Futility, thy name is XBox

I was looking over the VGChartz table that I linked in my previous post, and I noticed something interesting.

I used VGChartz's Tie-Ratio tab for my cost-benefit analysis of Game Pass, but gaming system Tie-Ratios aren't the only data available to us. Tie-Ratio is the number of games sold for every console. To calculate a Tie Ratio, you naturally must know: 1. the number of games sold, and 2. the number of consoles sold. And VGChartz have, helpfully, broken those numbers out separately.

And if you switch from Tie-Ratio to just look at the hardware numbers, you can see something interesting.

Death Watch 2024, continued: Embracer's Downward Spiral Deepens

Embracer Group, who just last month sold a $550M acquisition for $249M, have done it again, but worse. As reported by Ars Technica:

Embracer Group has been backing away from its all-encompassing position in the games industry lately. The latest divestment is Gearbox Entertainment, the studio behind the Borderlands series it bought in early 2021 for a deal that could have been worth up to $1.37 billion to Gearbox had it stayed inside the Swedish conglomerate's grasp.

The buyer is Take-Two Interactive Software, which had previously partnered with Gearbox on publishing Borderlands and other titles. Take-Two will issue new shares of its common stock to pay $460 million for Gearbox, to be completed before the end of June this year. Embracer paid $363 million in cash and stock for Gearbox in 2021 but promised up to $1 billion more should the developer hit earnings goals over six years.

"Today’s announcement marks the result of the final structured divestment process and is an important step in transforming Embracer into the future with notably lower net debt and improved free cash flow," said Embracer CEO Lars Wingefors in a statement intended to start nobody's imagination running.

A few things leap out at me.

Death Watch 2024: Embracer Group Continues To Spiral

As predicted by me:

• Embracer will not balance their books. There's only so much more that they can cut from the operation, and still have an operation.
• Embracer's next step will be divestment: selling off the assets that they bought, probably for a lot less than they paid for them, since it's a buyers' market right now.

 As reported by PC Gamer:

A Bloomberg report says that Swedish holding company Embracer Group has reached a deal worth as much as $500 million to sell its Saber Interactive division to a group of private investors. The deal will make Saber Interactive a privately owned company, according to the report, with approximately 3,500 employees.

Embracer bought Saber Interactive in 2020 at the height of its acquisition spree. It was made the fifth operating group under Embracer's corporate structure and currently serves as the parent of numerous other studios including 4A Games, Aspyr, Beamdog, New World Interactive, Slipgate Ironworks, and Tripwire.

That's me, two for two, with two to go: only restructuring and liquidation remain. If you shorted Embracer stock two months ago, then good for you. If you doubled down on Embracer stock two months ago, then I'm sorry. I'm so, so sorry.

That $500 million figure, BTW? That's wishful thinking. Embracer paid $150 up front, with $375 million in performance bonuses to follow, and there's no fucking way they're getting all of that back in a fire sale of Saber. 100%, Embracer are losing money on this deal; they're only doing it because they have no other options, and are desperately trying to survive long enough, and reduce their own prince point enough, to be bought by someone more flush.

Just bad luck that the rest of the big players in the industry are also contracting, I guess; there will be few, if any, $70 billion Activision-style deals this year. I give Embracer six more months; nine tops.

UPDATED MAR. 15TH, 2024:

Told you so:

Embracer has sold Saber Interactive for $247 million.

[...]

Embracer originally acquired Saber Interactive for $525 million in 2020.

As expected, sold for less than half what they paid to buy. This will all be going to creditors; there's no way this is going to operating expenses. Selling Saber only bought Embracer a little more time.

I'm calling it now: Embracer isn't going to make it

As reported by The Verge:

Embracer Group, the company attempting to forge one video game publisher to rule them all, has just presided over another round of layoffs. Eidos Montreal is letting go of 97 game developers and support staff, the company announced today on X, shortly after Bloomberg’s Jason Schreier scooped that the studio has canceled an unannounced Deus Ex video game.

This is just the latest in a round of increasingly desperate attempts by Embracer to reduce their burn rate to something they can afford. This is deeply misguided, for several reasons.

