Monday, December 5th 2016

2017's Weak VR/AR Demand May Burst VR Investment Bubble

Many research firms' numbers have shown that VR product sales in 2016 have been weaker than originally expected due to both high product costs and lack of content. No-one has yet seen VR's killer app, after all, and I know I'd love to see another Halo-like product to drive awareness on the VR platforms like it did on the original Xbox.

All of the above lead towards Google's Daydream View, HTC's Vive, Oculus Rift and Samsung Electronics' Gear VR having all achieved sales that are not even close to previously-set market expectations, with even the current mainstream poster-boy for VR, Sony's PSVR, showing adoption numbers that are as lowly as low can be. Even in their home-field, Japan, a country known for being filled with tech-savvy and tech-crazed customers, only 0.7% of the existing PS4 and PS4 Pro user-base has made the jump for a VR headset.
Consider the amount of studios that have already committed themselves towards the development of VR/AR games (such as Crytek with their Robinson: The Journey and 4A Games with their in-development ARKTIKA.1). Then consider that demand for those pieces of software - and VR headsets themselves - has been weakening recently. The supply chain has already invested heavily into related developments: vendors such as Acer and Asustek Computer have shifted major resources towards development of VR/AR devices for 2017 and are expected to release them in early 2017. However, some market watchers are concerned that the VR/AR ecosystem may not be mature enough to contribute much to the players - and excess offerings for a low-penetration market will invariably lead to losses and, potentially, bankruptcy.

VR/AR technologies also require more improvement in order to stimulate demand from both the consumer and enterprise sectors. It will take more time before the VR/AR market may begin enjoying robust growth, and such a slower-than-expected development is putting pressure on firms that have invested resources into related development. Asustek will launch an all-in-one VR head-mounted device (HMD) in the third quarter of 2017, featuring built-in cameras, sensors and controllers. And for Q1 2017, Acer is planning to release a VR HMD based on the Windows Holographics platform that support mixed reality experience. The company has been aggressively cooperating with VR players, having invested in the IMAX VR Content Fund and established a joint venture with Sweden-based game design company Starbreeze to develop StarVR HMD.

However, these companies are relatively large and have varied streams of income, and a lower than expected adoption of VR is unlikely to bring their budgets into the red line. However, many smaller companies have sprung up since the availability of VR and AR as a market, intent on carving themselves a pie of it. For the smaller companies banking on VR and AR to power both their content and their revenues, wrong (maybe hopeful) forecasts of market value may yet prove their financial undoing.
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37 Comments on 2017's Weak VR/AR Demand May Burst VR Investment Bubble

#2
newconroer
I have zero idea why they thought or predicted PSVR would be the front runner for Virtual Reality. Consoles and console players are and will never be at the technology forefront in any way shape or form, whether it's hardware or simply attitude/adoption.

VR/AR open up massive opportunities for artists, educators, programmers, marketing agencies, film students/students in general, transport and travel companies and on and on.
Much like Formula 1 drives automative engineering, VR will drive AR engineering and AR it looks like will become very popular in time.
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#3
entropic
htc vive costs more than a computer that could run it properly so go figure, also the lack of vr content doesn't drive people to hop on it, also because production times are what they are, it'll be a year before promised titles start popping up, personally i already resigned to maybe going for vr 2nd or 3rd gen depending on the price and content
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#4
Athlon2K15
HyperVtX™
Honestly, VR isnt for everyone. I tried it with the Rift and Vive and both made me sick to my stomach, same with the wife.
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#5
RejZoR
hardcore_gamer said:
High prices and exclusives killed VR
Reality is, none of that is the real reason for that. VR is a gimmick. I've been saying this the entire time and people laughed and me that somehow in current year" things will be different. And yet, here we are with news how there is poor reception of VR.

Sure, price and exclusives are among reasons, but the biggest one is that only thing that VR has an edge over normal monitor is immersion and head tracking. Nothing else. Those weird air waving joypads are clumsy and limited compared to keyboard+mouse, it's still cumbersome device and it just can't be relaxing if you have to move around and hold your hands up in the air for 1 hour or more. It's no wonder why all VR games feel like clumsy tech demos. Because that's what they essentially are.

When I heard about Serious Sam VR I was a bit excited. I mean, it's a fast paced shooter with amazing visuals. And what we really got? A 2016 clone of Virtua Cop from 1996/1997. Seriously?

Do you know what WOULD work? Combining VR headset with the head tracking and integrate it with games we already have.

