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2016 is about VR experiences, not VR sales

The biggest task facing VR in 2016 is getting as many consumers as possible to experience it, even if they can't buy into it yet

Virtual reality is, without a doubt, the most exciting thing that's going to happen to videogames in 2016 - but it's becoming increasingly clear, in the cold light of day, that it's only going to be providing thrills to a relatively limited number of consumers. Market research firm Superdata has downgraded its forecast for the size of the VR market this year once more, taking it from a dizzying $5.1 billion projection at the start of the year to a more reasonable sounding $2.9 billion; though I'd argue that even this figure is optimistic, assuming as it does supply-constrained purchases of 7.2 million VR headsets by American consumers alone in 2016.

Yes, supply-constrained; Superdata reckons that some 13 million Americans will want a VR headset this year, but only 7.2 million will ship, of which half will be Samsung's Gear VR - which is an interesting gadget in some regards, but I can't help but feel that its toy-like nature and the low-powered hardware which drives it isn't quite what most proponents of VR have in mind for their revolution. Perhaps the limited selection of content consumers can access on Gear VR will whet their appetite for the real thing; pessimistically, though, there's also every chance that it will queer the pitch entirely, with 3.5 million low-powered VR gadgets being a pretty likely source of negative word of mouth regarding nausea or headaches, for example.

"For a great many consumers, without proactive moves from the industry, word of mouth is all they're going to get regarding VR"

This is a problem VR needs to tackle; for a great many consumers, without proactive moves from the industry, word of mouth is all they're going to get regarding VR. It's a transformative technology, when the experience is good - as it generally is on PSVR, Rift and Vive - but it's not one you can explain easily in a video, or on a billboard, because the whole point is that it's a new way of seeing 3D worlds that isn't possible on existing screens. Worse, when you see someone else using a VR headset in a video or in real life, it just looks weird and a bit silly. The technology only starts to shine for most consumers when they either experience it, or speak to a friend evangelising it on the basis of their own experience; either way, it all comes down to experience.

That's why it was interesting to hear GameStop talk up its role as a place where consumers can come and try out PlayStation VR headsets this year. That's precisely what the technology needs; where at the moment, there are a handful of places you can go to try out VR, but it's utterly insufficient. VR's objective for 2016 isn't just to get into the hands of a few million consumers - it's to become desired, deeply desired, by tens of millions more. The only way that will happen is to create that army of evangelists by creating a large number of easily accessible opportunities to experience VR - and GameStop is right to position itself as the industry's best chance of doing so in the USA. Pop-up VR booths in trendy spots might excite bloggers, but what this new sector needs in the latter half of 2016 is much more down to earth - it needs as many of America's malls as possible to be places where shoppers can drop in and try out VR for themselves.

"What's happening here is deeply ironic; after years of digital distribution and online shopping making retail all but irrelevant...the industry suddenly needs retail stores again"

In a sense, what's happening here is deeply ironic; after years of digital distribution and online shopping making retail all but irrelevant, to the point where it's practically disappeared in some countries, the industry suddenly needs retail stores again - not to sell games, because those are, in truth, better sold online, but to sell hardware, to sell an experience. How exactly you structure a long-term business model around that - the games retailer as showroom - is something I'm honestly not sure about, but it's something GameStop and its industry partners need to figure out, because what VR makes clear is that games do sometimes need a way to reach consumers physically, in the real world, and right now only games retail chains are positioned to do that.

This isn't a one-time thing, either - we know that, because this has happened before, in the not-so-distant past. Nintendo's Wii enjoyed an extraordinary sales trajectory from its first Christmas post-launch into its first full year on the market, not least because the company did a good job of putting demo units (mostly running Wii Sports, of course) into not only every games store in the world, but also into countless other popular shopping areas. It was nigh-on impossible, in the early months of the Wii, to go out shopping without encountering the brand, seeing people playing the games and having the opportunity to do so yourself - an enormously important thing for a device which, like VR, really needed to be experienced in person for its worth to become apparent. VR, if anything, magnifies that problem; at least with Wii Sports, observers could see people having fun with it. Observing someone using VR, as mentioned above, just looks daft and a bit uncomfortable.

GameStop has weathered the storm rather better than some of its peers in other countries. The United Kingdom has seen its games retail devastated; it's all but impossible to actually walk into a specialist store and buy a game in many UK city centres, including London. Would a modern-day version of the Wii be able to thrive in an environment lacking these ready-made showrooms for its capabilities on every high street and in every shopping mall? Perhaps, but it would take enormous effort and investment; something that VR firms, especially Sony, are going to have to take very seriously as they plan how to get the broader public interested in their device, and how to break out beyond the early adopter market.

