The Hutch Report produced two reports on virtual reality. One dealing with the technology of virtual reality and another one specific to its use in the real estate industry.
At the time of researching these papers it was difficult to get to specifics amongst the amount of hype in the air. Most articles were dealing with what was to come, how big the market was going to be, how everything was going to be virtual reality.
We wanted to check in to see what the current environment is like.
The best place to start is with the leading headset, Oculus, which Facebook bought three years ago for as much as $3 billion. Facebook has been apparently silent about shipment numbers, but several people familiar with Oculus said that fewer than a quarter million Rift headsets were sold during their first year on the market. When queried by CNET, Facebook declined to comment on Rift sales.
This past February, Facebook decided to remove their VR demo stations from hundreds of Best Buy stores. Some shops were going days without giving a single demo of the Oculus Rift headset.
Since then there have been a number of price reductions by Oculus and its competitors however it is unclear how these price changes may have boosted sales.
Recently, Nokia announced that it would cease building its pricey OZO virtual reality cameras after finding that the VR market was developing “slower than expected”. They will be laying off up to 310 people as part of the move.
Premium content owners and other content creators are currently still experimenting with the medium, but there can’t be an expectation of ROI at this time. Poor video quality is already a leading contributor to subscriber churn. Imagine how consumers would feel if they were paying for VR video content and the experience was laggy and pixilated, and sucked up all their bandwidth?
For virtual reality to really materialise for the masses all the pieces need to be in place. There is no use in having harware developed if nobody is producing the content. If the visuals don’t add up to an exceptional viewing experience then consumers become immeditately disillusioned. If that happens, content producers pull back and don’t make the investments which leaves the hardward producers out in the cold.
Virtual reality has long overpromised and under-delivered. With its origins in the gaming world (Sega VR were present in amusement arcades 20-plus years ago), virtual reality resurfaced a few years later in the 3D world of Linden Labs’ Second Life, then basically disappeared until Oculus Rift. Since then there have been some impressive improvements, yet market acceptance has been slow. Today, VR is just a $7.2 billion-a-year industry. This is mainly attributed to the fact that most equipment is cumbersome to wear, a lousy visual experience, and easily induces nausea. A reflection of that was seen recently as Oculus made a change to their return policies making it easier for consumers with buyers remorse to get their money back.
Many VR insiders have been citing the hype cycle graph from Gartner Research. They are using this as evidence that everything’s fine. The graph shows that new technology normally enters a “trough of disillusionment” after a period of inflated expectations. VR is seen as currently in or emerging from its trough of disillusionment, and if it follows the graph it’ll soon move onto the “slope of enlightenment” where the technology matures and then it’ll hit mainstream adoption. Perhaps a principle issue here is that over the years, virtual reality, as well as 3D have visited this trough of disillusionment many times before.
Technology holds many promises for many industries so it is too early to start calling for the demise of virtual reality. In the end, the consumer will be the judge. If there is not enough percieved value, there will be no market. If the market just isn’t there, investment will dry up and there will be less innovation and fewer products.