Will PSVR 2 Become the Tipping Point for Mass VR Adoption?

When Sony released PlayStation 5 (PS5) in 2020, many wondered what its next Virtual Reality (VR) iteration would look like. Although the existence of PlayStation Virtual Reality 2 (PSVR 2) was confirmed in early 2021, CES 2022 gave eager consumers the official unveiling of the new headset that’s expected to release in early 2023. Haptic feedback, finger tracking, and the elimination of an excess of wires are among the most exciting features of PSVR2. Sony has an enormous and extremely loyal fan base but does the average consumer care about VR gaming? Even more, other players like Meta and Apple bring some other consumer options to the mass VR market.

One of the most compelling features of PSVR 2 will be the boosted OLED display resolution (2,000 X 2,400). This will provide immersion levels impossible with the 960 X 1080 resolution provided by PSVR. With the crystal clear resolution, PSVR2 users will see an unprecedented level of graphical details thanks to the horsepower of the PS5. PSVR 2 also includes four built-n headset cameras that enable more accurate motion tracking, which is crucial to an enjoyable VR experience. Among the movements that can be tracked is eye movement, something that can help developers create the most engaging experience possible via user feedback. The new Sense controllers are a sizeable upgrade from the PS Move controllers that lack thumbsticks and advanced tracking features. Brendan Walker, a game developer at Polyarc, told Play Magazine that he believes the PSVR 2 controllers are the best in the VR mass market. His belief stems from two points: dual-wielding, ergonomic design, and haptic feedback. When PSVR 2 comes out, gamers will have at least one killer app to make use of their new toy: Horizon Call of the Mountain, as revealed by Sony in January 2022. The expected price for PSRVR 2 is US$399

A more mature VR device that’s hitting the mass VR market is Meta Quest 2 (formerly known as Oculus), which is priced US$100 less than PSRVR 2 at US$299. Although publically shared data is unavailable, it's widely known that Quest 2 accounts for the overwhelming majority of total VR sales and has even outsold some newer gaming console iterations since 2020. Meta has plans to release two more VR headsets for the gaming segment by 2024, as per a report by The Information. One will be a high-end model released in 2023 and a budget-friendly model will reportedly be launched in 2024. Besides targeting gamers, Meta is also concentrating on providing VR options to the enterprise market. Project Cambria, which is supposedly the furthest along in development, will be Meta’s first VR headset geared to a work environment. Mark Zuckerberg is on record stating that the new headset will be able to replace the traditional work setup. Cambria comes equipped with a high-resolution display, eye tracking, face tracking, and is designed to last for long periods.

Although Apple has tapped into the Augmented Reality (AR) market, much remains to be seen for the company’s VR ambitions; so far, only developmental rumors have been shared online. If the rumors are true, Apple’s main differentiator will be a world-class display that will be on another level than PSVR 2 and every existing VR headset, although it’s supposedly not targeting the gaming market. The pixel density will outclass the 33 Pixels Per Degree (PPD) rumored in Cambria. Apple’s VR device is expected to have the capability to detect an object in the user’s hand, track finger and hand movements, and possibly come packed with Light Detection and Ranging (LiDAR) sensors. Given the high-end features of the rumored product, Apple will likely price its VR product at US$1,000 or more.

The consumer segment is easily the biggest driver in mass VR adoption, already a US$7.4 billion opportunity just in hardware sales alone; by 2027, that number will be US$20.8 billion. While consumer entertainment is the dominant driver for mass VR adoption, there is an immense opportunity to cater to educators. Although it’s just a US$564 million opportunity right now for hardware sales, ABI Research expects US$9 billion in hardware sales by 2027. To a lesser degree, some other segments that will adopt VR solutions include:

• Healthcare
• Manufacturing
• Location Based
• Real Estate
• Retail
• Transportation
• Utilities

VR devices like PSVR 2 and Quest 2 have all the right ingredients to hook the mass market, but is the mass market ready for VR? As impressive as Meta's sales have been since the release of Quest have been, it's still a far cry from mass adoption. Personal Computers (PCs), as invaluable as they are now to the modern consumer and business, took about three decades to enter the mainstream. This is something to be mindful of as excitement surrounding VR continues to pick up. VR has made tremendous strides in the last six years or so, but it’s far from being mainstream. Tech giants like Sony and Meta are at the forefront of innovation in the VR market and are playing a pivotal role in making VR more accessible to consumers and enterprises. While Meta Quest 2 is a standalone device, PSVR 2 is not, making the former a more attractive option for gaming enthusiasts looking to get started with VR experiences in a convenient and low-cost manner. According to ABI Research’s Virtual Reality Market Data: Devices, Verticals, and Value Chain market data report, there will be 79.4 million shipments of standalone VR Head Mounted Displays (HMDs) by 2027. For reference, that represents 88% of the 90.1 million total HMD shipments in 2027. However, it's worth noting that demand for app, mobile, and tethered HMDs is more significant in some non-consumer segments, most notably in education. This fact highlights the need for VR industry players to look beyond standalone VR devices if marketing to the enormous educator vertical.

It’s clear that to penetrate the mass VR market, companies need to deliver on three key areas: price, accessibility, and design. Quest 2 is a great example of accomplishing these three criteria and its soaring sales exemplify this fact. Quest 2 combines an affordable price with a cordless and user-friendly design. At the same time, PSVR 2 will establish a strong niche among passionate Sony fans and gamers who don’t want to meddle with PC gaming. Although Meta has lost billions in consecutive years, the company has its eyes set on a long-term vision where the metaverse dominates entertainment and even the workplace.

To generate even more revenue, it’s worth looking at VR software as a reliable revenue stream. A lot of the non-hardware revenue in the VR space comes from digital storefronts like Meta Quest store and operators like ClassVR. By 2024, services revenue will outdo HMD revenue. Compared to the US$32.3 billion annual hardware revenue expected by 2027, there will be US$67.6 billion in services revenue that same year—exemplifying just how crucial it is to focus on more than just hardware. Consumers and business leaders want solutions that make integration easier and content/software to use VR headsets with.

We are currently at a crucial period for VR, as consumers look for fresh experiences and enterprises seek out innovative workplace solutions in a world where remote work presents several performance-hindering obstacles.  As it stands, it appears that providers are up for the challenge and are taking the right steps toward the future of mass VR adoption. Going forward, ABI Research expects the advent of 5G and industry acquisitions to be major catalysts for VR adoption, and the company will surely be following all the upcoming trends.