As the buzz around VR fades, what’s next?


2016 was as good a year as any to start plotting VRs trajectory.

Headset launches by Facebook-owned Oculus, HTC, and Sony etched 2016 in the history books as the year major players brought virtual reality to the masses.

Consumers, for their part, offered limited resistance. With little in the way of social proof, giddy gamers rushed to drop cash on pre-orders. Then, they happily spent more money to upgrade their gaming rigs to specs more capable of running the resource-intensive contraptions.

Unfortunately for high-end headset manufacturers, not everyone’s as willing to part with their cash as hardcore gamers.

Barrier to entry

Of the “big three” headset manufacturers, Sony was the clear-cut winner in 2016, selling more than 745,000 units. Oculus managed to sell just under a third that amount (243,000), while HTC shipped 420,000 units, according to SuperData Research.

Sony’s dominance detailed the problems Oculus and HTC face moving forward. Both are a third-party solution to existing hardware, and expensive hardware at that.

Sony, on the other hand, kills the barrier to entry problem by offering a plug-and-play solution to hardware millions already own. At $399, it’s a cheaper — albeit under-spec’d (when compared to Oculus and HTC) — option that taps into an established ecosystem full of gamers looking for new experiences.

Spending thousands on a gaming PC is nothing new to gamers.

Adding a $600-ish VR headset is a drop in the bucket compared to the money some have tucked away inside PC cases with flashing LEDs, high-end components, and enough fans to cool a small server farm.

This is Oculus and HTC’s market, and one both have done reasonably well to tap. The problem, however, is that most casual gamers are of the console variety.

It’s looking bleak

Sony shot out of the gates, but it’s only as good as the content it offers. So far, we have a handful of release titles, and one blockbuster: Resident Evil 7.

Adoption will inevitably slow if Sony doesn’t pick up the pace.

For Sony, this is bad news. It needs more content at a time when developers are shifting away from VR just as fast as they embraced it.

RocketWerkz LTD., creators of “Out of Ammo” — a $20 VR game — have recouped only 60-percent of the estimated $650,000 it cost to make the indie title. According to Dean Hall, the company’s chief executive:

The future of virtual reality is very bright, but in the short term, it’s not where we see ourselves. The return on investment is not enough for us.

Voyager Capitol offers another cautionary tale. After investing in Envelop VR — a company that allows users to interact virtually with traditional desktop apps — the company closed the doors last month after raising more than $5 million, according to Erik Benson, a senior partner at Voyager.

“All the enthusiasm from VR manufacturers and developers just hasn’t been met with the same volume from the consumer market,” said Shauna Heller, founder of advisory firm Clay Park VR and a former developer relations specialist at Oculus.

Moving forward

The path forward for higher-end manufacturers seems to be in bundled hardware. Sony is the clear favorite here, but both Oculus and HTC have explored bundles that include the headset and a PC capable of running it.

Unfortunately, these are still $1,500-plus solutions, compared with half that for a PlayStation console and a PS VR headset.

By all accounts, none of these solutions are the answer. Instead, consumers are turning to smartphone-friendly solutions like Google Cardboard, or Samsung’s Gear VR. Like Sony, both offer a solution to use existing hardware without breaking the bank on upgrades — assuming you have a flagship smartphone.

Smartphone VR solutions offer another benefit too: it’s easier to demonstrate the experience. Unlike PC or console-based solutions, you’re typically carrying around all you need in your pocket. Just plug in a viewer, and you’re experiencing VR within minutes.

Analysts rarely agree on anything, but the sluggish pace of consumer adoption that led to the big three shipping just 1.4 million total units also caused analysts to get a bit more realistic on projections for 2017.

Virtual reality might still be the future, but it doesn’t appear it’ll be coming as soon as any of us thought.

h/t WSJ

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