One Year After, The VR Bubble Is Deflating

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One Year After, The VR Bubble Is Deflating
April 6, 2017
Photo by James Bareham / The Verge

 

One year ago today, HTC released the Vive virtual reality headset, marking a turning point for virtual reality. The Vive wasn’t the first commercial VR headset, or even the first commercial high-end headset. But besides the simple Google Cardboard, it was the first major headset released without help from Oculus, proving VR didn’t belong to any one company. It was also the first one to come with sophisticated motion controls, ushering in a completely new class of experiences. In some ways, the Vive’s launch was the moment that VR began feeling like a real industry, rather than a Facebook-backed passion project. A year later, that optimism has turned into something more mature, but less visible.

 

We’ve seen consumer VR milestones since April of 2016, including the launch of PlayStation VRGoogle’s Daydream platform, and the Oculus Touch motion controllers. Microsoft announced an upcoming line of Windows Holographic VR headsets. Samsung said it hadshipped 5 million Gear VR headsets at the start of 2017, and PlayStation VR exceeded expectations by selling 915,000 headsets in four months. All the major VR platforms built out their launch catalogs, and virtual reality video maintained a steady presence on YouTube and Facebook. VR arcades began opening in cities around the world. And virtual reality social spaces like BigScreen, AltspaceVR, and a number of multiplayer games have drawn modest but enthusiastic user bases.

For all that, there have been disappointments. The Oculus Rift launch was staggered by a component shortage, and as expected, desktop VR headset sales were far lower than those of PlayStation VR. Oculus shipped an estimated 243,000 Rifts in 2016, and HTC shipped an estimated 420,000 Vives. Daydream is still only compatible with a handful of devices. Virtual reality arcades are here, but they’re still in the novelty period. And in a major symbolic blow, Oculus co-founder Palmer Luckey removed himself from the public eye after political controversy, and left Facebook entirely last week.

 

“FROM A MARKET ADOPTION PERSPECTIVE, VR HAS MORE OR LESS DELIVERED ON EXPECTATIONS, BUT THE SENTIMENT ... HAS CERTAINLY CHANGED.”

 

There are other, less tangible shifts as well. Virtual reality is no longer an exclusive, theoretical technology, but it hasn’t seen mainstream adoption either. In the Gartner Hype Cycle, this might be called the “trough of disillusionment” — the moment where people decide a great new technology isn’t delivering on its promises. Businesses and research institutions have been using VR for training, design, and even medical treatment for decades. But for everyday consumers, it’s of limited use, particularly because of its price — robust experiences require expensive hardware, while cheap VR like Cardboard gets old fast.

 

Unsurprisingly, though, some of the VR community’s most dedicated members don’t think the medium is in long-term trouble. “I think the current ‘trough of disillusionment’ sentiment that seems to be pervading the industry (or at least investor panels at conferences) is a bit unfounded,” says Eric Romo, CEO of AltspaceVR. “From a market adoption perspective, VR has more or less delivered on expectations, but the sentiment around that market progress has certainly changed.”

 

Romo describes the current dip as the “Palm Treo” era of virtual reality. The current headsets are pretty good, but “they all have tragic flaws,” he says. Desktop VR is too complicated, and console VR monopolizes your living room, while mobile VR isn’t full-featured enough — and no midrange headset works with the iPhone, dramatically limiting its user base.

Photo by James Bareham / The Verge

 

Still, some people are already making a living off the medium. Longtime VR journalist Kent Bye, who characterizes VR as “still in the ‘cinema of attraction’ experimental phase,” says that the industry hasn’t figured out a reliable way for big projects to make money. “But a number of small indie VR teams have been able to break even,” he says. One success story is Owlchemy Labs, creator of Vive launch title Job Simulator — Owlchemy co-founder Alex Schwartz says the company made $3 million in sales last year.

 

Bigger names have also declared some victories. CCP, the studio behind EVE Online, has sold over 500,000 copies of its cross-platform game EVE Gunjack. That’s not a huge number compared to a best-selling mobile or console game, but it breaks out of the “niche” category. “[VR] will take a significant amount of time to approach widespread consumer adoption,” says Schwartz. But compared to some past technological breakthroughs — Schwartz cites the VCR as one example — it’s a “resounding, incredible success.”

 

“WE CAN’T AFFORD TO BE LAZY.”

 

Denny Unger of Cloudhead Games, the company behind episodic Vive launch title The Gallery, is still cautious. “The general public is clamoring for longer, more engaging, AAA experiences in VR while simultaneously accusing it of being a gimmick,” he says. “After one year on market, we have the velocity, but we have to keep pushing for quality of experience to make it over the hill. We’re still in a phase which demands we make the general public ‘true believers.’ We can’t afford to be lazy.”

 

Unlike in 2016, where new hardware launches set a clear course for VR’s development, it’s unclear what the rest of 2017 will bring. Self-contained headsets are on the horizon, but they may not hit the market until 2018. We don’t know what big players like Google and Apple will be doing, and Oculus’ latest project — a standalone device known as Santa Cruz — is just a prototype. The Gear VR is getting a modest upgrade with a new controller, but it still has clear shortcomings. Progress on Daydream is moving slowly, if it hasn’t outright stalled.

 

Until then, 2017 could well be a productive but low-key year for virtual reality. For the first time since 2013, there’s no more waiting for VR to “arrive.” It’s finally here — just figuring out how to get a foothold.

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