"The VR industry...is going to sell every headset it can manufacture in 2016. If it doesn't, then there's a very serious problem"

Much of the VR industry's performance in 2016 is going to be measured in raw sales figures, which is a bit of a shame; Vive and Rift are enormously supply constrained and having fulfillment difficulties, and the numbers we've seen floating around for Sony's intentions suggest that PSVR will also be supply constrained through Christmas. The VR industry - ignoring the slightly worrying, premature offshoot that is mobile VR - is going to sell every headset it can manufacture in 2016. If it doesn't, then there's a very serious problem, but every indication says that this year's key limiter will be supply, not demand.

The real measurement of how VR has performed in 2016, then, should be something else - the purchasing intent and interest level of the rest of the population. If by the time the world is mumbling through the second line of Auld Lang Syne and welcoming in 2017, consumer awareness of VR is low and purchasing intent isn't skyrocketing - or worse, if the media's dominant narratives about the technology are all about vomiting and migraines - then the industry will have done itself a grievous disservice. This is the year of VR, but not for the vast majority of consumers - which means that the real task of VR firms in 2016 is to convince the world that a VR headset is something it simply must own in 2017.

Latest comments (6)

Bob Johnson Studying graphics design, Northern Arizona University2 years ago
Yeah but don't think there is a hurry to roll out hands-on demos stations of the ViVE or Oculus when the real cost for the vast majority of consumers is going to be close to $2k.

For Vive and Oculus, it's a slow burn of a soft launch.

Sony is in the position to bring VR to the masses with its greater install base, lower pricepoint, 1st party developers, relationships with AAA publishers, retail relationships, marketing experience, manufacturing experience, ...

But even for Sony, VR is a $400 peripheral in a business where anything not in the original box withers and dies. It's a challenge.

Edited 2 times. Last edit by Bob Johnson on 22nd April 2016 5:18pm

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Now the sticker-shock has subsided the reality of how the mainstream will actually experience VR has started the dawn on the consumer sector. The majority of possible players will not be going into BestBuy or GameStop to try a dirty demo unit! The reality is that everything that we have been shouting about regarding the Digital Out-of-Home Entertainment (DOE) will come to pass.
For consumer HMD manufacturers ‘building-for-launch’, they were prepared to do anything to block contradicting voices, but now the reality is out, the developers need to find a means to recoup their investment in VR content - the opportunity to embrace the future of VR through public-space entertainment operation is now finding its voice!
For more information – please come to the VR Arcade Conference
http://www.virtualworldarcade.com/vr-arcade-conference-may-2016.html

(Sorry for the big plug! But if we don’t shout about it no one else will!)
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Ruben Monteiro Engineer 2 years ago
I can't shake the feeling this bubble will pop even faster than 3D TV...
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Show all comments (6)
Tudor Nita Lead Programmer, Gameloft Romania2 years ago
Too many separate big players are investing too much for this to just wither away without making any sort of a dent.

Additionally, development for VR fits like a glove for some existing genres ( and with minimal costs too ). We'll probably see quite a few products that will support the peripherals in the simulator / racing genres. Also, it might help revive the good old fashioned arcade dog fighting genre ( and by a stretch of imagination the first person puzzle genre ).

Edited 1 times. Last edit by Tudor Nita on 23rd April 2016 11:22pm

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Gary Jesch Executive Producer & Founder, CHOPS & Assoc. Live Animation2 years ago
How about the appearance of interactive avatars in this space again? Over the years, we have advanced the 3D Digital Puppeteer technology to where we are getting good lip sync and expressions without facial motion capture in real time, although some companies are still working on that. So what if we can put interactive avatars controlled by a puppeteer into VR space? They can serve as guides, storytellers, MCs and hosts - taking our VR audience on some pretty amazing journeys in a very intimate way. Or five persons can sit around a virtual poker table, appearing as their favorite characters, and play some cards together. The community of those who create VR worlds, develop characters and offer experiences need some way of getting paid for their efforts, without pricing themselves out of business. That's one of the problems that needs to be solved.
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Sandy Lobban Founder, Noise Me Up2 years ago
VR isn't going away this time, and I think its true that people want to experience it, to see if its worthy of their time. It will realistically be a slow uptake IMO, and it will fit into the mix like all other things. It's not all or nothing, because low barrier to entry options exist. Combined with 360 video experiences, I think you will see the indie sector do things on mobile VR that will ensure that slow adoption rate with the wider public. As for hardcore, and making a living from it, that's more prone to all of the unknowns, but if its easy enough to put it out at the same time, then it should mean you reach a wider audience overall.
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