Imagine playing Alien:Isolation using traditional keyboard and mouse with 100% independent head tracking and aiming. This way you actually get best of the both worlds. Precision and complexity of keyboard+mouse with immersion of VR since you only see ingame world and you can move your head around to quickly observe things without moving the gun around. Sure, it would be a bit confusing at first, but anyone who played any tank game knows it can work (independent turret rotation as you move the tank around in other directions). Now, that I'd pay money for. But for VR we have now, meh. Not interested even the slightest.

Or imagine Need for Speed with car interiors that you drive with keyboard or gamepad and you can move your head around within the cabin using VR. Superior immersion and usability since you can observe the world by moving your actual head while sitting comfortably on a chair. Again, that is what I'd pay for.
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#6
Steevo
VR is about as great as the 3D market for home, which is..... http://www.nvidia.com/object/3d-vision-surround.html great?

Perhaps if they found a way to interface with these smart screens we have, that already have some VR stuff, and an gyroscopes and accelerometers, and all the fancy stuff and cost a lot...... But nah, lets make proprietary stuff cause that has always worked....
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#7
ZeppMan217
RejZoR said:
Reality is, none of that is the real reason for that. VR is a gimmick. I've been saying this the entire time and people laughed and me that somehow in current year" things will be different. And yet, here we are with news how there is poor reception of VR.
So was 3D but now you can go to almost any movie theater and watch a 3D movie there - you don't have to worry about the tech aspect, glasses etc. There's a crapload of VR headsets, all different; there are various games and "experiences" available in VR but they require specific headsets to work, along with hardware; there's also the issue of VR applications being only usable if you have a VR headset, so instead of offering an enhanced experience to VR owners and incentivizing those without VR to get "the complete package" they're alienating the majority, those without the headsets.
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#8
Franzen4Real
hardcore_gamer said:
High prices and exclusives killed VR
I disagree. Hi prices yes, exclusives no. There isn't a single exclusive title/titles that, had they been multiplatform, would have made a difference from where we are now with VR. I have had a Rift since summer, and the only title I can see that I would want to try and cannot is Audioshield. And I'm sure the Vive group is not regretting their purchase over Lucky's Tale.

Lack of the killer app on any of the platforms is far more detrimental to VR than the handful of exclusives released thus far. Noone will care enough to buy hardware until they are shown some truly great software. (And even then, there are plenty of people who won't buy it just because they don't want to like it no matter what). I will also throw smartphone headsets into the 'bad for VR mix', as watching a 3D 360 video on youtube is not VR nor is it impressive at all, but this will be many peoples first introduction to the genre and surely isn't going to compel them to want more.
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#9
RejZoR
ZeppMan217 said:
So was 3D but now you can go to almost any movie theater and watch a 3D movie there - you don't have to worry about the tech aspect, glasses etc. There's a crapload of VR headsets, all different; there are various games and "experiences" available in VR but they require specific headsets to work, along with hardware; there's also the issue of VR applications being only usable if you have a VR headset, so instead of offering an enhanced experience to VR owners and incentivizing those without VR to get "the complete package" they're alienating the majority, those without the headsets.
I can also tell you something about 3D. Remember the days when EVERYONE wanted a 3D ready LCD TV? Fast forward to 2016 and you see TV vendors dropping 3D support because it's just not interesting. I have a 3 years old 4K top end model (at that time). Want to know how many times I've used 3D? Excatly ZERO number of times. VR is the same fail as 3D. It's just not as usable and convenient as regular 2D. It will NEVER hold on and replace normal monitors. Even when monitors will offer full 3D display, I'm sure many people will not want to use them due to headache inducing properties. It's just how it is.
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#10
Franzen4Real
RejZoR said:
Do you know what WOULD work? Combining VR headset with the head tracking and integrate it with games we already have.

Imagine playing Alien:Isolation using traditional keyboard and mouse with 100% independent head tracking and aiming. This way you actually get best of the both worlds. Precision and complexity of keyboard+mouse with immersion of VR since you only see ingame world and you can move your head around to quickly observe things without moving the gun around. Sure, it would be a bit confusing at first, but anyone who played any tank game knows it can work (independent turret rotation as you move the tank around in other directions). Now, that I'd pay money for. But for VR we have now, meh. Not interested even the slightest.

