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One Year of VR, and it isn't Dead Yet!

VR isn't dead. Pundits, tech reporters, and financial analysts have spent the last few years declaring virtual reality dead on arrival, but VR has not died. Virtual reality as a medium is healthier than it has ever been, but it still faces plenty of headwinds going forward.

The Cult of VR

Virtual reality is still a tiny segment of consumer electronics, but it also has its most fervent supporters. This era for VR reminds me of the early days of PC gaming in the 80s and 90s. It is even similar to the Mac faithful who kept Apple alive in the 90's as the company struggled to innovate without Steve Jobs. VR has its evangelists today. I definitely identify as one, myself. VR enthusiasts believe in the medium so much that we refuse to entertain the idea that it could fail. It is this blind faith that has lead me to describe it as a cult. Look at how Facebook views VR. They have yet to show a profit on the Oculus subsidiary, but they simply don't care. VR's success in the long-term is clearly more important to the company than short-term financial results. 

You Need A Killer App

A common refrain from VR's critics is that VR lacks a "killer app" that will move hardware. A year into this current head-mounted display product cycle, I think it is pretty clear that there is not just one thing that will sell these devices. There are immersive passive and more traditional gaming experiences that have created two markets for VR software. NextVR has done a great job of proving the value of virtual reality by putting customers on the sidelines of basketball games and creating a new way to enjoy spectator sports. At the same time, Resident Evil 7 has scared and delighted PSVR customers on the PlayStation 4. Neither one of those producrts are doing the same sales numbers as Angry Birds on mobile, but they highlight that VR customers are being drawn into the medium for a number of reasons. It seems that the comparison to mobile will be apt in the long run, as the utility of the smartphone can't be pinned down to one app. It is the vast array of applications that make smartphones great for users and, over time, VR software should be able offer a similar value to HMD owners. 

Developers! Developers! Developers!

Independent developers have been driving this new resurgence in virtual reality. Many of the established game publishers are sitting on the sidelines because the addressable market is too small to make a dent on their billion dollar bottom lines. This has left the door wide open for small teams like Owlchemy Labs, creators of Job Simulator, to take full advantage of being first movers in virtual reality. While $10-50 million in sales may not move the needle for an established game publisher, it is life changing money for small indie teams. VR has opened the door for a new gold rush in software development and it has been amazing to see companies that started as two guys in their college dorm room turn into more respected and established brands.

About Those Sales

Facebook and HTC have yet to reveal how many HMDs they have shipped, while Sony boasted shipping 1 million PSVRs in less than 6 months. These sales numbers for tethered VR HMDS are not great and they are not going to get Activision or EA to jump on the VR bandwagon. There are also some bright spots with the lower fidelity, untethered Samsung Gear VR and Google Daydream HMDs which allow anyone with a compatible smartphone to jump into virtual reality. The total addressable market is in the low millions of VR HMDs when you combine all of these devices, and there are more coming from various competitors. While the niche market is unappealing to some larger game publishers, there is still a find opportunity for software developers to profit if they can offer experiences that are truly unique and immersive. 

VR Won't Die

Many of the obstacles impeding VR from achieving mainstream success will be addressed over time. Screen resolutions will improve, batteries will become more efficient, and processors will become even smaller and more efficient. Untethered and tethered VR HMDs will converge into one device and it is very likely that augmented reality and virtual reality headsets will also converge over time. These are the early days of these new mediums. While it is entirely possible that some companies will not make it to the finish line of that great covergence device, VR will be there. It is simply too different of an experience. VR has too many use cases that can add value to a vast array of users. We are merely witnessing the beginning of what will likely be a 30 year evolution of the head mounted display form factor. Shacknews salutes the developers and engineers who are blazing the trail for this immersive and exciting medium. 

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