Is the Tech Industry Being Too Bullish on VR?
Stop me if you’ve heard this before: Virtual reality is going to be the fastest growing tech market over the next (insert any number) years.
Heck, we here at Dealerscope even included the technology in a recent rundown of tech segments that you ought to pay attention to—we went conservative and said over the next five years.
The latest entrant into the VR-market-growth-predictions club comes courtesy of SuperData Research, a firm that provides market intelligence info and data specifically on the video game market, from consoles to PCs, mobile, eSports, VR, and more. In their latest report on the VR market, which was strategically timed with the announcement of Google’s Daydream platform on October 6th, SuperData estimates that total revenue in the VR market will reach $10.2 billion by 2018 and nearly $30.5 billion by 2020. That latter figure represents a more-than tenfold increase from the $2.68 billion in VR revenue expected by the end of this year.
“What we believe is one of the key drivers in the overall market number is the fact that these are big companies,” Joost van Dreunen, CEO of SuperData Research, said in an interview with Dealerscope. “We’re talking about Alphabet, Facebook, Sony, Samsung, and HTC. They’re all so large and they have an enormous amount of budget available to push their respective products out that we believe that that is going to help drive up the consumer adoption over the next two years, and then arrive at about $10 billion” by 2018.
But even van Dreunen admits, “there’s a lot of back and forth on how optimistic those numbers are.”
So, what should we really make of VR as a whole, and how much can we really expect it to boom in the next few years?
For starters, the VR market itself, even with some of the biggest tech players participating, is still an incredibly niche market. “Where we see VR do will is in its presence on devices that focus or put an emphasis on gaming content,” van Dreunen said. And that’s great for gamers, but until VR can break out of the gaming box and find a way to bring down prices, it’s going to be a very constricted market. SuperData’s own figures show that half of consumers aren’t even aware of the various VR platforms available right now.
Non-gaming revenue projections for VR software
Revenue projections for VR software
PlayStation and Samsung dominate overall VR market share
VR struggles with consumer awareness, according to SuperData Research's findings
That said, even those companies who’ve decided to dive headfirst (literally) into this market are proving that there are ways to do VR well, and there are ways to completely botch the technology.
Van Dreunen and I were in agreement as to which company is far and away crushing it with virtual reality right now: PlayStation. Out of the box, PlayStation VR is essentially ready to go. The user needs a PlayStation 4 (or the 4 Pro, preferably), but there’s already more than 40 million of them in circulation. And beyond the hardware, Sony has access to external licenses and third part support that gives them a serious leg up as far as VR gaming content is concerned.
The Vive is in a similar situation with HTC and the Valve Corporation. HTC built the hardware, but it’s powered by Valve’s technology. Further, Valve has a gaming library that includes titles like Half-Life, Portal, and Counter-Strike to name a few.
Then you have products like the Samsung Gear VR and Google’s new Daydream platform. These are companies that are more interested in getting their product in the hands of users than they are developing exciting content. These are glorified Cardboard products that might feel nice on the user’s face, but don’t do anything to push the limits of VR.
On the opposite end of the spectrum you have Oculus. Despite having the backing of Zuckerberg and Facebook, Oculus has been a complete flop. From the bungled bundle pricing, to the many delays, and their troubles at retail, all on top of the fact that the thing is super expensive and requires more hardware than the average consumer is going to know what to do with—it’s just been a mess. And now you basically have Oculus admitting defeat this week with the announcement that they’re working on a device that won’t require such powerful computers in order to run.
So what is it going to take for VR to truly gain wider acceptance among consumers? How can the market find a way to match the numbers that van Dreunen’s firm put out there?
“The way we look at it is much the same way that Angry Birds drove acceptance of the iPhone—it was the killer app that did it, not the hardware. Games are going to be that category for VR and AR,” he said. “And then over time and very quickly, you’re going to start to see other categories take over and thrive. What drives that is the profitability that offers broader social media, travel, real estate and architecture. Other content categories are going to drive revenue for VR in the long term, but initially it’s going to be gaming.”
Completely agree about the content. But here I am, just looking for a more reasonable, appropriate, comfortable way the engage with VR that doesn’t put a strain on my neck and leave me feeling dizzy after 10 minutes straight under the hood.