Will Virtual Reality Fail? Once Again?

Don’t start bashing me so soon for calling VR failure. But let’s not become the mice of our own experiments. We may end up creating a huge biased views of our creation. Let us not become victims of misplaced enthusiasm and ignore relevant facts. This is not one of those posts where we repeat past experiences or how Google Glass and 3D TV failed. We have read all of that. As is the tradition of VRCherries, we will make you aware of some facts of Virtual Reality, pitfalls ahead and what could possibly go wrong. As it happens in most such failures, the big corporations just dismisses those investments off. Those who are left sulking are the practitioners of the technology. I am sure none of you, be the developers, content creators, small time researchers and such do not wish to be left with dead investments and no clients. So exactly how should we as the VR community should tackle this issue for our own benefit?

Dot Com Bubble

Big investments are no guarantee of success. It is not wise to assume that if Facebook has done an investment of $2 billion in Oculus and similar investments are done by others, it is ticket to success. Dot com bubble is a prime example of how market at large gets carried away in some sort of frenzy. Look at the following examples during the 1990s.

Inktomi – Valuation of $25 billion in 2000. Acquisition by Yahoo for $235 million in 2003.

Pets.com – Investments of $300 million vanished with the company. CNET named them one of the greatest disasters in the history.

Lycos – Acquired by Terra Networks for $12.5 billion in 2000 (approx $18 billion today) sold in 2004 for $95.4 million, less than 2% of Terra’s acquisition cost.

The Learning Company – bought in 1999 for $3.5 billion and sold for $27.3 million a year later.

Many dot-coms ran out of cash and were acquired or liquidated. Laid off technology experts found a glutted job market. Many went back to school to become accountants or lawyers.

Virtual Reality Hype

No denying of the fact that there is lot of excitement for Virtual Reality. Things are different this time. There has been huge investments by the likes of Facebook, Google, Samsung, HTC. More billions will be poured in the next few quarters or already being invested. But is that the guarantee of success? Just because a lot is being invested would not mean it will succeed all the time. Google Glass, 3D TV, they all had similar characteristics, Billions invested, millions of units sold. However, in the end who suffered the most? Not the Googles and Samsungs, but the practitioners who laid big bets.

Let’s accept it, the euphoria around VR got created when Facebook bought Oculus for $2 billion. The moment is similar to a $400 million buy-out by Microsoft of Hotmail. The marketing and PR agencies of the world are always looking for such stories. The reason? It sells. By riding on to such waves, marketing people can make you believe that you are going to buy something that’s the next big thing in the world. The danger with VR is, it is already happening.

Well, people may argue that gaming has its own multi-billion market and VR will definitely grow that pie. However, VR gaming is going to change lot of customer habits. Will you be playing games for an hour, standing in a room, moving around, turning around complete 360 degree? Would you want to get away from that chair? Many times we play a game sitting on a sofa or simply lying on the bed. How many times you would want to do away with that? Customer habits are hard to change.

VR and Problems it solve

What we need to understand is that VR in its current form is a completely new technology. We need to ask ourselves, what need or problem VR currently solves? It is not banking on any existing need or way of doing business. Well many would site the example of how smartphone brought in a revolution in the recent past.

Smartphone was never a completely new innovation. It started with the first telephone device and gradually became part of life. There was a need of wireless devices which was being fulfilled in a limited way by cordless phones with a range of 10-30 meters. More was needed. Hence, came mobile. Smartphone added different features, gave users a choice of features, more processing power, touch and so on. But it always banked on the need to talk and communicate with the world. That never changed.

Think about it, how we use our smartphone?

  • Communication – calls, texts etc
  • Social Media
  • News and information consumption
  • Emails and other such business application
  • Entertainment – videos, games etc

As smartphone is going to be the heart of any future VR application, we have to keep the above in mind.

Will VR remain as an add-on to mobile devices or evolve on its own? VR will almost always require a smartphone. Yes there is an entertainment factor and a huge one. But if it does not develop capability to solve real life problems, it will remain as another entertainment device, may be an add-on TV, may be a gaming interface. In that situation, it will remain as one such entertainment technology. As the name given by Morton, it may become an apparatus to view TV.

Relevant Read: History of Virtual Reality.

VR Market

There are predictions that VR is going to be a trillion dollar industry by 2035. May be multi-billion by 2020. However, who is going to have a major share of this revenue? Well, the VR Headset manufacturers, platforms such as Unity and Unreal, core software developers. Where will be the money from solutions and services? It will come much later. As per Deloitte, VR industry may see the first billion dollar year this year. But 70% of that is coming from hardware. The sale of Oculus is also not growing at the same pace now that the initial euphoria from the developer community has veined.

