The market realities of VR

Virtual reality has been out in the wild for well over a year at this point but how is the market shaping up? Has it been the runaway success that some predicted, or is there more that needs to be done in order to break the tech into the mainstream? Jonathan Easton asks the channel about where VR currently stands in the real world.

Virtual Reality has always been seen as ‘future tech’. It’s been the stuff of science fiction, of the ‘what will the future look like?’ questions, and – to some – a concerning prospect for a generation already addicted to its devices. 

But here we sit in 2017. VR devices are readily available to suit any budget. From cardboard headsets that can be found in pound shops, to the premium head mounted displays (HMDs) produced by the likes of HTC and Oculus for hundreds of pounds, there’s a good chance that you’ll be able to get your hands on VR.

The average shopper however isn’t so aware of VR’s ubiquity, says Wearable Technology Show COO John Weir. “I would say that the average person in the street doesn’t see VR as a necessity in their daily lives – it’s still the stuff of science fiction.”

I think it’s still a nascent technology which is gaining traction in gaming but remains sluggish – this is going to be a long slog.”

Weir isn’t alone in his belief that VR is taking its time to gain traction. Kamal Hitari of online retailer Hitari holds a similar belief that “consumers are aware of VR as an entertainment and gaming device but its potential is massive and we are only scratching the surface with its uses.”

Likewise, Tanya Laird, founder and chief exec of Digital Jam, thinks that average consumers “have heard of VR however the reality of the penetration is somewhat smaller than the perception.

“The reality is, for most people within the VR industry their bias is still very much out of proportion to the general population. Hands-on experience is still limited to early adopters and hardcore gamers/enthusiasts.”

And this isn’t just conjecture, the stats back it up states Jonathan Wagstaff, UK and Ireland country manager at Context: “When we conducted our VR survey of EU consumers last summer a quarter of those sampled still had not heard anything about virtual reality.”

However, he goes on to say that the advertising push from the likes of Samsung with its Gear VR and Sony with PlayStation VR over the Christmas period means that “awareness will definitely have grown”.

“Content is key for VR in the long-term.”
Dan Todaro, Gekko

An enthusiast’s market

It seems that even though awareness is rising outside of a core audience of enthusiastic, early-adopting gamers, there is a problem when it comes to exposure. “The challenge is getting people to experience the different levels of entertainment,” says SNR UK category manager, Charlie Stringer. 

“How we bring these experiences to life in store is something we’re talking to all of our suppliers and strategic partners such as Intel and Microsoft about. This is a massive opportunity for us as the biggest retailer of consumer electronics.”

Similarly, Chillblast sales director Ben Miles shares a similar concern about how to show off VR to a new audience, and that cheaper VR experiences have a detrimental effect. “It’s our thoughts that entry level VR experiences like the Samsung gear VR and Google cardboard do more harm than good when it comes to giving people a taste of VR.”

“Far too many of these experiences are generally poor quality, lacking immersion and are poorly executed. If someone can try VR for the first time on a smartphone device and it gives them the inspiration to try something more “premium” then so much the better, but many people we encounter say they “don’t like VR” because they have founded an opinion based just on a piece of kit that came free with a mobile phone.”

In terms of the sales figures though, it is those cheaper VR setups for mobiles that are winning. The three main mobile VR headset types – Google Cardboard, Google Daydream, and Samsung Gear VR – account for 98 per cent of the nearly 89 million headsets sold in 2016, according to data from SuperData Research; a statistic that supports the claims of Merge VR executive vice president, Dan Worden: “The consumer interest in mobile VR is showing quickly that there is incredible potential way beyond a gaming platform. In fact, many in Generation Z express great interest in virtual exploration – going somewhere they can not go right now, whether that is underwater, a tropical island, space, or even a football match.”

It’s clear that there is a great deal of interest in VR in experiences outside of gaming, but there are fears that consumers may lose interest.

Content driving growth 

What use is a consumer technology without content? That is a big question currently being asked of VR.

Now that we have the tech – and it’s more than just a proof of concept – many are wondering what’s next. Certainly, that is a problem for many of the mobile VR experiences like Google Cardboard that come with a handful of tech demos, but little else to keep users engaged. “There are fundamentally still a few barriers of entry for these products to become more mainstream, one down to cost and more importantly content to other consumers engaged,” says Stringer.

Gekko managing director Dan Todaro agrees that “Content is key for VR in the long-term”, but says that a lot is being done to ensure interest is maintained. “With an estimated $400 million having been invested in 2016 on content development, the industry has established VR as a credible platform over and above Sony’s PlayStation VR, which is estimated to have sold 2.6 million units in 2016. 

“If brands continue to produce content that appeals to their key consumers, then VR will continue to grow. Expect this to come from gaming, where VR’s appeal is greatest.”

VR is not however just a gaming medium. “There are many uses VR can provide in medicine, architecture, design, education – limitless possibilities,” says Hitari. 

However, like with the tech demos on Google Cardboard or the limited range of compelling games across PlayStation VR, Oculus Rift and HTC Vive, “VR has next to no compelling business applications yet,” according to Ed Daly, MD of digital arts studio Seeper. “You could walk into a thousand offices and factories and I’d wager you’d never see anyone using a VR device. Some businesses can see potential in training but the interaction solution is not there, and I’m not sure will be there for a long time to make heavy use viable.” 

While all the focus may initially be on gaming, VR might see most of its profits coming from the business world, says Laird. “The real revenue potential for the next 3-5 years remains in B2B”.

We’ve been saying this for months, but it must be still stated that virtual reality is still in its infancy; it’s still new tech to most people. The market is emerging across a variety of different audiences and price points. The biggest challenge facing both vendors and retailers is making sure that customers can get a hold of the tech, and that they remain engaged with it as more content is being produced. 

VR tech isn’t perfect yet, but keeping interest in this hot topic of technology is the key to its long-term viability.