1. Layoffs are expensive. A laid off employee still receives several months of pay in severance, and several months of benefits, which can't just be cut off cold because you decided they would be unemployed now, through no fault of their own.
2. Layoffs are destructive. Contrary to the popular beliefs of CEOs, terrified employees don't work harder; they spend work time hunting for better jobs elsewhere, assuming they don't burn out from their suddenly increased stress. Expect turnover and absenteeism to increase, and remain high, even as productivity drops and remains low.
3. Layoffs are short-sighted. Embracer Group does not makes games; they employ people who make games. Or at least, they did; every new round of layoffs mean fewer people to make the games which are their sole source of revenue. And good luck hiring new people to replace the ones you laid off -- nobody wants to get hired at a company that's as badly managed as Embracer.

This is a death spiral. 

HTC's death spiral, continued

Way back in 2017, I was confidently predicting that VR would not be a widespread thing in 5 years time, as some were predicting, and that companies which were betting their futures on VR would come to regret those bets. In particular, I'd called out HTC, the former darling of the Android smartphone business, as being especially poorly positioned to make such a bet.

Fast forward five years, and most of those predictions are still holding up. VR is still not a widespread thing, in spite of Facebook Meta dumping $10 billion USD into their VR business and counting, and "Meta" is just the latest attempt to rebrand VR as something else. Do you remember XR? I do, but I'm probably the only one.

And HTC, having already pivoted from VR to Meta, and then to blockchain, is still desperately searching for the buzzword which can save them.

As reported by The Verge:

HTC’s slow-motion fall from smartphone grace is reportedly set to continue in 2022, with the company said to be working on a new “metaverse”-focused phone in April as the remnants of the once-flagship smartphone company continues to desperately cling to whatever zeitgeist term it can to stay afloat, according to DigiTimes.

[...]

The news sounds a lot like HTC’s last major pivot towards relevancy: its Exodus line of blockchain phones that its offered for the past few years. Promising decentralized apps (“Dapps”) and a built-in cryptocurrency wallet, the phones could run blockchain nodes and even mine paltry amounts of cryptocurrency, but — like many instances of blockchain technology — it was a solution largely in search of a problem that never really took off. 

[...]

HTC’s main announcement at MWC 2022 was the debut of a nebulous “Viverse” — the company’s metaverse concept that promises to fuse VR, XR, 5G, blockchain technology, NFTs, and more together into a new, futuristic platform.  

[...]

Given that HTC’s Viverse doesn’t really exist — nor does widespread adoption of any modern metaverse concept — it’s easy for the company to just say it’s making a metaverse app or phone. After all, who’s to say that you aren’t?

I will give HTC this much credit -- they've lasted longer than I thought they would. But considering that consumers are not showing any appetite for Metaverse, or for blockchain products in general, outside of a small group of well-heeled early adopters, I don't see why anyone would want HTC's blockchain-based Metaverse knockoff.

I mean, seriously.... Viverse? So much for dignity, I guess.

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?

Confirmed: Epic's big gamble is actually a loss

Or, as Kotaku put it, "Epic CEO Tim Sweeney Is Very Excited About The Epic Games Store Losing A Ton Of Money." This revelation apparently comes to us by way of Epic's own court filings in their ongoing war of legal attrition against Apple, which the eagle-eyed and awesomely-named Tyler Wilde spotted, and wrote about for PC Gamer.

Epic Games has spent the past two years shoveling Fortnite money into the Epic Games Store, making over 100 exclusivity deals and giving away free games every week. We knew Epic was spending a lot of cash to get customers onto its store, but didn't have many specifics until [...] we learned this week that Epic committed around $444 million to Epic Game Store exclusivity deals in 2020 alone.

[...] A "minimum guarantee" is just another way to refer to an advance: It means that Epic guarantees the publisher a certain amount of money whether or not their game actually sells enough to cover it. For example, Epic put down $10.45 million for Control.

[...] Some of those deals must be for exclusives releasing in the future, but according to Apple's learnings, Epic is going to eat "at least $330 million in unrecouped costs from minimum guarantees alone" if you also consider 2019's deals.

I'd posted about Epic's big gamble back in 2018, and have opined before about how Tim Sweeney's arrogant approach was likely doomed to fail; for more, check out "Metro:Exodus proves several of my points about Epic's new marketplace," "PR Communications 101: Sarcasm = Mockery," or "Why platforms aren't your friends" (although that last one was basically an excuse to embed Folding Ideas excellent video on essentially the same subject).

