VR the biggest loser this holiday?

SuperData revises its VR forecasts with PSVR seeing the largest downgrade

As the numbers from Black Friday and Thanksgiving weekend continue to trickle in, many analysts are examining how the holiday sales picture is coming together this year. While The NPD Group is not ready to give its full assessment just yet, the firm did note to that digital promotions on PlayStation Network and Xbox Live were much more aggressive this year and may have impacted the retail channel. Digital aside, the sector that seemed to struggle the most is virtual reality, according to SuperData, which said VR has been the "biggest loser."

Thanks to "notably fewer units sold than expected due to a relatively fragmented title line-up and modest marketing effort," VR headsets are now expected to sell even fewer than previously thought. SuperData's revised forecast for 2016 calls for under 750k PlayStation VR units sold (their previous estimate was 2.6 million) with Google's Daydream selling just 261k (down from 450k). Previous estimates for HTC Vive, Oculus Rift and Gear VR remain unchanged at 450k, 355k and 2.3 million, respectively.

As you can see, expectations for PSVR have seen the most dramatic shift. Stephanie Llamas, director of research and insights at SuperData, explained to us, "PSVR had the best opportunity to benefit from the holidays but their supply inconsistencies and lack of marketing have put them behind their potential. They did not offer any first-party deals this weekend, restock bundles or market the device, pushing instead for the PS 4 Pro. They have also pointed out that VR looks even better on a Pro than a standard or slim PS 4, so the message to most gamers is: Get the Pro now, then the PSVR later. As a result, we won't see them break 1M shipments until well into the new year."

"Had Sony pushed the PSVR the way they've been pushing their other new hardware, the demand would have certainly fulfilled a supply of over 2 million"

Stephanie Llamas, SuperData

Llamas added that Sony may be deliberately limiting PSVR supply until it can do a better job with supporting the platform. "Had Sony pushed the PSVR the way they've been pushing their other new hardware, the demand would have certainly fulfilled a supply of over 2 million. However, given its quiet release it's clear they're being cautious before fully investing in the tech. Without the 'killer app' and the slow, steady release of AAA content, they will release less than 1 million devices until they have content they feel confident will bring in the praise they want. They can afford to take it slow since they have no competition for now, so their supply and sales will rise steadily into 2017 as opposed to riding the seasonal wave," she said.

As for Oculus, Llamas believes they've taken a risk by possibly splitting their own user base. "The Rift's Touch controllers are an opportunity for Oculus to penetrate, but not many headsets have moved, especially with their round-about deal where purchasers earned $100 Oculus credit rather than just getting $100 off. Oculus's hardware release strategy has also slowed them down and split their user base, so developers are having to make some choices around whether they should develop for both Touch and non-Touch users. This means development has slowed and is becoming another barrier to growth," she remarked.

Looking at the non-VR games market, Nintendo may actually prove to be the biggest winner, thanks to updates both to Pokémon GO and selling out of its NES mini. "On mobile we recorded a spike in earnings as players made the most of the Thanksgiving special for Pokémon GO. The game's ability to stay in the forefront of people's minds as we approach the release date for Super Mario Run may prove beneficial for Nintendo, which has yet to make a convincing claim on the $38 billion mobile games market," said Joost van Dreunen.

Overall digital game sales this holiday are down 2% from 2015 so far, but the impact of digital has grown tremendously in just a few years. "In 2012 full game downloads accounted for only 6% of total unit sales around the Thanksgiving holiday in the United States. For 2016E that number was four times higher at 24%," van Dreunen said.

The other big contributor to the slow holiday start has been big discounting, according to Wedbush Securities' Michael Pachter. "We saw greater discounting of high-profile new video games this Black Friday compared to last year. Last year's top sellers, Activision Blizzard's Call of Duty: Black Ops III , Bethesda Softworks' Fallout 4, and EA's Star Wars Battlefront, saw sticky pricing on Black Friday, with the $60 price point remaining largely intact. While discounting of sports games happens each year, many other titles that maintain pricing on Black Friday were listed at discounts of 40% or more this weekend," he observed.

"For example, Walmart had EA's Battlefield 1 and Titanfall 2 at $27, and Microsoft's Gears of War 4 and Take-Two's Mafia III at $35. Walmart also had Activision Blizzard's Call of Duty: Infinite Warfare Legacy Edition, which includes Modern Warfare Remastered , for $57, a $23 discount. Discounting of Call of Duty: Infinite Warfare began earlier in the week, with widespread discounts of roughly $20 for the different versions of the game. Hardware discounting for the PS4 and Xbox One was largely consistent with 2015, as $50 discounts were commonplace."

Pachter also agreed that the "pace of the mix shift to digital full game downloads continues to be brisk," but we probably won't know whether digital sales fully made up for retail declines until we get the complete NPD report for 2016 sometime in January.

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Latest comments (10)

Paul Jace Merchandiser 5 years ago
"Nintendo may actually prove to be the biggest winner, thanks to updates both to Pokémon GO and selling out of its NES mini. "

I wouldn't call them a winner for Black Friday considering there was almost literally no stock of the Nes mini available to purchase after launch. Had Nintendo actually resupplied stores they could have made a killing with their emulation system. But instead they ended up making the same mistake they've made with the Wii and amiibo's: not having enough supply at launch to meet demand or having an efficient means to resupply stores in a timely manner.

