1Q 2018 Virtual Reality News Update and Analysis

An earlier published Executive Foresight introduced some of ABI Research’s early 2018 expectations for the VR market, and in the short time since that publication, new market developments have already rolled out. On the standalone VR front, Oculus officially unveiled the commercial version of its Oculus Go HMD at GDC (partnering with Xiaomi to release the rebadged device in China, called the Xiaomi Mi VR Standalone), priced at US$199 in the U.S. market. First-hand experiences have largely been positive and, despite being powered by an older Snapdragon 821 (HTC’s VIVE Focus, for example, is powered by a Snapdragon 835), the experience has been depicted as top tier among portable VR devices, likely due in part to the Go’s use of fixed foveated rendering and premium optics.

HTC had two major announcements: the eventual availability of its standalone HMD, the VIVE Focus, to international markets (outside of China), and pricing for its VIVE Pro tethered HMD. The VIVE Focus uses an AMOLED screen (Oculus Go uses fast-switching LCD) with a 2880x1600 pixel resolution and, as mentioned earlier, is powered by the newer Snapdragon 835 (same as the Lenovo Mirage Solo). The Focus supports inside-out tracking and 6DOF movement, but only 3DOF for controllers (Go is 3DOF for everything). While pricing information is not available, it will likely fall within the US$400 to US$600 range with the middle (US$500) being a popular estimate. HTC’s VIVE Pro HMD will be priced at US$799, which includes a 6-month trial to HTC’s VIVEPORT Subscription, but for the time being this price point is only for the HMD and connectivity box (no controllers or basestation).

With the announcement of the VIVE Pro pricing and preorders, HTC also lowered the MSRP of its first-generation VIVE bundle, reducing it by US$100 to US$499. Sony also permanently dropped the price of its PSVR bundles with pricing starting at US$299.99 (US$100 down from previous pricing).

New and updated hardware, along with lower pricing for older tech, are certainly welcomed and needed steps, but this also reflects how far the market must still advance before it is ready for wider mainstream audiences; in other words, the market is still in its awkward transitionary phase. For example, 6DOF movement with 3DOF controller(s) presents a halfway point between current mobile VR and premium tethered VR experiences, leaving developers in a potentially difficult position if this class of HMD becomes popular by creating a third tier (e.g., supporting the previously larger 3DOF mobile market, more premium 6DOF tethered, or something in between). The mixed 6DOF and 3DOF HMD/controller scheme also places limits on how readily software could work across platforms, and yes, gaming is already moving cross platform with titles like Fortnite and PUBG hitting mobile devices, consoles, and PCs (in some cases, allowing for crossplay between platforms as well).

Pricing remains an issue, particularly for HTC’s VIVE Pro. The Pro is positioned as an upgrade for first-generation VIVE adopters, because the initial preorder does not come bundled with the necessary accessories (controllers and basestations). Pricing for two controllers and two basestations (same accessories) from HTC is US$529.98, which is higher than the bundled price of the now lowered price, first-generation HTC (US$499). HTC has announced a discounted tracking bundle (controllers and basestations) for US$300, but the price for a full package of VIVE Pro headset, controllers, and basestations would be US$1,100. HTC will reportedly release a VIVE Pro bundle in the future, but pricing is uncertain.

The HTC Focus, assuming it comes to market at US$500, could face a challenging market compared to the already well-received Oculus Go. By splitting the difference between mobile and tethered VR (regarding movement and control), it could see the least native developer support; while the Oculus Go is 3DOF, all around it is still a good fit for the mobile VR space.

Until full 6DOF standalone HMDs with two controllers (also 6DOF) arrive, it will be difficult to assess the actual market potential for standalone VR, suggesting we might have to wait for Oculus’s Santa Cruz product or a new HMD based on Qualcomm’s Snapdragon 845. This is critically important because it could greatly expand the installed base of users at the premium end, being developed for both tethered/PC/console and full 6DOF standalone HMD platforms. Until then, the market will still largely be bifurcated between mobile (3DOF) and tethered (6DOF). Surprisingly, there has been little development of 6DOF movement in the mobile VR space, despite early test cases that used SLAM to offer these types of experiences.

This suggests the market could be shifting away from mobile VR (HMDs that use smartphones), which would greatly reduce ABI Research’s current forecasts. If the market does reduce its support for mobile VR, ABI Research does not expect to see a 1:1 shift from mobile VR to standalone VR because the cost differential is too high for those looking to invest in a more casual VR experience (even at US$200). Ultimately, the VR hardware market must work toward enabling and pushing cross-platform play and experiences. The market will certainly support 3DOF and 6DOF experiences (some experiences will naturally be a better fit for one or the other), but long term, ABI Research expects more discrete separation between the two (e.g., controllers in 6DOF HMDs will need to be 6DOF as well) in order to present content developers with the largest possible user bases.

Looking beyond these tech and pricing issues, there are some additional signs pointing toward continued positive growth as an industry. Indeed.com was cited as saying it is seeing a solid uptick in job postings for AR, VR, and esports positions; AR/VR positions are still favoring game development. In addition, VR arcades continue to expand with more than 30 VR arcades across the United States announcing plans to deploy HTC VIVE’s Ready Player One Experiences. While the market is still interested in and supporting VR, it might just have to wait a bit longer before we start to see just how mainstream it can become before looking further into the future.