Suffice it to say that I am not at all surprised to learn that Epic are losing money on the EGS; given how much money they were spending to basically bribe both developers and consumers into adopting it, I would have been far more surprised to learn that they were turning a profit. Interestingly, Epic's exclusivity agreements appear to work exactly the way I always thought they did: like the royalty advances of book publishing and other, similar industries, but even I did not predict losses on this scale; apparently even Fortnite's huge haul isn't enough to keep pace. 

I'm also a little surprised that we're learning about these losses at all; I was expecting this information to remain well-buried for a long, long time. I suppose I shouldn't have been surprised, though, given the broad extent of Apple's document pulls from all and sundry in the matter of their legal battle with Epic Games; the California judge overseeing the proceedings described it as Apple having "salted the Earth with subpoenas" from a variety of industry players, including Valve Software. This likely means that Friday's bombshell is likely only the first of many; there are a lot of previously confidential, behind-the-scenes dealings which are about to become part of the public record. That's very exciting. Consumers could be on the verge of learning a lot about the workings of an industry that we previously could only guess at.

For now, though, we can only shake our heads in mock disbelief at the extent to which Epic's Game Store has flopped. Given that the service launched in 2018, and is still hemorrhaging money with no end in sight, I have doubts as to whether Epic can actually turn this around. The brand damage here may just be too deep, and the stench of flop sweat and failure is unlikely to attract new business partners eager to associate their valuable brands with Epic's radioactive one. 

Even worse for Epic: the Fortnite revenue which has been funding the EGS to this point is also down, from $1.8 billion in 2019 to less than $500 million in 2020:

[...] Epic said that players spent $700 million on the Epic Store in 2020, but third-party game sales only accounted for $265 million of that spending.

No wonder Sweeney has resorted to litigation! At this point, the EGS's only hope may be to find a sympathetic judge who'd be willing to "flip the board," disruptive the game of the entire video games business on their behalf. Given how much room to run Judge Hixon is affording to Apple, though, I would recommend that Sweeney not count too heavily on the tree of that particular lawsuit bearing the sort of lucrative fruit that the EGS needs in order to stave of death by starvation, especially since their entire legal argument is that the 30% cut is unnecessary. Apple can now counter that argument by simply pointing out that Epic's 12% cut is losing them money hand over first, and clearly not a sustainable business model. Look for that lawsuit to badly for Epic.

Will Epic's epic-scale Game Store losses cause the company to course-correct?

Probably not, alas. Sweeney is still Epic's majority shareholder, which means that he's basically able to do whatever he wants with the company. Epic's next-largest shareholder, Tencent Holdings, who own 40% of Epic, do have the sort of resources required to put pressure on Sweeney, but they can't simply vote him out as CEO, or off Epic's board of governors, which will limit their options... assuming they're even inclines to intervene here, which is far from certain. For all the suspicion that surrounds any Tencent acquisition, their management style has so far been pretty hands-off, at least with their interests outside of China.

Of course, even Epic Games can't sustain this kind of burn rate forever; eventually, they're going to have to make changes in order the stop the bleeding, and put in place some sort of plan to "return to profitability" (corporate code of mass layoffs). Given that their legal battle with Apple has only served to make the industry-standard 30% cut to the platform look more essential than ever, and that Epic has done almost nothing to earn back the trust and good will of the Steam community (which, at this point, includes basically all of the PC gaming community), and also given that efforts to repair their brand and rebuild their business can't even start until the Apple lawsuit, at least, is either dropped or settled, I'm starting to have serious doubts about Epic's long-term prospects. I beginning to wonder if Epic will be able to survive at all, in the medium-to-long term.

In the near term, however, while Epic still have a fat war chest and a loyal Fortnite fan base, I expect that the PC gaming industry news is going to be very, very interesting. Watch this space...

In case you needed one, here's another reason not to buy an Oculus VR headset

 

As reported by The Verge:

Oculus will soon require all of its virtual reality headset users to sign up with a Facebook account. [...]

Starting later this year, you’ll only be able to sign up for an Oculus account through Facebook. If you already have an account, you’ll be prompted to permanently merge your account. If you don’t, you’ll be able to use the headset normally until 2023, at which point official support will end. [...]

Facebook also says that all future unreleased Oculus devices will require a Facebook login, even if you’ve got a separate account already.

Yay?