VR Failure

For practitioners of VR to succeed, we need to go beyond the gimmicks and wow factor of VR. Right now Virtual Reality is just sexy. So unless an ecosystem develops and evolves, unless the real money from the businesses start coming, VR may fail. For businesses to start pouring money for real life usage of VR, Virtual Reality has to solve some business or real life problems. We think, non-technology oriented corporations have a big role to play. When such corporate adapt VR as a way of doing business, can VR truly succeed and survive.

Based on what we know so far, Facebook is trying to create a social VR platform and ecosystem. How does that help a VR start-up?

Many industries are said to be disrupted by VR. Travel, Gaming, Healthcare, Training and education. I completely agree with it’s limited application in training and education. Will it ever replace actual travel? I don’t think so. While there are some initial successes of how a surgeon used VR, but they are again once off examples. We have given two examples in our previous story,

  1. Tata Motors’ Virtual Drive for Tiago
  2. How a start-up generated $1.5 million in 3 months?

If you look at the first one, though we did not call it a business failure given the ROI, it was definitely a huge failure as a Virtual Reality project. The second, however, had a clear value proposition for success. Yes there are obvious examples such as real estate, Home design and architecture which promise huge potential. But the cost of creating a VR experience will be a big deterrence even for that segment.

Current challenges VR face for mass adoption

These have been talked about earlier as well,

  • Price – a Good quality VR system costs close to $1000. That’s OK if it adds value. Seriously, if you are not a VR practitioner in one way or other, how much of your daily time would you spend in using such a system and for how long?
  • Quality – no matter what we say, the grid and pixels which are apparent after some time, does not really give the feeling of reality.
  • Compelling Reason – Nothing that makes me desperate to invest in it. There is right now absolutely nothing that compels me to buy a VR headset or similar system.
  • Behavioral Change – This is a big one. VR adoption means alteration in consumer habits which are not so easy to change.

So what does VR have to do differently to succeed and sustain in the long run? We will look at how we can avoid VR Failure in the next post. 

Follow VRCherries on Facebook and Twitter to keep updated with more such Virtual Reality stories.

Share it, if you liked it. 

Until Next Time…..

Jitesh

A digital enthusiast, who is amazed by the power of Virtual Reality. Here to share what I read.

4 thoughts on “Will Virtual Reality Fail? Once Again?

  • Pingback: 360Cities – Panoramic Photography Blog » Blog Archive » Interesting articles about VR – week #45

  • November 3, 2016 at 9:38 pm
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    Interesting analysis Jitesh, and even though in your byline you are amazed at the power of Virtual Reality, you indicate that you actually have not purchased a VR system, which presume to mean a desktop version. Is this the case, if so, what systems do you work with to form this opinion?

    Since I actually design VR viewers and develop VR content, and like you, talk about it on our show ‘All Things 3D’. I feel many of your points like price, quality, compelling reason, and behavioral change are indeed obvious and like a number of recent tech devices e.g. 3D printing and 3D scanners, which have also underperformed, we could indeed face the same market disappointment. But as you also said in the historical comparison with smartphones, it took almost a two decades for it to become ubiquitous in today’s society. Sure we will see some failures, but we also will see some huge successes especially in the field of mixed reality. VR will never be for everyone just like 3D fabrication, but that does not mean it it isn’t already seeing applications that will make it permanent fixture in the future.

    Reply
    • November 4, 2016 at 5:36 am
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      Hi, Well I have been working on and using all kind of devices and systems, right from a $5 cardboard to Oculus. I am not negative on VR. In fact in my last para, I mentioned of another post that I am writing which will talk about what we can do to make it a success. I see a different problem. It’s always the market and economy that decide whether a product/platform is a success or not. The way VR is currently heading, I see that we are developing for ourselves. That’s why I said, let’s not be the mice of our own experiment. VR needs to address obvious and undetected issues with Enterprises and individual customers. I don’t see that happening in a big way. I will be wrong if I say it’s not there. But the community is giving importance to WOW factors. That’s something we need to worry about.

      Reply
  • November 3, 2016 at 7:52 pm
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    You know whats funny, hundreds new websites about VR talking about VR and dreaming to make VR revolution happen. VR is 100% future, maybe not this 2-3 years yet, until iphoneVR will be released, but it’ll be growing as hell anyways and it’ll get cheaper and better quality next year already, next Christmas is going to be final VR revolution for all. Thank you.

    Reply

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