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It May Take Years For Virtual Reality To Go Mainstream, Says New Report

There will be 2 million headsets sold by the end of the year, but it could take six to eight years for VR to reach a tipping point.

It May Take Years For Virtual Reality To Go Mainstream, Says New Report
[Photo: Kobby Dagan via Shutterstock]

Virtual reality is becoming a more popular technology in the wake of high-profile product launches like the Oculus Rift and HTC Vive but it is still several years away from "hypergrowth" and mainstream adoption, a new study found.

In the 2016 Virtual Reality Industry Report, issued jointly today by Greenlight VR and Road to VR, and which offers a 10-year roadmap for the VR ecosystem, the researchers predicted that while there will be 2 million—non-Google Cardboard—virtual reality headsets in consumers’ hands by the end of this year and 36.9 million by the end of 2020, the VR industry is still six to eight years away from hypergrowth or a tipping point in adoption of the medium.

That said, the study predicted that by the end of 2025, there are likely to be 135.6 million VR headset in use, of which 122 million will be mobile.

The consumer VR era kicked off in earnest last fall with the launch of Samsung’s mobile Gear VR and was further bolstered over the last few weeks with the launch of the tethered—meaning, connected to a powerful computing device by wires—Rift and Vive. Sony will complete what some might call the end of the beginning of this era later this fall when it releases its tethered PlayStation VR system. Analysts from Digi-Capital have previously predicted that the VR ecosystem would be worth $30 billion by 2020.

The report offered plenty of fodder for both those who are skeptical of VR’s prospects and those who are enthusiastic about the technology’s future. Still, it’s hard to escape the study’s most significant conclusion, that it will be several years at a minimum before consumer virtual reality is a major market. And that’s in large part due to the fact that there is no killer app on the immediate horizon.

"Unlike smartphones, where there was a stronger need for consumers to have these devices," the report’s authors wrote, "the use cases that will drive broad consumer adoption are still early in development."

That said, they continued, they do expect that a killer app is coming at some point. "We believe mainstream adoption of [VR gear] will be accelerated by the development of a ‘killer consumer app,’ which will likely come from social networking in virtual reality."

A sentiment like that, if eventually proven accurate, would likely be great news for Oculus, which is owned by Facebook, whose CEO, Mark Zuckerberg, has lauded the technology’s potential social impact.

Still, Oculus should not start celebrating just yet. While the Rift may well get the lion’s share of headlines in the early going, the PlayStation VR may very well be the long-term winner. Because of its lower price—Sony’s hardware will sell for $399, versus $599 for the Rift and $799 for the Vive—the report suggested that by 2018, Sony will have sold 3.1 million units, "just over half of the tethered [head-mounted display] market."

What’s uncertain, according to the study, is how the various VR systems will differentiate themselves over time. "There will be a natural sorting-out process, by which various hardware configurations...evolve to optimize each vertical/use case," the authors wrote. "For example, gaming platforms may evolve ultra-robust audio capabilities, while military platforms may evolve deep [augmented reality], or information overlay capabilities."

Developer Expectations

As in any medium that mixes hardware and software, the success of virtual reality is entirely dependent on the development and availability of content that consumers want, and are willing to pay for. And while there are a growing number of developers building VR content, the people doing that work seem like they don’t expect to be able to make much money doing so anytime soon.

According to the study, developers expect "dramatic" growth of between 200% and 300% by 2018, and "believe [VR’s] ‘inflection point’ is still two-to-three years off."

More to the point, developers seem aware that in the short term they won’t be making a lot of money off their VR efforts. That’s in part because they think there will be multiple models of VR content, and prices for that content that are either very low or very high. In total, 51% of all VR content is expected to cost $24 or less.

Still, developers are flocking to virtual reality, with 44% of all of those working to build VR content having started to do so within the last year. Just 19% have been doing so for more than a year, and 17% for more than two years, the report found.

Of those currently working on VR content, 61% have been doing so for the Oculus Rift, while 57% have focused on the Gear VR, 46% on Cardboard, 30% on Vive, and just 11% on the PlayStation VR.

Those numbers should change over time, though. The study predicted that developers’ focus going forward will shift, with 46% building for the PlayStation VR, 44% for the Vive, 37% for the Gear VR, 30% for the Rift, and just 24% for Cardboard.

As the VR industry expands, one of the brightest spots could be what is called "standalone" headsets. These are devices that are neither tethered nor connected to a smartphone. Rather, they have integrated computing and communications systems. Both Google and GameFace Labs are thought to be working on such systems.

Google successfully pulling off such gear could be a major boon to the industry’s growth.

"If Google can release a standalone headset that requires no external computational source, wires, or unnecessary tinkering to get working," the authors said, "we estimate that it will greatly appeal to the average consumer. Eliminating any unnecessary cognitive burden to the user is paramount for emerging technologies, and VR is no different."

Related video: Will virtual reality ever go mainstream?

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