Or imagine Need for Speed with car interiors that you drive with keyboard or gamepad and you can move your head around within the cabin using VR. Superior immersion and usability since you can observe the world by moving your actual head while sitting comfortably on a chair. Again, that is what I'd pay for.
Again, can't totally agree here. I too thought the same as you until I got the Rift and started using it. First person shooters that move fast are by far the worst of the worst experience in a headset. There is a huge problem with your eyeballs telling your brain your moving, but your inner ear is telling your brain your stationary (i.e. locomotion). It is an instant recipe for headaches and nausea. It is especially bad when you are turning the body of the character with controllers, not the head with your head tracking. On the other hand, the racing games do exist and they are quite good when using a steering wheel/pedals with exception of the UI. Dirt Rally VR is awesome, and is as you described with the modeled interiors etc. Being able to look through turns does make the game feel much better than a TV. For whatever reason, it feels pretty natural as opposed to the FPS games.

VR is going to be viewed as a gimmick though as I have seen you saying for quite sometime now. It is not something the masses wanted or have asked for in the first place, and is very niche. Also, there is no content that truly takes advantage of the hardware potential, and only looks to re-imagine all the existing stuff we already do on a flat monitor. I think content creation such as Oculus Medium and Quill is going to be more suited to VR than content consumption. I'm sure artists and 3D modelers will not sustain that market (though I am happily going to be using Medium starting tomorrow)
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#11
Steevo
Franzen4Real said:
Again, can't totally agree here. I too thought the same as you until I got the Rift and started using it. First person shooters that move fast are by far the worst of the worst experience in a headset. There is a huge problem with your eyeballs telling your brain your moving, but your inner ear is telling your brain your stationary (i.e. locomotion). It is an instant recipe for headaches and nausea. It is especially bad when you are turning the body of the character with controllers, not the head with your head tracking. On the other hand, the racing games do exist and they are quite good when using a steering wheel/pedals with exception of the UI. Dirt Rally VR is awesome, and is as you described with the modeled interiors etc. Being able to look through turns does make the game feel much better than a TV. For whatever reason, it feels pretty natural as opposed to the FPS games.

VR is going to be viewed as a gimmick though as I have seen you saying for quite sometime now. It is not something the masses wanted or have asked for in the first place, and is very niche. Also, there is no content that truly takes advantage of the hardware potential, and only looks to re-imagine all the existing stuff we already do on a flat monitor. I think content creation such as Oculus Medium and Quill is going to be more suited to VR than content consumption. I'm sure artists and 3D modelers will not sustain that market (though I am happily going to be using Medium starting tomorrow)
http://venturebeat.com/2016/09/02/vr-adoption-among-steam-users-has-crashed-to-a-halt/

Less than .3 of steam users. And that figure is flat for the last few months.
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#12
Franzen4Real
Steevo said:
http://venturebeat.com/2016/09/02/vr-adoption-among-steam-users-has-crashed-to-a-halt/

Less than .3 of steam users. And that figure is flat for the last few months.
Yep, not surprising at all to me. They have only sold a few hundred thousand headsets total (Rift/Vive combined) and there are millions of steam users. So, figuring in Rift users that do not get counted on Steam, we are probably looking at 0.5% or less. It is too bad, it could be a great medium to explore but no Devs are going to really dig in and spend tons of resources to make something great for so few people. It will end up becoming an Indie hardware set for niche software products and 3D 360 video player.
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#13
xkm1948
Same old techpowerup forum members not believing in the future of technology.

For one thing, using envelope for Windows I have not been using my monitor for almost two weeks now. I can strap on my Vive and complete all of my computer works in VR. It is pretty amazing as you are not bond by the size of the monitors any more. This for one is way more important than VR's use in gaming.

As I have mentioned before in my review for VR it will take time for the new tech to become mainstream. We still need way better GPU to provide 4K resolution VR HMD at great framerate. Neither AMD nor nVidia can do that for now. Within a few years though it will be a lot different. Some of the nation's top research labs are already adapting the idea of using VR to directly visualize microscopic images. A cellular biology lab I used to work in have already come up with ways to basically "teleport" you into live scanning electron microscopic imaging of cancer cells with HTC Vive. The results were mind blowing as it provided a complete new perspective in terms of cell membrane dynamics as well as biophysics at such scale.

This is not a gimmick. It will revolutionize our lives.

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#14
TheinsanegamerN
xkm1948 said:
Same old techpowerup forum members not believing in the future of technology.

For one thing, using envelope for Windows I have not been using my monitor for almost two weeks now. I can strap on my Vive and complete all of my computer works in VR. It is pretty amazing as you are not bond by the size of the monitors any more. This for one is way more important than VR's use in gaming.

