The introduction of Virtual Reality (VR) devices has begun to reshape the way people consume media, allowing users to be completely immersed in a virtual world through graphical and auditory inputs. As VR hardware prices drop, uptake will increase, with Tractica estimating VR revenue to grow to $21.8 billion worldwide by 2020 at a CAGR of 142%.
That said, the future of VR like many new technologies is still uncertain. While VR offers a new experience, the discomfort of wearing a heavy head gear and reported cases of motion sickness in some users may dampen VR’s rapid proliferation. The last “big” entertainment revolution that required wearable devices, 3D, never met its hyped potential for various reasons such as the lack of 3D content, discomfort of 3D glasses and the need to purchase new 3D-enabled TVs.
Is VR going to be more than a hardware play? Can VR be a major disruptor of the media and entertainment industry? For this to happen, we believe VR must first succeed in the gaming industry which it has the most obvious near term implications on, in order to build enough traction to make an impact on mainstream media.
Satisfying (demanding) gamers’ needs will help in positioning it for mainstream media.
Gamers demand much higher specifications and quality (of gaming) to address issues such as latency and motion sickness, as compared to consumers who sit back to consume entertainment. This can lead us to believe that at the tipping point whereby VR technology becomes good enough to satisfy gamers’ needs, it would also be more than sufficient to cater to mainstream entertainment. That said, VR gaming is still in its infancy stage but demand appears to be positive among the early adopters – with an ever-growing pool of developers building up a library of VR games through open source VR platforms such as Unity and Unreal. The gaming community also has high expectations of VR, with a strong belief that it would revolutionize the future of gaming. According to a report from SuperData Research, video games will be the key driver of virtual reality hardware in 2016 – consumers are expected to spend US$5.1B on virtual reality gaming hardware, accessories and software in 2016, up from US$660M spent in 2015.
The VR hardware ecosystem is developing at a fast pace, and VR devices are becoming more affordable and less clunky.
With VR devices ranging from the affordable Google Cardboard to the mid-tier Samsung Gear VR, up to the top-of-the-range HTC Vive and Oculus Rift, consumers across various market segments would have VR device options within their budget. There has also been multiple iterations for most of the VR devices launched in the market so far (mostly developer kits), improving on the comfort level of the headgear as well as their technical specifications. The Oculus Rift was first introduced to the market via Kickstarter in 2012 and raised US$2.4M, almost 10 times more than the funding it was seeking. Facebook’s subsequent acquisition of Oculus at US$2B in 2014 in turn helped Oculus accelerate their product development and partnerships, with the goal of expanding the applications beyond gaming to entertainment, education and communications in the future.
Media companies and startups alike have also started to experiment with VR content.
NBC Olympics has partnered with Samsung to broadcast 85 hours of VR content from the Rio 2016 games, allowing NBC Sports app users with compatible Samsung Galaxy smartphones and Samsung Gear VR headsets to view footage from the opening and closing ceremonies as well as sports events. Owners of the Samsung Gear VR headsets also can watch content in a virtual environment (e.g. living room/ cinema) on their Netflix VR and Hulu VR apps.
On the advertising front, Hollywood studio Lionsgate is planning to leverage mobile VR as a promotional channel to promote new films such as Now You See Me 2. Oculus also offers users the opportunity to view 360° 3D videos and ‘virtual reality movies’ covering short films and event livestreaming such as sports and concerts. Jaunt, a startup backed by Disney, also developed an end-to-end cinematic virtual-reality content-creation platform which allows users to view concerts, sports and films in VR. Similarly, Vrse has experimented with producing short content teasers and clips for media companies and brands, with plans to expand to feature-length VR films in the future. However, the VR productions so far have mostly been in the “education” phase as opposed to full-scale production, and mainly short-form content as it becomes uncomfortable to wear the headsets for prolonged periods of time. As the headsets are improved over time, the content will be lengthened as well, but the existing content has already shown great promise among the early adopters in the industry.
While the verdict is still out on whether VR will succeed in penetrating mainstream media, VR is making good progress on both the hardware and gaming front, with the top-range VR device releases likely to hit the consumer market in the 2nd half of 2016.