VR Slow To Catch On With U.S. Consumers

VR Slow To Catch On With U.S. Consumers
May 25, 2017

The virtual reality industry is bullish on VR. Not so bullish? The market.


This year, 22.4 million people in the U.S. — or 7 percent of the population — will engage with VR monthly, reported market research firm eMarketer in its first forecast on augmented reality and virtual reality.


That figure includes 360-degree videos, photos and product demos via any device (including connected TVs, desktops/laptops, mobile devices and headsets), as well as games via headset. The category is being driven mainly by 360-degree photos and videos on Facebook and YouTube.


Counting only headsets, just 9.6 million people in the U.S. — or 2.9 percent will use VR monthly.


And growth is slowing. While total VR use will rise 109.5 percent between 2016 and 2017, it’s expected to grow 63.7 percent in 2018 and 34.1 percent in 2019 as the number of monthly users nears 50 million people.


VR “will not reach mass adoption in the foreseeable future,” eMarketers said in its report.


Virtual reality players acknowledged this trend at the VRLT Summit last month, citing big, expensive headsets and a dearth of content that would entice consumers to make the investment.


Today’s VR headsets are “bulky, they’re big, they’re tethered, so consumers getting comfortable with a system that will lead to mass adoption is going to be a challenge to address," said VRTL co-founder Ned Sherman, counsel and director at Manatt Digital, during a break at the conference.


“That is due to a few factors, namely cost of those headsets, ergonomic design of those headsets, and the fact that we’re still limited by technology,” added his partner Sunny Dhillon, partner and co-founder of Signia Venture Partners.


Specifically, as much technological progress has been made in VR, the systems are still powered by lithium ion batteries. “What you can power on a GPU is still very limited by battery technology,” Dhillon added.


The limitations of VR headgear are changing, though, said VRC co-founder and Chief Strategy Officer Robert Stromberg. “The headsets I think will streamline, become much like sunglasses eventually, sexier, [and] people will be less vain about wearing this big bulky thing on their head. … And then of course the price point coming down.”


And with the eventual advent of 5G telecom networks, “you can start sending a lot of stuff up to the cloud that doesn’t have to be processed on your local computer," added Dhillon. “Therefore you don’t run into the same overheating problems or processing constraints that you currently have.”


Meanwhile, the amount of content is limited, added Jesse Sisgold, president and COO of Skydance Media. “There are some nice choices, but there’s not that much,” he said. “There’s not that many titles that have come out and [consumers] said, ‘Oh my gosh it’s a little bit expensive, but I need to have this at home.’”


It’s a chicken-and-egg problem, said VRC CEO Guy Primus. “The more content there is, the more people buy headsets. … We think that when people see something that they’re familiar with, that there is a defined business model for and is successful in the minds of consumers and in the minds of partners, that’s going to attract more people to the market.”


AR, on the other hand, is finding more traction, with 40.0 million Americans — or 12.3 percent of the population — expected to engage with some form of augmented reality monthly this year, per eMarketer.


Much of this growth is being fueled by Snapchat Lenses, Facebook Stories and Instagram Stories.


By 2019, 54.4 million Americans, or 16.4 percent of the population — nearly one in five Internet users — will use AR monthly.


But AR user growth is slowing as well, with this year’s figure growing 30.2 percent over last year, and usage expected to grow 20.1 percent in 2018 and 13.1 percent in 2019 to 54.4 million monthly users.

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