VR has failed to thrive in the pandemic

This isn't how it was supposed to play out. 

As the COVID-19 pandemic's first wave gathered speed, and fortunate souls like me switched from meatspace commuting to tele-commuting, I started seeing more and more takes like this one, from CNBC:

Virtual reality is booming in the workplace amid the pandemic. Here’s why.

After years of promises and false starts, Covid-19 has driven a record number of workers remotely and could finally usher in their regular use of VR and AR at home — or at least give the tech a push on the path to mainstream.

A PwC report last year predicted that nearly 23.5 million jobs worldwide would be using AR and VR by 2030 for training, work meetings or to provide better customer service. According to a report by ABI Research this year, before the pandemic the VR market was forecasted to grow at a 45.7% compound annual rate, surpassing $24.5 billion in revenue by 2024. Virtual reality used within businesses is forecasted to grow from $829 million in 2018 to $4.26 billion in 2023, according to ARtillery Intelligence.

The alert among you will have already spotted the repeating pattern here: a click-bait headline that talks about a VR boom as if it's happening, then immediately follows with a sentence that only says that it could happen; and "analysts" with skin in the VR game, bullishly predicting that VR will grow into a multi-billion dollar business in the next five years, in a report published a year earlier, before the pandemic had even started. In short, a lot of speculation with no substance, breathlessly presented as if CNBC were reporting on something that was already happening.

We've been seeing this same pattern play out for years, in no small part because analysts like PwC have been making these same predictions for about five years now, without the predicted VR boom ever happening, but COVID-19 changed a lot of things. Did it change this one? Was this actually VR's hour, come round at last?

Let's start by looking at where VR was then - specifically, July of 2020, which is when CNBC posted the article I've linked above, using the best metric available to us: Steam's Hardware Survey. And, yes, I'm aware that Steam's Hardware Survey comes with caveats about its usefulness as a measure of the hardware marketplace (among other things, it tends to under-count users of AMD's hardware), and one of those caveats has to be Valve themselves, who have skin in the VR game and every reason to skew the VR numbers to make the tech look more popular than it is. None of that alters the fact that the SHS is the best set of statistics we have available, and the only one which we can use to track the progress of something like VR over time.

With that in mind, this was then:

and this is now:

The important lines, as always, are the bottom lines, which show VR adoption growing from 1.91% of Steam users at the start of the pandemic to 2.30%, year-over-year growth of only 0.39%. Monthly growth has slowed, too, from 0.62% to 0.09% per month, so VR's growth has actually slowed over the past year. 

This comes at a time when PC hardware sales really are booming; when gamers are so desperate for new hardware that they're spending several times MSRP to buy new consoles and graphics cards from scalpers; and when Steam itself is showing double-digit-percentage sales growth with no sign of slowing down as the pandemic's third or fourth wave (depending on where you live) gathers speed, bringing new stay-at-home orders. Hardware makers can't keep product on shelves, and content streaming services are growing like weeds; everything has boomed, and is still booming, in this pandemic year... with only a few notable exceptions, VR being one of them.

Do you remember Quibi? Or Mixer? Both of them failed to grow during the pandemic, too, in spite of conditions for growth being basically perfect, as demonstrated by the fact that every other competing product showed double-digit growth, or even triple-digit growth. Both of them are now gone. VR, by comparison, doesn't even have competitors, and it's still essentially not growing, and  VR's current collective size is still well short of the 13.5 million that got the WiiU cancelled for not being viable as a platform. It makes me wonder just how long VR apologists can continue to deny the obvious realities of the situation.

I stand by my previous predictions about VR: absent the discovery of some strong use case (i.e. some thing which can only be done with VR, and which people want or need to do), VR's combination of significant cost, significant unresolved technical issues, and other barriers to entry for the tech, will prevent VR from seeing widespread adoption for the foreseeable future. 

COVID-19 changed a lot of things about our lives. Making VR look attractive to consumers was not one of those things.

UPDATED Apr. 14/2021: In case you were wondering just how much PC hardware sales were booming, Tom's Hardware just posted the answer:

News stories about chip shortages for various applications have become so common in the past few months that they now sound like background noise. It's no secret that demand for PCs and other electronics is high, but sales of personal computers have actually beaten all the expectations in the first quarter as they increased by 55% year-over-year, according to the latest data from IDC. Apple seems to be the biggest winner here since its shipments have more than doubled.

The industry shipped as many as 83.981 million PCs in Q1 2021, up 55.2% from the same quarter a year ago and a modest 8% decline from Q4 2020, which is a seasonally strong quarter. In fact, most Top 5 PC suppliers demonstrated over 50% year-over-year PC unit sales growth, an indication that they were eating the lunch of smaller players, which is not particularly surprising as they could procure more components and ship more machines.

[...]

"Unfulfilled demand from the past year has carried forward into the first quarter, and additional demand brought on by the pandemic has also continued to drive volume," said Jitesh Ubrani, research manager for IDC's Mobile Device Trackers. "However, the market continues to struggle with setbacks including component shortages and logistics issues, each of which has contributed to an increase in average selling prices." 

So, availability is low, prices are high, but demand is still backed-up from last year, and sellers are still struggling to keep pace. VR, meanwhile, isn't selling. Everyone in the VR business should be asking themselves some hard questions, right about now.