In the United States, only 9.6 million people use virtual reality (VR) at least once a month, and by 2019, VR will penetrate 5.2 percent of the population, according to eMarketer. And yet, the VR industry has already become a complex ecosystem. As the VR Fund’s VR Industry Landscape illustrates, the ecosystem encompasses a multitude of companies spanning applications/content, tools/platforms, and infrastructure:
When I recently did a Google search for VR, my top 20 search results revealed diverse uses of VR spanning architecture, entertainment, healthcare, pornography, retail, sports, and travel/hospitality. Why has VR spawned such a complex ecosystem touching many industries when so few consumers actually use it? A few reasons stand out:
- A wide range of corporations are adopting VR. Businesses such as John Deere, KFC, UPS, and Walmart are using VR for training workers. Brands ranging from Alibaba to Audi have launched VR experiences that reimagine retail. Do a Google search of your own, and I suspect you’ll have similar results as I did, uncovering articles such as “Virtual Reality Walkthroughs Are Transforming Architecture” and “Virtual Reality is Reshaping Medical Training and Treatment.”
- Venture capitalists have been generous in their funding of VR start-ups. Meanwhile, content specialists for VR have emerged in fields such as healthcare.
- Bellwether technology firms such as Amazon, Facebook, Google, and Samsung are placing large bets on VR’s future through the development of products and services, and those companies influence the uptake of technology across multiple industries.
Meanwhile, VR maintains its base in gaming, entertainment (both adult and otherwise), and sports industries, where VR’s ability to immerse an audience in another world is a natural fit. For example:
- The NBA has been broadcasting games in VR for the 2017-18 season through its League Pass VR streaming experience.
- AMC Entertainment recently announced it is working with Dreamscape Immersive to bring VR to movies in 2018.
- Studios continue to develop VR games although their profitability is an open question.
According to Piper Jaffray, by 2025, gaming, movies, music, sports, and pornography will account for a nearly $6 billion market based on content alone.
Here’s what I think will happen to the VR ecosystem in 2018:
1) The real VR growth will occur in the corporate world
As noted, more companies are appreciating VR’s value to rethink functions ranging from sales to training especially for high-risk situations such as complex parts assembly. To get a better sense of why VR is already catching on among enterprises for training, I suggest readers review these examples from STRIVR, which specializes in workforce training.
HTC’s Vive Business Edition (launched in 2016), and Oculus’s Oculus for Business (launched in 2017) will act as catalysts for this growth. Vive Business Edition and Oculus for Business are suites of tools and services geared toward corporate customers, and the competition between the two will be good for the uptake of VR among enterprises. Meanwhile here’s a quick overview of many industries where VR has already taken hold.
2) VR will remain a toy for affluent technology early adopters to entertain themselves
On the consumer side, affluent technology early adopters will continue using VR for games, sports, and entertainment– especially porn. As reported in The New York Times, views of VR porn on website Pornhub are up 275 percent since Pornhub launched VR in 2016. Now the site is averaging about 500,000 views a day. (On Christmas Day in 2016, the number of views increased to 900,000.) According to Piper Jaffray, porn will be the third-largest VR sector in 2025.
Outside the core base of games, sports, and entertainment, VR will struggle to catch hold for any meaningful consumer use. The cost of equipment, awkward user experience, and lack of compelling content will remain impediments. VR needs to find useful applications such as in healthcare, and the equipment needs to become more affordable for consumers to accept it. If cost comes down and technology becomes more affordable, consumers will more likely overlook the less-than-compelling user experience – because we have a way of adapting to technology, don’t we?
3) Facebook will nudge its community to social VR
Facebook will continue to introduce tools for creating content and experiences that tap into our increasingly visually oriented, interactive society. But social VR will really amount to quasi-social VR such as 360-degree video content that does not require an Oculus headset. Facebook’s VR platform, Facebook Spaces, is still in a nascent state.
Bottom line: VR will proliferate among businesses because VR is proving its value with enterprises. On the consumer side, VR will remain a niche entertainment experience until the content gets better and the technology becomes more accessible.