VR Is Dominated By Video Games… For Now

VR Is Dominated By Video Games… For Now
June 30, 2017

Virtual or augmented reality is still trying to justify its billing as the next big thing, but there is a very familiar use case dominating the nascent developer space.


People always say that the leading indicator of technological adoption is the adult industry. While that may have been true during the Betamax versus VHS days or the early Web, things are a bit different today. Games of all sorts are now the leading sign of technological adoption. When the game makers get in on something, you know everybody else will soon follow.


A survey of over 600 people who work in the “realities”—virtual, augmented, mixed— by the Virtual Reality Developers Conference said that 78% of developers were working on games or interactive entertainment. According to the second annual VRDC VR/AR Innovation Report, games are seen as the best way to give people the immersive experiences which (in theory) will spur mass adoption.


The training and education categories are some way behind games, with 27% of people citing virtual learning as a focus. Around 19% of developers said branded experiences—often car showrooms or rendered VR vacations—were on the agenda.


Industrial and product design was cited by 15% of virtual reality developers as an avenue to pursue, with medical/healthcare applications chosen by 14% of developers. Consumer-facing experiences such as retail/commercial and travel scored 11% and 7%, respectively.


As a whole, the virtual and augmented reality segment needs to start building on the hype it has generated. But developers are taking the long view as the majority of programmers view the realities as a medium to long-term revenue stream. A number of respondents to VRDC’s survey said that they were not expecting to turn a profit in the near future, citing the fact that the market is yet to mature.


“While money still flows freely through the VR/AR/MR industries, it’s clear that most industry professionals aren’t expecting to turn a profit in the short-term,” the report said. “When we asked industry professionals about when they believed VR, AR, or MR would generate a profit for them or their client, just 16 percent said in the short-term, 39 percent said medium-term, and 38 percent said only in the long-term.”

Virtual Reality Revenue Will Be Game-Based


The news that games are the dominant force in the nascent virtual or augmented reality universe is not shocking. In many ways, the growth of the realities is mirroring that of the app ecosystem, which has always relied heavily on mobile games for ongoing revenue.


One reason for this is that virtual reality developers see games as a sure bet.


The vast majority of available VR content is game-based and that is not likely to change any time soon. A recent report by the Entertainment Software Association said that 15% of gamers had used virtual reality in the last 12 months, with 63% of “frequent gamers” familiar with the experience. In addition, one in three of these hardcore gamers said they intended to buy virtual reality hardware in the next year.


At ESA’s E3 2017 trade show in Los Angeles, there were 126 exhibitors involved in the virtual and augmented reality space—a 138% increase from last year’s E3. These immersive experiences were (on the whole) either video games (granted, it is a gaming show) or the latest versions of headsets … which were being used to play games.

According to Boston-based Strategy Analytics’ director of director of digital media strategies Michael Goodman, the focus on game content has effected the virtual or augmented reality industry as a whole.


“There is a distinct lack of content but the other thing I would argue is that there is also a lack of a unique VR experience,” said Goodman, in an interview with ARC at E3. “A lot of times these VR games just play like console games. I am using a VR headset but it plays like I am playing or watching on a two-dimensional or flat-screen television … the only difference is that I am wearing the screen on my head.”


Goodman uses Microsoft’s Kinect as an example of next-generation technology that failed to live up to expectations. The hands-free motion control hardware was praised for its innovative approach to (no surprises here) gaming but Kinect did not take off in the way that Microsoft hoped.


The lack of consumer love came down to the actual experiences that Kinect offered, a scenario that Goodman sees being replicated in the virtual or augmented reality space. People expect unlimited freedom when they decide to put on a headset but the reality is that the developer has likely built an experience that sends a person down a linear path.


“I can turn my head and look around to get the 360-degree experience, but most of these games are not taking advantage of the environment. Not to the extent that they could or should be,” Goodman said. “That’s one of the really important parts for virtual reality to succeed. It can’t just be the console experience on a screen two inches in front of my eyes. And for far too many of these games, that’s exactly what it is … the experience is lacking.”


The Average Person Needs More Than Games


When you take into account the level of hype that virtual or augmented reality has received to date, the assumption is that critical mass will be achieved sooner rather than later.


Global virtual reality revenues are expected to hit $7.2 billion by the end of this year, according to market analyst Greenlight Insights but this is considered to be modest growth. By 2021, global revenue will reach $74.8 billion, Greenlight said, citing the fact that enterprises—and not just game publishers—will integrate virtual or augmented reality experiences into their business practices.

The problem is that for the average person on the street, virtual and augmented reality experiences seem to be centered around games. Several respondents to the VRDC survey said that the technology was often marketed as immersive or interactive entertainment as opposed to “the world-changing technology that it is.”


In the near future, the challenge is to convince people that not every immersive experience will be a game. With that in mind, there is a demonstrated need for virtual and augmented reality developers to turn their collective gaze on something other than VR versions of popular titles like Fallout 4 or Doom.


“I believe the average citizen of the world needs more use cases than watching documentaries or playing games,” said an anonymous respondent to the VRDC survey. “Perhaps the healthcare and business sectors will utilize it more, but I would love to see our educational system adopt more products like Google Expeditions. In the meantime, it will be largely commercial promos or marketing that will take hold, obviously behind games industry. And porn.”

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