As I have mentioned before in my review for VR it will take time for the new tech to become mainstream. We still need way better GPU to provide 4K resolution VR HMD at great framerate. Neither AMD nor nVidia can do that for now. Within a few years though it will be a lot different. Some of the nation's top research labs are already adapting the idea of using VR to directly visualize microscopic images. A cellular biology lab I used to work in have already come up with ways to basically "teleport" you into live scanning electron microscopic imaging of cancer cells with HTC Vive. The results were mind blowing as it provided a complete new perspective in terms of cell membrane dynamics as well as biophysics at such scale.

This is not a gimmick. It will revolutionize our lives.


VR's sales say it all. VR is not selling. It's a fad, just like 3D before it. The current gen of VR has not fixed the issues of previous attempts (eye strain, nausea, ece) that affect a significant number of users, and it is still far too expensive for most consumers, not to mention you need a high end PC to run it, and high profile games are still mostly absent.

Betamax was real popular for certain applications, but bombed in the general market. So did laserdisk, so did HD DVD, ece. VR is like laserdisk, really cool, but ultimately too expensive and annoying for most users, combined with VR sickness.

you use envelope, and that's great. But your typical business or home user is not going to shell out hundreds upon hundreds of dollars for a VR headset, dedicated GPU to render it, open up their PC to install it, ece. It's just not happening. And the enthusiast market is not going to be big enough to support VR forever.
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#15
xkm1948
TheinsanegamerN said:
VR's sales say it all. VR is not selling. It's a fad, just like 3D before it. The current gen of VR has not fixed the issues of previous attempts (eye strain, nausea, ece) that affect a significant number of users, and it is still far too expensive for most consumers, not to mention you need a high end PC to run it, and high profile games are still mostly absent.

Betamax was real popular for certain applications, but bombed in the general market. So did laserdisk, so did HD DVD, ece. VR is like laserdisk, really cool, but ultimately too expensive and annoying for most users, combined with VR sickness.

you use envelope, and that's great. But your typical business or home user is not going to shell out hundreds upon hundreds of dollars for a VR headset, dedicated GPU to render it, open up their PC to install it, ece. It's just not happening. And the enthusiast market is not going to be big enough to support VR forever.
What is your source of information for that? Massive consumer survey conducted by you? Have you even tried it yourself, for once? As far as people who actually purchased the headsets very few reported motion related sickness.

This is fundamentally different from the 3D TV hype.


As for the cost. Well it is not even as expensive as most flag ship smartphones. Don't write something off so eagerly.

In terms of professional market not big enough I can tell you that is dead wrong. Have you ever heard of Illumina? The company that makes DNA sequencing machines? Probably not. They live just fine by only supporting research institutes both private and public. As a matter of fact these big research institutes and education facilities are the key for VR to success. Consumer product for average folks will take some time to mature to the level of smartphones.

Give it some time to mature. Also, please take a look at Google's Daydream system as well as Microsoft Hololens. There are not so hardcore VR/AR out there just for evertday people.
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#16
Steevo
It has to do with perception and money. Can I buy a decent 4K TV that multiple people can use and enjoy at the same time for the cost of a VR headset? Yep.
Will they both hook to my PC and look amazing? yep
Am I taking a risk with so few titles available? yep
Does it look like the technology is going to mature making my purchase obsolete very quickly? Yep

Sure it costs as much as a smartphone, but a smartphone does more than one trick, VR does not.

VR is currently the cart in front of the horse.
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#17
Dippyskoodlez
xkm1948 said:
What is your source of information for that? Massive consumer survey conducted by you? Have you even tried it yourself, for once? As far as people who actually purchased the headsets very few reported motion related sickness.

This is fundamentally different from the 3D TV hype.


As for the cost. Well it is not even as expensive as most flag ship smartphones. Don't write something off so eagerly.
The cost is relevant because unlike smartphones that are heavily subsidized and loaned/leased on payment plans, VR is not.

VR also has unique hardware requirements that even further narrows down the scope of viable consumers.

I do agree its very different from the 3d tv garbage, but there is an immense amount of work going into physical ailment prevention using these headsets. The complaints are legit, I love all kinds of twisty turny movement harassment on rollercoasters and such, but there have been a few times I noticed the headset definitiely fooling my body into feeling bad. It wasn't strong, but I could imagine general consumers having more trouble for sure.

I think the real block right now is that the hardware is still extremely immature. Finally consumer ready? sure. But it's not the quality experience it certainly can be. 1080 per eye is still not nearly enough to provide consistently clear and enjoyable views. Lenses are still a bit tricky, and there's not a ton of extremely enticing content yet.

