Why Virtual Reality will not be ubiquitous within the next decade...

Introduction

At the time of writing this essay, the year 2019 has just started. 3 Years ago it was 2016: The year the award winning game Pokémon Go was launched. Was this the year Virtual Reality took off? But wait…Pokémon Go is a game based on Augmented Reality, NOT Virtual Reality, which brings us back to the first basic question we must ask ourselves: What is the definition of Virtual Reality in the first place? And is Virtual Reality mainstream technology today or will it become mainstream technology tomorrow?

Virtual Reality - Definition

Virtual Reality is “an artificial environment which is experienced through sensory stimuli (such as sights and sounds) provided by a computer and in which one's actions partially determine what happens in the environment”.

Virtual Reality is NOT:

• 360: 360 degree video, YouTube/Google, FaceBook and Vimeo currently supporting immersive video.
• AR: Augmented Reality, examples: Pokémon Go, Ikea Place app, Snapchat AR bitmojis.
• MR: Mixed Reality. MR accounts for depth and height to map out how objects surrounding you construct your environment. Compared to AR, MR has a higher degree of interaction between the digital content and the real world. Example: a virtual animal could run away and hide under a real world desk or car.

VR is however part of XR: Extended Reality. XR is the umbrella term referring to all real-and-virtual combined environments and human-machine interactions generated by immersive computer technology and wearables (as mentioned above).

In this essay we will focus on Virtual Reality or VR from this point on. We will examine this from a supply and demand law perspective: One of the most fundamental concepts of economics.

VR SUPPLY AND DEMAND

Supply: Technological Readiness of VR Hardware

Let’s examine the availability, features, functionality and pricing of VR headsets available today. But first let’s take a look at the history and pace of innovation of Virtual Reality prior to today: The history of Virtual Reality teaches us that virtual reality is not a new technology - it has been around for over 60 years going all the way back to the Sensorama - been credited by many as the first VR device. Therefore, Virtual Reality is an emerging technology, but certainly not a new one! So, where are we today? VR headsets can be divided into 3 categories: Standalone, tethered and mobile:

• Standalone VR headsets are very new, and offer a convenient alternative to phone-based and tethered headsets because they don't require any additional hardware to run. Fundamentally, they're mobile VR headsets with Android smartphones and displays built in (without the cellular function). Check out these recent reviews from PCMAG.com, TechRadar & PC Gamer.
• The disadvantage of tethered devices is that they are - obviously - being tethered, which limits mobility and lowers the immersive effect. What we really need here is high speed wireless connectivity - new emerging standards such as WiGig interoperability and IEEE 802.11ay, providing consumers with interoperable solutions and connectivity between devices with a transmission rate of 20–40 Gbit/s, thus enabling these untethered VR devices to connect to a PC/Platform at high speeds. IEEE 802.11ay is in draft at the moment (ratification expected March 2020) and certainly not available in commercial VR products yet. That takes even more time.
• Mobile VR headsets have another disadvantage today: You can not count on accurate position tracking. Standalone VR headsets provide a similar performance and experience as you would get on Mobile VR headsets and thus also suffer from the same drawbacks. This is a result of the fact that mobile/phone based headsets use Three Degrees of Freedom (3DoF) tracking (all phone-based VR headsets including Google Cardboard, Samsung Gear VR, Google Daydream, as well as some standalone headsets such as Oculus Go (released in 2018) use 3DoF). Tethered VR headsets use 6DoF tracking (examples: Oculus Rift, HTC Vive). For a detailed overview of positional tracking technology in VR, please see: A quick guide to Degrees of Freedom in Virtual Reality.

Then there are other technological advancements needed in order to create the perfect immersive/VR experience: Field of View (FoV - ideally a minimum of 220 degrees), refresh rate (90 fps and above in order to prevent motion sickness, headaches, etc), resolution and pixel density (pixel per degree). Of all the VR headsets on the market today the recently announced Pimax 8K VR headset does not even get close to the theoretical approximate pixel density of the human fovea (which is 60). The Pimax 8K actually features two 4K screens: 3840x2160. However, it is actually upscaling a 2560 x 1440 resolution. In short the Pimax 8K is NOT true 8K. It results however in 2560/150 = 17 pixels/degree (horizontal resolution divided by monocular horizontal FoV=pixels/degree). 

