VR Industry Hype vs. Reality

Some have inaccurately written off the VR industry as niche or immature. I disagree with this sentiment completely. We already have mature software technologies (3d modelling + game engines) that need to be only slightly modified to accommodate new head tracking hardware.

Furthermore, over the past few months I have personally seen a large amount of my technically illiterate colleagues, computer blind friends, and still-using-landlines members of my family start to have an extreme interest in virtual reality.

How have these people – who still have extreme difficulty even operating an iPad or any desktop PC – expressed great interest in using “such an immature and not-ready product“? While this is obviously a source of great optimism for myself since I work in the VR field and love to see the industry grow, this result has a greater impact on the outlook of the industry itself. It proves the point of VR enthusiasts that virtual reality is indeed a desirable interface between human and computer that the mainstream will participate in. More importantly, the indications of extreme interest from technological laypeople proves without a doubt that the VR industry is here now.

These indications of interest that are backed up with raw data:

Every major VR headset sold out in minutes. The Oculus Rift in particular has sold out until July, and that’s without the Touch controllers. Demand has unquestionably exceeded supply. Sales have certainly been very positive. Another thing to take into account is that there are millions of Google Cardboard headsets in the hands of consumers right now. Furthermore, the Playstation VR, coming out this fall, brings a very affordable (and very convincing) VR experience to some of the 36 million PS4 owners which, by the way, are mostly tech savvy gamers.

We haven’t even talked about the the true mass market opportunity: Samsung’s phone based VR headset, the Gear VR, seems to be everywhere. The surprisingly good mobile VR headsets have sold out online multiple times, and will be shipping alongside the Samsung Galaxy S7 later this year.

While it’s easy to fall onto the hype train because VR is just plain exciting, this hype has produced some impressive sales numbers for an industry that many are writing off as “too early”. My personal prediction is that sales will continue to beat forecasts well into 2017. Still not convinced? Go look at some photos from Game Developer Conference 16 – where everyone seemed to be doing something in VR.

Funding

Excluding MagicLeap’s monster round of investment, VR & AR investment in 2016 has already surpassed $400mm USD in 2016. Some more from Digi-Capital:

We’re now seeing the creation of dedicated early stage AR/VR funds, such as the Colopl VR Fund with $50M to invest. We note that amounts committed by Limited Partners to AR/VR funds are not included in the $1.1B number – that number is the amount invested into companies directly. In other words, there is more money in the AR/VR investment ecosystem looking for great portfolio companies.

With $120 billion revenue forecast to come from AR/VR by 2020, investors have a clear eye on the future.

– Digi-Capital

It’s hard to find an industry with growth forecasts as aggressive as VR and AR.

vr-investment-2016

Excitement, and investment from venture capital, is not always an accurate predictor of mass-market opportunity. The combination of said excitement and big sales trajectories, however, certainly leads us past the trough of disillusionment and into the slope of enlightenment. Just ask Gartner. To say that the VR industry “isn’t here yet” is like saying the internet was a fad in 1999 because a few over-funded companies made odd-ball product decisions.

vr-hype-cyle

While Gartner does indicate that VR is “5 to 10 years” away from complete mainstream adoption, I think that’s just fine. Mass market adoption of the “information super highway” was still in the “5-10 years” category when Google and Amazon were founded and they did very well even in the early days.

hype-cycle-1995

It’s here.

More interesting to many outside observers is simply the delight people experience when they try VR for the first time. Everyone is extremely excited – even outside of the tech sector. VR (and eventually AR) will certainly reach mainstream in the next few years as we build out exciting new VR content libraries. Personally I have seen many non-gaming, non-tech savvy friends have strong desires to experience virtual reality. The delightful look on their faces once they walk around in Fantastic Contraption or guns in Space Pirate Trainer is confirmation that VR is here now and will only get better as we refine content for the virtual world.

The virtual reality industry is far from its peak, but to dismiss it as too early or too gimmicky is a premature and overly dismissive attitude. There are tremendously creative people who are building unimaginably exciting and immersive experiences that will utterly change the way we consume media (or do work, or socialize, or watch sports…).

Everyone around tech is excited about virtual reality, and there is a very good reason to be. The next Google is probably already in their humble beginnings, as is the next Steven Spielberg or Paul McCartney. Our new connection to computers is extremely worthy of the attention its getting, and things will only get more intense from here on out.

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