However, since the headsets are finally on the market, it can finally start to trickle out to users and developers with these grand ideas. Stuff like Plants vs zombies and Minecraft didn't happen on day 1.
Posted on Reply
#18
Diverge
I'd be interested if there was:

1) More content
2) Cheaper prices
3) A more mature product (fear of it being obsolete in 6 months to a year)

I've almost compulsively bought a vive, because it would be cool to try. But I was able to restrain myself, and glad I did.
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#19
bug
I'll quote here the answer of a wise man when asked about why 3D TVs didn't take off: "Du-uh!"

When you see more press than actual products and marketing campaigns with no real interest in a product (except from a few geeks), you can bet the house you've got a dud on your hands. Just sticking with recent history, one can easily add smartwatches and curved TVs to the list.
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#20
xkm1948
Diverge said:
I'd be interested if there was:

1) More content
2) Cheaper prices
3) A more mature product (fear of it being obsolete in 6 months to a year)

I've almost compulsively bought a vive, because it would be cool to try. But I was able to restrain myself, and glad I did.
Smart watch is stupid from the beginning. Who would need to constantly recharge another gadget that you barely use? Curved screen TV/cellphone is just pure demonstration that OLED now works. VR/AR is fundamentally different from those failure. The entire reason that made VR/AR possible is the vast improvement of computing power as well as smaller footprint of semiconductors. With more powerful GPU and CPU VR/AR is bond to become mainstream. Will it be overnight? Hell no. It will probably be a good 5~10 years before this technology becomes main stream. This is the replacement of monitors, not an add-on to current computer interface.

Be open minded is all I am trying to say.
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#21
Dippyskoodlez
xkm1948 said:
Smart watch is stupid from the beginning. Who would need to constantly recharge another gadget that you barely use? Curved screen TV/cellphone is just pure demonstration that OLED now works. VR/AR is fundamentally different from those failure. The entire reason that made VR/AR possible is the vast improvement of computing power as well as smaller footprint of semiconductors. With more powerful GPU and CPU VR/AR is bond to become mainstream. Will it be overnight? Hell no. It will probably be a good 5~10 years before this technology becomes main stream. This is the replacement of monitors, not an add-on to current computer interface.

Be open minded is all I am trying to say.
My smartwatch is fuckin awesome. Necessary? not quite. But neither is most things that exist.
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#22
dwade
It was a gimmick since its first introduction. Fast forward a few years; it's still the same gimmick that only interest guys in suits!
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#23
Vayra86
RejZoR said:
Reality is, none of that is the real reason for that. VR is a gimmick. I've been saying this the entire time and people laughed and me that somehow in current year" things will be different. And yet, here we are with news how there is poor reception of VR.

Sure, price and exclusives are among reasons, but the biggest one is that only thing that VR has an edge over normal monitor is immersion and head tracking. Nothing else. Those weird air waving joypads are clumsy and limited compared to keyboard+mouse, it's still cumbersome device and it just can't be relaxing if you have to move around and hold your hands up in the air for 1 hour or more. It's no wonder why all VR games feel like clumsy tech demos. Because that's what they essentially are.

When I heard about Serious Sam VR I was a bit excited. I mean, it's a fast paced shooter with amazing visuals. And what we really got? A 2016 clone of Virtua Cop from 1996/1997. Seriously?

Do you know what WOULD work? Combining VR headset with the head tracking and integrate it with games we already have.

Imagine playing Alien:Isolation using traditional keyboard and mouse with 100% independent head tracking and aiming. This way you actually get best of the both worlds. Precision and complexity of keyboard+mouse with immersion of VR since you only see ingame world and you can move your head around to quickly observe things without moving the gun around. Sure, it would be a bit confusing at first, but anyone who played any tank game knows it can work (independent turret rotation as you move the tank around in other directions). Now, that I'd pay money for. But for VR we have now, meh. Not interested even the slightest.

Or imagine Need for Speed with car interiors that you drive with keyboard or gamepad and you can move your head around within the cabin using VR. Superior immersion and usability since you can observe the world by moving your actual head while sitting comfortably on a chair. Again, that is what I'd pay for.
Fully agree with you.

Elite: Dangerous I think is a good living example of VR done right in a lot of ways.
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#24
cheddle
When will people finally realize... Fruit Ninja VR IS VR's killer app!!!!!
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#25
ShurikN
Not to mention the amount of really well made and interesting games for VR is negligible. Its usually same old crap where you touch stuff in a room and accomplish absolutely nothing, with graphics on the level of Half Life 1. Also the fact that you have headset exclusives isn't doing it any good either.
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