Virtual Reality - When will it take off?
When Facebook acquired Oculus for $2.3 billion in March 2014, it felt like the Virtual Reality industry was set to boom. In 2017, when reports estimated that the global augmented reality and virtual reality market size stood at USD 11.35 Billion, it felt like the industry was set to boom. At the time, the industry was forecasted to reach USD 571.42 Billion by 2025, rising at a CAGR of 63.3 percent between 2018 and 2025. When Apple launched ARkit for all their iOS devices and made it easier for developers to create AR applications, it felt like the industry was set to boom.
Unfortunately, we're still waiting for the industry to boom. As one cnet reporter states, back in 2013 we all expected virtual reality headsets to be as common as mobile phones within six years. However, last year, the global shipments of VR headsets totaled 5.7 million, which compares pretty poorly to the over 1.3 billion smartphones shipped in the same amount of time. The VR headset market is still niche and the headsets are seen more as a gimmick or as novelty products used as marketing events. Considering the hype around the industry and the billions of dollars put in by all the tech behemoths, where did it all go wrong?
There have been several challenges faced by the VR industry, due to which there hasn't yet been widespread adoption. Despite the impressive technological advancement, which has led to high quality standalone VR headsets (such as the Oculus Quest) in the past few years, user adoption has been extremely low. One reason for this is the price and the complications attached. Most high-end headsets, such as the original HTC Vive or the Oculus Rift required a high-end PC to power the headset as well. While the Oculus Quest and the new Vive are able to operate standalone, they're still pricey and not easily available in India. A 32 GB Oculus Quest starts at Rs. 28,000 in India and was available on Amazon, while the HTC Vive was unavailable, and the HTC Cosmos (which requires a PC) that sells at $700 in the US was listed on Amazon India at Rs. 85,000 (after a 15% discount).
While there are cheaper alternatives, such as the Google Cardboard (which require a smartphone), the experience is nowhere close to the same. That leads to these cheaper alternatives being fun products to use once or twice, and then they end up in a cupboard never to be used again. Moreover, the cheaper or even the mid range headsets such as the Samsung Gear VR or LG 360 VR (usually in the $75-$125 range) are not usable for longer periods. They're usually not correctly configured for positional tracking, which often results in motion sickness.
Another issue for consumers is the availability of content. While a quick search of the Oculus app store shows a variety of titles ranging in price from free to $40, there are very few that are worth actually using. Moreover, even the great games are relatively unknown. For instance, a common name on the list of best Oculus apps is Superhot VR. While supposedly an excellent game, it doesn't come close to matching the popularity and the demand of a game like FIFA. For instance, while Superhot has sold over 2 million units across Playstation VR, Oculus, and all other platforms since it's launch in 2016, the Playstation 4 exclusive Spiderman game has sold over 13 million units in around a year and a half. In fact, gamers around the world are already considering buying the PS5 on release because there's a new and exclusive Spiderman that will be available for it. VR headsets are a long way from reaching that sort of demand.
Discounting games for a second, there's still not enough content to make it worth buying a headset. Even though YouTube and Netflix have apps, the amount of content available is a tiny fraction of the entire content library, and far more limiting considering only one person can use the headset at a time.
Having said this, there's still a huge market for VR headsets on the business side. For instance, Walmart is using Oculus headsets to train all their employees. They claim that by watching the module through the headset, the brain feels like it has already experienced the situation. They also noticed that VR training boosts confidence and retention while improving test scores by 10 to 15 percent. An even more interesting claim is that the "associates who simply watched others experience the training saw the same retention boosts."
Given the current pandemic, the emphasis on the role VR can play in healthcare has come into the spotlight once again. Whether it's helping patients recover faster during physical therapy, or training doctors for specialised operations, or even just increasing quality of research, there's a lot that VR can be used for in this field. Even in the field of mental health, VR is used primarily for exposure therapy — for example, for the treatment of post-traumatic stress disorder in veterans.
Another field that's in a great position to use VR to its advantage is the edtech and education sector. A great example of how it's being used in classrooms is Google Expeditions. Google says that VR lets you explore the world virtually while AR brings abstract concepts to life - thus making it easier for students to learn while simultaneously boosting creativity and increasing the quality of teaching.
Clearly, there's still a lot of potential and room for growth in the VR industry. It could be argued that there was too much hype too early on and that the industry still needs some time. It could also be argued that while the consumer side hasn't taken off, there's a lot of usage on the business or enterprise side. In our view it's not a question of whether it'll take off, it's merely a question of when. Unfortunately that's been the question for close to a decade, but it feels like we're finally getting closer to the answer - one way or another.