What Virtual Reality will need in order to succeed

What do VR headset manufacturers need to look out for and learn from to make sure their innovation actually makes it into consumers’ hands?

[article originally published at https://www.ideatovalue.com/inno/nickskillicorn/2016/03/virtual-reality-will-need-order-succeed/ ]

Today marks the day when virtual reality takes its next leap toward reality, as Oculus Rift was released to those who had pre-ordered it and goes on general sale.

However, just like many promising technology innovations which came before it, the wider Virtual Reality industry has a couple of hurdles it needs to overcome to become a success.

So looking at the industry from an innovation perspective, here are my insights into the Pros the industry has going for it which will help it to become a success, and the Cons it needs to overcome to get there.

Pro: Early reviews are positive

The first reviews for the Oculus Rift are coming in, and in general they are quite positive. They mention how the immersive nature of VR provides an experience that just cannot be achieved with other types of entertainment, making you feel like you are really in the middle of it.

I myself was able to try a previous version of the Rift, and I have to admit that the experience was very impressive.

One important thing to note though is that the people who have been writing the reviews are predominantly videogame journalists, and they have been getting numerous opportunities to try out the units, watch them evolve and see dozens of different game demonstrations at trade shows and private viewing events over the past few years. This has let these journalists get used to the technology over a period of months before forming an opinion.

Con: Lots of competing technologies make for a crowded market

While the Oculus Rift is potentially the most well-known VR headset around right now, it is far from the only one.

In fact, there are numerous other companies out there developing their own VR systems based on similar but different underlying technologies, with different control systems. In general, they are either interactive (controller-based / games-first) machines, or VR viewing systems (mainly smartphone-based).

Interactive VR companies:

• Oculus Rift – launched ($599 – requires a high-end PC)
• Playstation VR  – October 2016 ($399- required a Playstation 4)
• HTC Vive – April 2016 ($799 – requires a high-end PC)
• Microsoft HoloLens (augmented reality) – developer-only edition now available to order for $3000

VR Viewing Systems

• Gear VR (by Oculus and Samsung) – $99 with a compatible Samsung Galaxy smartphone
• Google Cardboard – $25+ with a compatible Android smartphone

While this many competitors may seem like a positive for consumer choice, it actually leads to a fragmented market which makes it harder for consumers to know that the system they invest in will have enough content to make it worthwhile. The different underlying technologies, especially different controller inputs, also make it more challenging for both game developers and video-producers to support multiple systems.

Ultimately, at least one of the systems is likely to suffer as consumers end up choosing the system which gives them the best value in terms of price and content.

Con: High price point makes it too expensive for the mainstream (right now)

As of today, the Oculus Rift retails for $599. This is just for the VR headset, controller and sensors, and does not include what is required to actually play any games or video: a high-end gaming PC, which is likely to cost in the region of another $1000.

Compare this to a current generation videogame console and HD TV which can be bought for around $500 in total. This means that these machines will likely only appeal to early adopters who have enough disposable income to cover the high cost.

Using the videogame market as an indication, there is also a historical trend of sales volumes increasing as the price of the system drops, usually as they become cheaper to manufacture over time. Therefore, we can expect the prices of the system to drop in the year following launch, which should lead to a rise in sales volume.

What these companies need to avoid is trying to replicate the smartphone market, releasing a new version each year, as once someone buys a system they will be unlikely to upgrade it for a few years. I therefore don’t predict new versions of these VR systems for about 3 years following launch, when a significantly better version will not only be possible but attractive to consumers.

Pro: The machines do not need to make a profit in the short term to survive

Fortunately, all of these systems have the support of multi-billion dollar companies behind them, and so don’t necessarily need to be profitable from day 1 in order to survive.

Oculus Rift for example is owned by Facebook, who purchased the company for $2bn in 2014.

Again, following the example of the videogame console market, most of these companies will realise that it will take several years, and likely the hardware becoming cheaper, before the sales volume will be mainstream enough to become profitable (if it ever will. Some companies will continue to make a loss on hardware and make profit on the associated content being sold).

Pro: Some of the initial technological hurdles have been overcome

Even up until a few months ago, when the previous beta versions of the headsets were being used, many people who tried them for more than a few minutes experienced a pretty visceral problem: the machines made them so nauseous that they wanted to throw up.

This is because the human senses of balance, vision and movement are so finely balanced that when the previous machines were off by just a fraction (such as you moving your head and there being a slight delay before the screen showed the same movement), the brain would become confused and know something was wrong.