Are these technological limitations the reason why not everybody has a VR headset at home today? Or are there other reasons? As a matter of fact, why are VR headset sales declining overall? Consumer interest in VR appears to be declining, according to sales rank data tracked for Amazon. Worldwide shipments of augmented reality (AR) and virtual reality (VR) headsets were down 30.5% year over year, totaling 1.2 million units in the first quarter of 2018 (1Q18), according to IDC.

Furthermore IDC forecasts Virtual Reality headsets to grow from 8.1 million in 2018 to 39.2 million by the end of 2022, representing a five-year CAGR of 48.1% (and this included BOTH AR & VR headsets). That’s far from being ubiquitous…

That’s just the hardware. Obviously software (applications) are complimentary to the hardware innovation. So if the technological readiness of VR hardware is insufficient today, what about the software/applications? Looking at a recent study called “Impact of Virtual, Mixed, and Augmented Reality on Industries” by Prof. Dr. Thomas Hutzschenreuter and Christian Burger-Ringer from the University of Munich the conclusion can only be that ubiquity for VR is not going to happen overnight and will not be here tomorrow. Yes, the increased performance of the hardware drives application diffusion for VR between 2020 and 2030. But mass adoption of these applications by users leading to ubiquity is another story...

Demand: Is there a need from a user perspective?

Let’s take a closer look at the application and the users: There are 2 markets (consumer & business) for a total of 13 VR applications (we’re excluding 360 degree video as this application is not classified as VR per our definition). These VR applications are:

Consumer VR applications:

1. Social VR. 
2. Virtual Classroom.
3. Virtual Tour & Configurator. 
4. VR Online Shop.
5. VR Game.
6. Immersive Sport Application. 
7. Educational Game.
8. VR Experience.

Business VR applications:

1. VR Telepresence.
2. VR Engineering.
3. Medical Visualization.
4. VR Simulator.
5. Immersive Therapy.

The 8 consumer VR applications are however clearly nice-to-have applications, not really addressing a new need. In other words, they are all substitutional solutions. Example here is a VR Online Shop being a substitute for a traditional online shop. 

We have to ask ourselves here: Is a user going to invest in expensive VR hardware in order to experience something in a different way? Will people put on their VR headset every time? Is it socially acceptable to do so? 

The 5 business VR applications are a different matter. That is mainly a question of ROI, CAPEX and OPEX - Will the investment justify the benefits from a business perspective?

What we have not yet seen is a killer VR application that everybody needs and wants. So therefore it is very unlikely that VR will become ubiquitous within the next decade from an application or user perspective. 

CONCLUSION

Some signs & recent news seem to validate our statement: Jaunt Lays Off ‘Significant Portion of Staff’, Shutters VR Production to Focus on AR. IMAX has closed all its VR centers in December 2018, because they were not profitable. The StarVR Developer Program ‘On Hold’ Due To ‘Uncertainties With Shareholder’. On a positive note: DisplayLink Showing 60GHz Wireless Adapter Reference Design for Oculus Rift during CES, January 2019. It certainly is not a boring marketplace to track for all the industry analysts!

And so the hunt for the killer VR application continues, as well as innovation on the hardware side of things. The question whether or not people will actually wear VR headsets in such a way that VR can be called ubiquitous during the next decade is however highly unlikely. 

Food for thought: Ask any of the 61% of the population in The Netherlands wearing glasses, contact lenses or other reading or visual aids occasionally if they prefer wearing visual aids to not wearing visual aids. That plus the fact that putting on a headset and closing off the world around VR users is perceived as being anti-social behaviour is not going to help. 

Best regards,

Angelo Lamme

About the author: Angelo Lamme is a broadcast and network consultant with over 20 years of experience in the broadcast and technology world, including various international roles working for companies like United, Irdeto, Motorola and 3Com. Angelo is a Professional Member of the Society of Motion Picture and Television Engineers (SMPTE).