Veteran investor Mitch Lasky has poured a healthy slug of cold water over the enthusiasm surrounding VR, describing the early market for the technology a, "dramatically overfunded space," that, "kind of scares me as an investor."
Speaking at Casual Connect USA today, Lasky admitted that his "intense emotional experience" while using the current high-end headsets did not convince him that VR was a smart investment within the next few years. And given that Lasky can count Riot Games and Snapchat among his own smart investments, it's a perspective worth taking on board.
"When I look at it more structurally, I'd say something that may sound a little strange: perhaps the Facebook acquisition of Oculus wasn't the greatest thing for the development of virtual reality in the long-run," Lasky said. "It set such a high watermark, and it rung the bell so loudly for the industry, that it sort of forced the hand."
"It's a dramatically overfunded space, actually, from a VC perspective"
Had it been Samsung, HTC or Softbank spending that $2 billion, Lasky said, there might have been a few more raised eyebrows regarding the wisdom of the investment. "But Facebook is smart money," he continued, "and it really established an arms race of sorts in that field, where all of the big companies felt that they had to have a play.
"A lot of game developers jumped in, a lot of venture capitalists jumped in. It's a dramatically overfunded space, actually, from a VC perspective."
The chain reaction sparked by Facebook's acquisition of Oculus led to the formation of "a consensus" that VR is, "gonna work, it's gonna be huge, it's the next big thing, the next big platform. I've talked to senior executives at Facebook who've told me that it's the next mobile phone. I don't personally share that view."
However, adverts for the Gear VR are now playing during primetime sports broadcasts, at a point where, in Lasky's view, "the market is so nascent that we haven't even figured out what we want to do with it yet. It kind of scares me as an investor.
"I've seen 25 or 30 excellent demos. I haven't seen a lot I would consider finished products, or even things that suggest finished products. And if it's anything like mobile games, I started a mobile games business in 2000. It wasn't until 2008 or 2009 that they really became viable as big businesses.
"It was not just the launch of the iPhone, but the launch of the App Store, and even the launch of in-app purchases, that were necessary to get mobile games catalysed in a way that made it meaningful as a business. VR may take a while."
GamesIndustry.biz is a media partner for Casual Connect USA. Our travel and accommodation costs were provided by the organiser.