However, even within the past few months, issues like this appear to have been resolved. Whether people will want to exist in a VR world for hours at a time (or more specifically, be comfortable wearing a VR headset for hours at a time) is still to be seen. But at least some of the initial fundamental issues now appear to have been resolved.

Con: Not everyone will be able to use it

VR headsets are supposed to give you the aura of being in a vast other place. Some, like the HTC Vive, will even let you move around within this space and interact with objects by moving your arms around.

But only if you have a spare 1.5m x 2m of unrestricted floorspace within which to move.

Much like Microsoft’s Kinect camera, which tracked your movement in the real world as a videogame input, many people just will not have the space to use a system like this, especially people living in average sized European or Japanese households which are often smaller then US counterparts.

Pro: A stable platform for game development available across machines will lead to more games

One thing which has been surprising when looking at the games being developed with VR in mind is how few system-exclusive titles there are. These are games which are only available on one type of console or VR system (such as the Halo franchise only being available on Microsoft Xbox machines, or Gran Turismoonly being available on Playstation).

Much like the rest of the game industry, most of the VR games under development are what is known ascross-platform. So if a game is coming out on Oculus, it is likely also going to be available for HTC Vive.

Games developers are doing this to make sure their fate isn’t completely tied to the success of a single system, especially as right now no single system has gained a large enough audience to be declared the winner. It lowers the risk to the game developer, and is also good news for early adopters of the systems since it means they likely won’t miss out once an exciting new game comes out.

Con: Video production requires not just new equipment, but a new process

While I’ve talked a lot about games so far, that is only one half of the content being produced for the system. The other is 360° video. But this presents a huge challenge for video producers: Using traditional video-production methods, they would be able to see everyone that up until now was behind the camera!

In some cases, this isn’t so much of an issue, which is why a lot of VR video so far has either been computer-generated (where there is no camera), taking someone to look around a location as if they were standing in one spot, or taken from the viewpoint of a “rider” (such as following an individual doing extreme sports or a flying drone).

But for the majority of “produced” video, such as TV or films, there are numerous challenges to allowing the viewer to look around.

Where do you put a microphone to pick up sound if the viewer could look up or around themselves?

How do you hide the person operating the camera?

How do you make sure the person viewing the video is looking in the right direction when something important is about to happen so they don’t miss it (like a gunshot)?

Some companies are addressing this by only having a 180° viewing angle on their videos, so people can only view what is in front of them (which seems like it will remain a common compromise for now).

One example of how this is already changing video production came from an unlikely source: the videos for the Sports Illustrated Swimsuit Edition. Usually, there would be a whole team of people behind the camera including the director telling the model what to do, people to make sure the lighting was right and sound engineers. But for 2016 and the VR experience, all that could be on the beach with the models was the VR camera.

Pro: “Early adopter content firms” are already investing heavily as they see the value

There is one industry which has always been at the forefront of new video technology, and has almost always had a say in which company ends up winning.

It happened with VHS vs Betamax, DVD, Blu-Ray, video on demand, video streaming, HD video, even online credit card processing, and it is fully-invested in VR video as well.

How do I put this delicately…

It’s porn.

Some of the largest adult companies are already offering new hardcore pornographic sex videos in VR. And while you might say “that’s not for me”, sex in any medium is always pushing the limits of what is possible with the latest technology.

And it is already finding a niche that people are willing to pay for. So even if you’re not into it, you can thank porn for helping improve the technology which will end up being used for non-pornographic uses by other companies.

Pro & Con: It needs to be seen to be believed

Finally, one thing which you’ll hear more and more often when talking about VR is that “once you try it, you’ll get it“.

This is both an advantage and a disadvantage. On the one hand, it means that once someone has experienced VR, they will quickly be able to determine their own value perception of it and what price they’d be willing to pay for it.

But until they have experienced it, it is so fundamentally different that most mainstream people won’t be able to make their mind up.

This requires the manufacturers of not only the headsets, but also the content producers, to invest in educating the public by bringing headsets to places where people can try them. Malls, universities, fairs, schools, stadiums, homes.

Only then will people be able to make a purchase decision.

So it’s going to be a couple more years before everyone is watching The Fast and the Furious 12 from the perspective of being in the car itself.

And I, like most people, can wait.

Will you be getting a VR headset this year? Which one? Or how cheap do they need to become before you’d consider buying one? Let us know in the comments below (we read all comments).

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