Coronavirus could be catalyst to reinvigorate virtual reality headsets


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Mark Zuckerberg, chief executive officer and founder of Facebook Inc., demonstrates an Oculus Rift virtual reality (VR) headset and Oculus Touch controllers as the gives a demonstration during the Oculus Connect 3 event in San Jose, California.

David Paul Morris | Bloomberg | Getty Images

For the more than 90% of Americans who have been cooped up in their homes for more than a month, reality is beginning to bite. There are only so many Netflix series you can watch consecutively, so many movies you can start and stop and so many video games you can replay before the torpid gloom descends. A change of pace is surely in order.

Tech companies are hoping this change will come in the form of virtual reality headsets, with some analysts saying the stay-at-home orders could finally be the Hail Mary pass they’ve been waiting for.  

After all, it’s been six years since Oculus founder Palmer Luckey said virtual reality was “going to change the world.” 

‘Crisis could jump-start interest’

“It’s a little early to tell if people are having more virtual reality experiences now, but I think this crisis could jump-start interest in it,” said Kirk Soderquist, a partner at Perkins Coie, a law firm focused on the interactive entertainment industry. “I think we may look back on this and see it as an inflection point for the sector.”

The truly immersive virtual reality experience transports people to other places — both reality-based and simulated. You can take walking tours of your favorite cities and visit national parks and cultural landmarks. You can climb Mount Everest with Everest VR, swim with whales with TheBlu, even explore the surface of Mars with Titans of Space.

While people aren’t racing to buy the expensive headsets and the consoles that are sometimes needed to go with them, they are enamored with the technology when they try it out. “I was blown away when I had my first experiences with it,” said Norm Rose, a senior technology analyst with Phocuswright, who tracks emerging technologies. He bought an Oculus Go VR headset two years ago. “It’s not always the best experience, but when it works, you feel like you’re someone else somewhere else.”

But VR is not only limited to travel. Industries like health care, automotive manufacturing and education have accounted for a bulk of the roughly $19 billion spent last year on virtual reality and augmented reality products, per estimates from consulting firm IDC. To date, gaming surprisingly has not been the most popular segment of the consumer VR market, but even there, VR games face stiff competition from traditional computer-based products.

The technology can be used for social media and business meetings as well. And the pandemic seems to be stirring this revival: Altspace, one of VR’s first social platforms, is suddenly being flooded with requests to host a variety of VR events, and Facebook is working on launching Horizon, an animated world of avatars for Oculus headsets. The tech giant will also likely offer professional conferences, social gatherings and lectures across its new virtual world.

Omdia senior analyst George Jijiashvili, though, sees a major issue: “I don’t think this crisis is a massive opportunity for VR, because there’s just not enough headsets out there to make a big impact.”

Consumers currently own just 26 million virtual reality headsets globally, according to data from tech consulting firm Omdia (formerly Ovum). That’s far less than overhyped expectations for the technology several years ago.

Tech companies fail to enchant consumers

For years now, major technology companies have tried to spur the market. Both Google and Samsung introduced low-end devices several years ago that consumers could pair with their smartphones to get a virtual reality experience. The cardboard- and plastic-based products were cheap, and indeed Google gave away millions of its Google Cardboard headset. But it didn’t go over very well with consumers.

“The headsets were clunky, the experience wasn’t very good, and there was not a lot of support in terms of content,” said Jijiashvili. “I think many of those headsets are sitting in drawers untouched.” Last year Google essentially abandoned its Daydream VR platform.

The industry suffers from the familiar chicken-and-egg syndrome common to many technology markets. Without a large enough installed base of headsets, VR content developers aren’t motivated to produce enough expensive applications. And without enough cool content to access, consumers have been slow to buy the headsets. “Prior to this crisis, the [consumer VR] industry was in a trough of disillusionment,” said Phocuswright’s Rose.

Since Facebook released the Oculus Rift in 2016 after buying independent headset maker Oculus two years earlier for $2 billion, advocates declared virtual reality would be the next new trend. But the Rift never generated much buzz, largely because of the $599 price tag. Still, tech giants — including Google, Samsung and Sony — joined in the race to bring consumer-ready headsets to market, and plenty of backers began pouring billions into content development. But even with the introduction of lower-priced headsets, such as Gear VR, LG 360 and Sony’s PlayStation VR, sales are slow.

A new opportunity for tourism industry?

The coronavirus pandemic has had a significant impact on the tourism industry due to the resulting travel restrictions. Air travel has dropped by more than 95%, and bleak economic data and a rising unemployment rate are increasing doubts about when travel will pick up again.

But Rose, who also runs a travel tech consulting business, believes there is a big opportunity for tourism businesses with VR applications — not to provide an entertaining escape for consumers but to help them plan for actual vacations and travel. There is a running debate in the industry about whether VR tourism experiences might reduce the number of people taking actual vacations. Rose doesn’t think so. He believes that VR technology has the potential to complement consumer aspirations to travel rather than replace them.

“If I were a major travel company, I would be cutting deals with equipment manufacturers to get headsets into consumers’ hands,” said Rose.

“Because the VR industry has disappointed so far, the travel industry thinks that it doesn’t work,” said Rose. He believes that travel companies should be investing in VR technology now to prepare for the post-pandemic environment. That may be a tough sell, given that consumer travel has essentially ceased for the last six weeks.

Costs are coming down, the headsets are getting smaller, and their power is increasing. The industry is going to get there.

Kirk Soderquist

partner at Perkins Coie, a law firm focused on the interactive entertainment industry

“The real value in VR is in trip planning,” he said. “VR can help people plan an actual vacation.”

It will take some further evolution of VR technologies to enable that, including the capability for people to organize their research and undertake actual transactions through VR applications. It will be a huge step up for the industry if people can experience destinations, check out accommodations, save the information and actually book tours and rooms through VR applications.

It stands to reason that the industry will get there — not least because Facebook CEO Mark Zuckerberg is a true believer in the technology and still believes that VR technology will ultimately play a much bigger role in people’s lives, including how they engage in other computing activities. The company’s latest headset, the Oculus Quest, was introduced to rave reviews last year, and many analysts see it as major leap forward for the industry.

“Costs are coming down, the headsets are getting smaller, and their power is increasing,” said Soderquist. “The industry is going to get there.”

In the meantime, you can go climb Mount Everest.



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