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The Year Virtual Reality Began Creeping into View

Virtual Reality Market Analysis and Commentary

20 Jan 2017 - As we closed the door on 2016 what did we learn about VR? The reality of VR was more muted than the hype, despite the release of high profile PC and console hardware. Now, heading into 2017 the industry must correct the balance and build momentum as the battle transitions from hardware to operating system. 

VR hardware uptake has experienced slow progression to date and the accompanying content industry is still very much in its experimental phase, as it seeks to find out what works and critically what people will pay for. The games sector is off to a quicker start, particularly since the October release of PSVR, raising awareness and bringing a slate of paid-for games to market. 

But it will fall to the mobile space to bring VR into the hands of the masses, the high cost of PC and console based headsets (and accompanying hardware) will mean adoption remains limited to gaming and consequently there is tremendous industry investment on developing higher quality mobile experiences across both hardware and content. Combined global PC and console headset sales are forecast to exceed one million units by the end of 2016 whilst worldwide mobile headset demand is projected to reach four million units.

The release of Google Daydream came in as a new mobile VR ecosystem, a worthy competitor to Facebook's Oculus. Daydream represents a significant upgrade on its predecessor Cardboard in terms of content curation, quality and applications. Google's own content including YouTube will be joined by a host of other premium partners, with commitment already confirmed from the likes of Jaunt, Netflix, The NY Times and CNN.

Getting it into the hands of consumers will be aided by Daydream support from a strong roster of handset suppliers including Motorola, HTC, Samsung, Huawei, and LG which are expected to roll out handsets during 2017. 

Google's open approach to its mobile VR eco-system is in contrast to that of Facebook's Oculus, which is currently only available through Samsung Gear VR. Googles stance creates an easier and more unified experience across mobile VR users and thus creating a scenario not dissimilar to the mobile OS battle between iOS and Android.

Samsung Gear VR exclusive mobile access to the Oculus platform has helped establish a high quality mobile experience. However, in the long term will be restrictive and is likely to result in the need for the platform to open up to other HMD and handset manufacturers to compete with Daydream.

Moving forward the requirement for handset support could become a thing of the past, as key to Oculus's strategy will be the launch of its All-in-One headset "Project Santa Cruz" negating the requirement for a handset, PC or console to power it. This offers a dedicated receptacle for accessing VR content, freeing the mobile handset to perform its normal duties. 

The drive from these two behemoths will form the momentum for the VR gold-rush from 2017 as the industry has another year to push this nascent industry forward beyond its infancy and novelty to adoption and consumer stickiness. Both companies have a focus on increasing communication between consumers, monetised through advertising which could easily transfer to their respective VR ecosystems if they succeed.

Then of course, there are also two relatively unknown quantities in this space, Amazon and Apple, who continue to stir speculation in the industry and have the potential to disrupt efforts by Facebook and Google.

As the various hardware and platforms continue to evolve, the key to longevity is the monetisation of the content, which has yet to create a "need" in the consumers' eye. To date, content has been predominantly backed by sponsorship and advertising and whilst it has been a good opportunity to showcase the possibilities offered by VR, if the consumer gets used to that, it will be difficult to get them to open their wallets.

So 2017, what do you have for us? Daydream is expected to be a catalyst to an open Oculus ecosystem, stimulating mobile VR growth creating a better quality, lower cost alternative to Console and PC. Greater handset support and content availability will increase consumer awareness and expand uptake.


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