If the Switch is successful when it launches next year(and it's really still too early to tell) I suspect Nintendo will go through this same problem again. In these situations both Nintendo and the customers end up losing out. But for the purposes of this story(despite how well the new Pokemon games are selling) I'd say Nintendo was one of the biggest losers this Black Friday weekend just from a consumer point of view.

Edited 1 times. Last edit by Paul Jace on 30th November 2016 6:08am

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Jeff Kleist Writer, Marketing, Licensing 5 years ago
Nintendo has always console considered themselves a toy company, which is why they keep shorting their products (they've been doing it since the NES days, when they refused chips provided by third parties, claiming they weren't up to snuff, despite independent tests holding Thur were equal or better)

They'll never stop shooting themselves in the foot

VR is simply too expensive right now. The Sony enthusiast was forced to choose between VR and the Pro, because very few were dropping a grand on both, and most chose the one that would provide the greatest benefit to their overall gaming.

Oculus needs to look at their manufacturing costs, and cut it to the bone for the consumer version,and concentrate on corporate apps and their upcoming wireless unit. I know for a fact the touch controllers are two hundred dollars simply because they know their existing customer base isn't price sensitive., and the original SRP was sub one hundred. Selling The touch controllers at cost to existing customers will close the gap, and by selling the total package at $399 they can get Thur customer base up hard core, especially since Scorpio users are likely to be looking their way next year.

I'm still not certain if the Vive is really long term viable as a consumer product. . Room VR not a thing for the masses, and they lack the big business connections, or the broad money base to support them given their flailing main cell phone business. If they fail to get the Asian VR parlors going, their survival s mostly dependent on other companies not dumping cash into the market

Edited 1 times. Last edit by Jeff Kleist on 30th November 2016 9:17am

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Klaus Preisinger Freelance Writing 5 years ago
VR has become a trainwreck of fragmentation; different specs, different features, different controllers. even different challenges of setting up a room at home. Not to forget artificial incompatibilities for the sake of sales platforms, instead of generalized drivers. On top of that, there is the highly questionable quality of the 'games' themselves.

For every one reason to get excited about VR, there are at least two reasons to make a run for the hills.
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Greg Wilcox Creator, Destroy All Fanboys! 5 years ago
I'd add that not having some of these games available as "flat" experiences hurts VR as well, as that's a case of devs and pubs ignoring the chance to make a few bucks off folks who may want to play a good game but can't use VR for any number of good reasons.
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@Klaus Preisinger: Trainwreck of what? Are you serious. VR is fine and takes all of 2 minutes to decide which way you may wish to experience it. Once you decide, especially if you go the Sony route, you can go buy the PSVR and be up and running in no time.
There really no reasons to "run for the hills" that just a ridiculous statement to make. Are you even playing the VR games being released? Stick to what you know, because you really dont seem to understand whats happening in VR in the homes of gamers.
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Paul Jace Merchandiser 5 years ago
@Greg Wilcox--While I see your point(similar to how I've had a 3DS for over four years and have only used the "3D" twice) I have a feeling that VR developers really want people to experience their games in actual VR. I see nothing wrong with having the option you bring up but they would probably be afraid that the majority of people would prefer playing their game in normal vision if given the option. It'd be nice to hear a few VR developer's opinion on this.
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Jeff Kleist Writer, Marketing, Licensing 5 years ago
The VR title we're working on is BEST in VR, but we know that keeping the 2D mode viable is what allows us to be profitable at this point in time
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Look, there just a total lack of the "killer app" this side of 2016.
and there is not enough viable affordable platforms that support VR or the cost of VR by itself

so it will be a slow comfortable ramp up to mid 2017 at earliest
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Look, there just a total lack of the "killer app" this side of 2016.
and there is not enough viable affordable platforms that support VR or the cost of VR by itself

so it will be a slow comfortable ramp up to mid 2017 at earliest
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John Bye Lead Designer, Freejam5 years ago
"SuperData, which said VR has been the "biggest loser.""

I think they mean "SuperData has been the biggest loser".

Everyone here has been saying since the start of the year that their forecasts were crazily optimistic. They've had to downgrade those estimates at least three times this year as reality sets in, and they were still way off.

Most commenters on this site seem to have done a better job of forecasting the demand for VR this year than SuperData.

Lest we forget -

January 2016 - $5bn - install base of 30m mobile, 6.6m PC, 1.9m console

March 2016 - $3.6bn - "we overestimated PC and mobile and underestimated console"

April 2016 - $2.9bn - 3.5m Gear VR, 1.1m PC, 2.6m console

October 2016 - $2.6bn - 2.3m Gear VR, 800k PC, 2.6m console

December 2016 - $??bn - 2.3m Gear VR, 800k PC, 750k console


Their estimates for PC (Oculus and Vive) have dropped almost 90% over the year, and console (PS VR) by 70% since their last prognostication two months ago. Given that Sony themselves were predicting sales of PS VR in the "hundreds of thousands", 2.6m seems wildly optimistic. Have Sony even manufactured that many yet?

Edited 1 times. Last edit by John Bye on 1st December 2016 2:02pm

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