VR Market Update (July 2019)

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3Q 2019 | IN-5573

Outside of the recent attention the Oculus Quest has received, Virtual Reality (VR) largely remains on the periphery of tech news and media coverage. VR no longer garners any stage time at the large mobile device and software/platform unveilings, and while hardware updates to tethered VR devices improve upon user experience and setup, these updates often only elicit brief mentions and do little to move the needle toward renewing wider enthusiasm for VR. Beyond the view of the average consumer, however, the VR market continues to see traction and adoption in the commercial and enterprise markets. First, however, it is worth noting some positive consumer news.

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Smaller Announcements Add up to Keep Momentum Moving Forward

NEWS


Outside of the recent attention the Oculus Quest has received, Virtual Reality (VR) largely remains on the periphery of tech news and media coverage. VR no longer garners any stage time at the large mobile device and software/platform unveilings, and while hardware updates to tethered VR devices improve upon user experience and setup, these updates often only elicit brief mentions and do little to move the needle toward renewing wider enthusiasm for VR. Beyond the view of the average consumer, however, the VR market continues to see traction and adoption in the commercial and enterprise markets. First, however, it is worth noting some positive consumer news.

Within the first two weeks after the Oculus Quest launched in May, Facebook announced that Oculus sold US$5 million worth of Oculus Quest content. Most of this content was very likely gaming related, which suggests launch sales likely fell around 100,000 to perhaps 150,000 units. Game prices ranged from US$0-$40, with most titles priced at US$20-$30—for example, Beat Saber and Robo Recall: Unplugged were priced at US$30, Superhot VR at US$25, Job Simulator at US$20, and Fruit Ninja VR at US$15. If we assume each individual purchased US$37.50 worth of content, that would equate to roughly 130,000 units. These are early adopters, so we could assume a higher spend of US$50 that would put early sales at 100,000. While far from game console launch figures, it is promising, especially considering many retailers’ reported stockouts. Then again, Samsung’s Gear VR also experienced stockouts when it first launched and limited retail availability that stretched into the holiday season.

Amazon added VR support to Oculus for its Prime Video service, and Mozilla announced Oculus Quest support for its VR web browser Firefox Reality.

On the commercial front, there were a number of recent announcements and headlines worth highlighting:

  • In addition to its earlier implementation of employee VR training, Walmart began using Oculus Head-Mounted Displays (HMDs) as part of its assessment when filling management positions.
  • Audi expanded its use of VR to more dealerships, adding an Audi Customer Private Lounge at Audi Centre Centurion in Gauteng, South Africa. Audi is also using VR HMDs to test assembly processes for its e-tron GT, which is the first car in the Volkswagen group to have assembly and logistic processes tested without a prototype.
  • Osso VR announced that 1,000 surgeons use its software every month.
  • The Void, along with Unibail-Rodamco-Westfield, announced plans to open 25 new locations in the United States and Europe by 2022, including Amsterdam, Chicago, Copenhagen, London, Los Angeles, New York, Oberhausen, Paris, San Francisco, San Jose, Stockholm, and Vienna.

Standalone Addresses Some of the Early Issues with VR

IMPACT


The early successes of the Oculus Go and the Oculus Quest are evidence that standalone VR is able to generate renewed interest in VR and address some of the issues consumers have with tethered and mobile VR HMDs. Oculus is also expanding its Oculus for Business lineup, with Quest and later Go to support both Six Degrees of Freedom (6DoF) and Three Degrees of Freedom (3DoF) use cases. Its relative ease of use and setup, compared to tethered VR solutions, and not too dissimilar performance has helped position the Quest as a good alternative to the more costly (when the price of a PC is factored in) and dedicated tethered VR setups. Compared to mobile VR, the Quest offers a closer experience to the higher end tethered HMDs, but also does a better job with heat and comfort and doesn’t drain the user’s smartphone battery.

Innovation and pure performance are still key selling points for tethered VR, particularly in the commercial arena where customers are less price sensitive, more flexible with dedicated setups, and demand more immersive experiences. Solutions such as Varjo’s VR-1, for example, claim to be the first “human-eye resolution headset.”Varjo is also introducing the XR-1, a Mixed Reality (MR) solution that will allow users to combine virtual and real-world elements together. For example, automotive designers can test out different interior layouts or gauge clusters while sitting in a vehicle or even while conducting test drives. In time, however, the gap between tethered and standalone VR will close, mirroring a similar situation that transpired in the game console and gaming PC space. In the gaming market an initially wide gulf in performance existed between the game consoles and PC game platforms, but after several generations of consoles there is now significantly more overlap between the two and, although the PC still offers a more premium experience, the differences are far smaller than they were in previous console generations.

Pathway Forward Starting to Look Clearer

RECOMMENDATIONS


As VR adoption lagged behind early expectations, many individuals—particularly those in the video space—turned away from VR and immersive content, perhaps as a reflexive move due to the fall of 3D TV. In fact, some have already drawn parallels between the two technologies. If we only examined the consumer space this argument would have some merit, but viewed in its entirety (adding in enterprise/commercial) the future for VR and immersive content starts to look brighter. In addition to the traction in the commercial verticals like Architecture, Engineering, and Construction (AEC), Retail, Healthcare, and automotive, VR is finding ways to play a role behind the scenes in the media and entertainment sector as well: – Disney and visual development company Magnopus used VR to visualize and work on virtual sets throughout production of the computer-animated remake of The Lion King).

Before the Oculus Rift and HTC Vive launched, it almost felt we were on the cusp of an Apple iPhone moment: that is, a demarcation point where VR would spread and eventually leave an indelible mark on our daily lives. These early devices turned out to be more akin to the early Windows Mobile for Pocket PC or Palm mobile devices, finding roles among early adopters, businesses, and tech savvy individuals, but generating little buzz among the masses. Forecasts are far more conservative now, and even though Facebook hasn’t fully backed off from its 1 billion user goal, the company does accept that this future is off on a distant horizon. Despite this longer-term view, many still present the question, “what is the killer app that will jump start the market?”     

Some might point to 5G and cloud VR (or a potential game title), but as the market develops, the likelihood of one specific application or product release catalyzing the market is starting to decline. A particular game title could create buzz, much like Pokemon Go did for mobile AR, but that doesn’t always translate into widespread adoption. Rather, VR is taking a slower burn to market adoption. VR in training and education, for example, demonstrates the technology’s value and gives users a touchpoint without them needing to invest in the technology for home/personal use. As these roles become better established in public and professional settings, these technologies will increasingly flow out to users’ households. New sensors in HMDs that track users’ eyes and emotions will help humanize virtual avatars, giving more power to social VR and real-time communications. Improved resolution and HMD performance will make VR experiences appear more natural, potentially opening up the door to those users who are currently unable to participate in VR experiences (e.g., those who become nauseous when the VR experience does not adequately match normal human vision). Individually, all of these advancements might not seem like much, but cumulatively over time they will start to have a stronger impact, much like the growing list of smaller VR announcements that go largely unnoticed by the mainstream media outlets. It will take time, but immersive tech still has a strong future ahead.

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