content into new areas and make the experience more unique and compelling.

I go to many of the conference that feature VR demos (CES, Game Developer Conference, GPU Technology Conference, Augmented World Expo, to name a few) and often they are entertaining, but we only experience these demos in short doses, which is not an indication of market success. Some events allow more time to explore.

HTC Vive X Demo Day

HTC Vive X VR accelerator program has a $100M investment fund to build such unique content and already has over sixty investments. There are five accelerator locations – two in China, and one each in Taipei, Israel, and San Francisco (SF). I was at the SF office recently for a Vive Demo Day, where Vive X brought in companies from its world-wide offices.

Many of the application programs were design for business-to-business (B2B) markets – training (including sports), simulation, healthcare, even virtual human resources (remote interviewing). One company from Israel, PlusOne, created a virtual environment for language and inter-cultural social interaction training. It can also include bio-feedback to understand stress during the training and provides quantified scoring. I can also see the technology can be used for speaker training – especially for people with public speaking phobias.

Also at the Vive X Demo Day were some games. An interesting game from Red-Accent VR tries to recreate a full-fledged Basketball game, including virtual dunking. The game mechanics take some time to learn, but you can work up a sweat. They believe VR eSports can be a $1B market in 2020. The goal is location-based games today (arcades) and a home version by end of 2018.