Is Consumer Virtual Reality Closer Than We Think?

Insights from CES 2022

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01/11/2022

Colin McMahon

 

CES 2022 has just ended, marking several days of impressive technology announcements and advancements across a broad spectrum of industries and target audiences. That said, what surprised me most from this show was the notable presence of consumer-targeted virtual reality (VR) headsets. Multiple companies arrived to show off (or at least announce) new hardware, putting emphasis on a market that I believed to be largely static (save for Meta).

 

With this seemingly renewed focus on consumer VR, a question naturally entered my mind: Is consumer VR closer than I think? I, like many, have largely dismissed consumer VR as a niche—something for high-end PC users but inhibited by too many factors to achieve mass market adoption. While I did believe that consumer VR would eventually come, it seemed years away. Given the failed attempt in 2016 to launch VR devices into the public consciousness, has enough really changed to make 2022 different?

 

 

Why Consumer VR Hasn’t Gone Mainstream

When virtual reality met the public in 2016, it was headlined by devices like the Oculus Rift and HTC Vive. Both headsets were technologically impressive, showing that new worlds and new experiences were possible…then not much happened. There were numerous reasons for this, chief among them was a barrier to entry. The Oculus Rift was $600, while the HTC Vive was $800—steep enough before factoring in that neither headset was independent. Both needed a computer to run, and not just any machine would do. Specifically, modern chip sets were needed to give the computer enough processing/graphical power to assist the headset in delivering its VR experience. In total, it was no exaggeration to say that, for someone totally new to VR, it would likely cost well over $1,000 just to get everything they needed.

 

But price was not the only entry barrier. Consumer VR was plagued by wires, cameras, and sensors in 2016. A complete setup wasn’t just over $1,000; users needed a space where they could clear out all obstacles, set up their boundary sensors, setup the external cameras, then check the setup to make sure they could move without getting tangled on the wire that linked their headset to their computer. It was far from an out-of-the-box experience. Real work was needed before anyone could hope to use their VR setup, provided they even had the dedicated space for it.

 

Lastly, after all this monetary investment, after spending time to reorganize the home and establish a dedicated space, consumer VR in 2016 simply didn’t have any applications that really rewarded its early adapters for their investment. While there were interesting apps, and some really nice software, there was no killer app. Users often found themselves playing experiences on bulky headsets that felt more like tech demos rather than finished products. History has shown repeatedly that, without a killer app that clearly communicates a product’s uses and experience, many users will dismiss said solution as a gimmick or a fad. That is exactly how many people reacted to consumer VR following its resurgence in 2016.

 

 

How Consumer VR Has Advanced Since 2016

2016 was six years ago and, despite certain pundits proclaiming otherwise, VR did not die when faced with a lack of significant consumer support. As has been discussed in other blog posts, much of VR development simply shifted toward enterprise audiences and solutions. That does not mean, however, that consumer VR went static.

 

Two notable product releases occurred in the gap. First, after Oculus and HTC released their consumer models, Sony quickly followed up with the PlayStation VR (PSVR) add-on to its PlayStation 4 system. At $400 it became the most affordable option on the market (the PS4 being another $300-$400), significantly lowering the cost as a barrier to entry. Since release, the PSVR has sold roughly 6 million units—exceeding Sony’s expectations for the add-on.

 

The other, arguably more notable new hardware has been the Oculus Quest 2. This 2020 device is important as it is the first consumer-focused all-in-one VR headset, meaning it had no computer, no cables, and no external sensors. Everything the user needed came right out of the box and could be setup within minutes. At $400 for the high-end model, it was also very affordable. As of November 2021, the Quest 2 had already sold 10 million units (beating lifetime PSVR sales in one year), and recent data showed it being more searched during the Christmas rush than gaming options like the Nintendo Switch or PlayStation 5.

 

Source: Road to VR

 

Does Consumer VR Have a Killer App?

So there’s been some progress, but has it been enough? At CES 2022, Sony announced a successor to its PSVR product (creatively called PSVR 2), that will have fewer wires and more impressive technology. In addition, Panasonic and subsidiary partner Shiftall revealed a new high-end PC VR headset, dubbed MeganeX, which will release for $900 this Spring. Pricewise, not much has changed with this headset, although the cost of owning a VR-ready PC has fallen since 2016.

 

I was fortunate enough to (virtually) talk with Shiftall representatives during CES and asked them point-blank what had changed: What made 2022 not another 2016? The answer was one word: social. Unlike in 2016, there now exist rapidly forming social networks and social spaces where VR users can gather together for interactive experiences. It’s going by several names, with the most popular currently being metaverse.

 

These social spaces tend to be less device specific, with some being accessible (to a point) without even needing a VR headset. It certainly is an improvement, but will it be enough?

 

 

Will 2022 Be the Year for Consumer VR?

While positive inroads will no doubt continue to be made, I remain skeptical on consumer VR’s chances to go mainstream in 2022. For starters, there is no release date window for the PSVR 2. Sony hasn’t even shown a picture of the actual device yet. More importantly, however, there remains a chip shortage and supply chain issues. The Shiftall representative confirmed that these problems would impact MeganeX’s availability. They will likely impact every extended reality (XR) device’s availability for the foreseeable future. This will make it easier to say “Well, people want this. Look, it’s sold out!” while missing the larger picture of the market as a whole.

 

Second, while PSVR 2 looks easier to setup, it is still a device bound to the PS5—meaning its install base will be restricted to owners of that platform. I believe substantial growth in consumer VR depends on the presence of more all-in-one headsets that are ready to use right out of the box. Consumers simply don’t have the patience for long, multi-step setup processes when they can just go online in seconds with traditional devices. Additionally, while headsets are getting lighter and more comfortable (the MeganeX, in particular, is positively stylish looking next to the old Oculus and HTC models), the wire will always, always feel cumbersome and limiting.

 

Consumer VR is making definite progress, and I believe we may be closer to a breakthrough than I initially thought…but it is a marathon and not a sprint. As Campfire CEO Jay Wright said on a recent Keypoint podcast, XR (in general) needs to stop overhyping and overestimating the speed at which its technology will transform the world. Replacing the computer is a difficult task, replacing the smartphone just as much.

 

Until more innovation has been made, Keypoint Intelligence suggests the attention remain on enterprise VR solutions, which have been much quicker to deliver real results that warrant further investment and attention.

 

 

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