THE BLOG

VR Will Be Bigger - and Smaller - in 2017

01/07/2017 11:28 am ET

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By Keith Soljacich, VP, Director Technology DigitasLBi

Last year, CES 2016 offered hopes and promises of a year ahead where everyone and their Grandmother would be strapping on a VR headset for their first transformative experience.  While that did happen for many, with sometimes hilarious results, the technology didn’t come out firing on all cylinders and headset sales didn’t meet the expected targets.

Many consumers had expectations that VR technology would come to us fully mature and ready to blow our minds left right and sideways.  But, in retrospect, those were unreal expectations, as no new technology comes to market fully baked.  It will still take a few years and a few technology generations.  VR hasn’t yet seen its “iPhone moment”.

But this is where the fun begins.  CES 2017 brings the next wave of VR technology innovation, and it’s evolving at a blistering pace behind the billions of dollars being invested.  VR companies spent the past year honing and refining the technology, and are showing off next-gen prototypes on the show floor.  The footprint for VR on the floor has continued to grow year over year and consumer interest is exceeding projection.  We can remain bullish as ever on the future of VR for consumers with room to grow. So with CES 2017 well underway, here are some areas of growth opportunity we see for VR going forward.

MORE AND LESS

Over the next couple years evolution of technology for VR is a given.  There are devices like Project Alloy from Intel, Santa Cruz from Oculus, and experimental prototypes behind lock and key at places like HTC and Microsoft that the public isn’t privy to, and that’s exciting.  We’ll lose the cables, dongles, and cameras and trade in for next-gen VR systems that are untethered, lightweight, and tracked from the inside out.  VR technology on display on the CES show floor this year, like 8K displays, headset eye-tracking, and sensory replication will be miniaturized and embedded.  And, ideally, with scale comes savings for consumers as prices come down to meet demand.  We don’t know the magic price point yet, but we’ll find out soon.

BEYOND A KILLER APP

VR will need more than a “killer app” to spur adoption. The novelty and excitement of one app, like Facebook or Twitter, moved millions of first-time buyers during the smartphone era.  But with VR there may be no singular app that can move the masses to buy. When VR provides a multitude of experiences, social connections, and utility that make strapping on a headset essential – then we may see the next, more profitable, wave of adoption.

But can VR be profitable with the video game purchase model?  Consumers are buying once up front and own the content forever.  Or will they adopt the millennial-preferred Netflix/Spotify model and charge a subscription fee for a vast library of content, games, and experiences updated monthly?  HTC announced that they are going to introduce a subscription service through Viveport offering 3,000 titles by the end of 2017.  The global marketplace has overwhelmingly chosen the latter approach in this decade, and VR can either follow suit or create its own new content consumption paradigm.  Either way, we want a wide array of experiences in VR to keep the technology fresh and worthy of strapping on a headset.

BE SIMPLER

Another area that will be vital to VR adoption is consolidation and standardization. The early days of TV had RCA and Zenith, the PC era had Windows and Mac, and the smartphone era had iPhone and Android.  That narrow range of choices in ecosystems instilled confidence in the consumer.  Consumers knew if they bought an iPhone, anything in the Apple ecosystem would work seamlessly.  Similarly, if I built an iOS app, I knew it was accessible and available to millions of iOS users.  Build once, run on all devices.  VR developers will need that marketplace stability to invest in large scale projects, because in 2017 it’s still the Wild West of platforms, technologies, and storefronts.  Historically, the simplification of choice goes a long way toward consumer adoption rates.  The recent formation of the Global Virtual Reality Association (GVRA) that includes the likes of Facebook, Alphabet, Sony, Samsung, and HTC should set the stage for standardization, and in the long term that’s a win for the consumer.

There’s a lot for all of us and our grandmas to be excited about for VR in 2017 and beyond, and CES is kick-starting the next generation.  For the brands that dipped their toes in the water and saw early results, they can feel confident that the technology is here to stay and will stay ripe for adoption and innovation for a long time.  The sweet spot will be $120 billion (what VR/AR is expected to generate in revenue by 2020) and with killer experiences, consolidation, and technological evolution, VR is well on its way.

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