If you're wondering why Facebook would possibly want to add even more barriers to entry in the way of VR adoption, in spite of the fact that almost nobody has a VR headset or cares about VR, the answer appears to be

a) consolidating Facebook’s management of its platforms, and

b) slightly simplifying the launch of Horizon, the social VR world that Facebook announced last year.

Of course, Facebook's disastrous record on privacy and data security makes 'a' problematic right out of the gate, and 'b' is only helpful is people care about Horizon... which is so thoroughly not a thing that even I hadn't heard about it, and I've been following this shit.

GG, Facebook! Well played. With most of your customers having bought those headsets only because they could also use them with Steam, you've now spiked your own sales, and probably the overall sales of VR headsets, for no other reason than sheer, monopolistic territoriality.

BREAKING: "Spatial Computing" is still bullshit. Surprise.

I first encountered the term "spatial computing" in a Reddit thread on the topic of VR. My post touched on a theme which should be familiar to anyone who's read any of the other posts on this blog about the subejc: that VR is only good for qualitatively enhancing a limited subset of existing experiences, without enabling anything quantitatively new. In other words, it lacked a strong use case, and would never see widespread consumer adoption until that changed. To quote Palmer Luckey, "No existing or imminent VR hardware is good enough to go truly mainstream, even at a price of $0.00."

One VR defender fired right back, though, declaring my statement to be "simply not true," before going on to list of a bunch of qualitative enhancements to existing experiences like telepresence, social media, and spatial computing, which is defined as "human interaction with a machine in which the machine retains and manipulates referents to real objects and spaces." In VR, specifically, that equates to the use of physical actions in place of other input schemes, i.e. motion controls, which also didn't require VR, and which have stubbornly not replaced other input methods because motions controls suck.

VICTORY!!! After waging a very noisy, one-sided war against Google, Valve, and gamers, Epic Games has quietly surrendered

What a difference a year and a half can make.

And, yes, it has been only that long since Epic Games announced the very first EGS-exclusive title: Supergiant's Hades, an early-access game that announced at the Game Awards in December of 2018, and released the same night. That was only a few months after Epic declared that Fortnite: Battle Royale for Android would be side-loadable only from their own digital distribution channel, rather than just making the game available on Google Play like every other developer with an Android app to flog.

Tim Sweeney's Epic Games would go on from there to declare themselves to be so deeply opposed, on principle, to everything about Valve Software's Steam service that they just had to launch a competing service... which offered absolutely nothing to consumers that Steam didn't, and was actually missing a whole bunch of stuff that Steam users were used to. No worries, though, because Tim Sweeney had a plan: to embrace exactly the same platform exclusivity deals that he'd once called evil, back when Microsoft and Sony were profiting from them, and not him.

The message from Epic to gamers was crystal clear: fuck you, pay me. And gamers got the message; they heard Epic loud and clear... and, en masse, gamers refused to pay.

This is going to take a lot of work...Stadia's launch plagued with missing features, sparse game selection, and unplayable lag

When Google announced Stadia, their first-to-market (if you don't count Sony's PlayStation Now) video game streaming service, there were lots of questions. What would its subscription model look like? What would its game selection look like? What features would the service have? Could even Google get the thing to work? And would Google stick with Stadia for the long haul, even if it wasn't an instant hit at launch?

Well, we now have the answers to those questions, and they're... un-good. One might even call them double-plus un-good. Let's break it down.

John Carmack jumps from VR to AI

I'm calling it right now: VR is dead. It's not, as someone tried to convince me recently, five to seven years away from breaking out, once they figure out exactly what socialization and spatial computing are and how VR can make them happen. No, VR is over; this generation of VR has failed.

For proof, look no further than John Carmack, who left id Software for Oculus because he was just that excited about the possibilities of VR, and who is now jumping off the VR ship before it sinks and takes him down with it. As reported by The Verge:

John Carmack, the chief technology officer of Facebook’s VR subsidiary Oculus, is stepping down this week. Carmack posted the news on Facebook today, saying he plans to focus his time instead on artificial general intelligence. He will remain in a “consulting CTO” position at Oculus, where he will “still have a voice” in the development work at the company.

Carmack will still work on some VR projects at Facebook, a spokesperson told Variety. In addition to general advisory tasks, for example, he will keep working on projects that maximize VR visual quality on lower-powered mobile hardware. However, he says that VR will “only be consuming a modest slice of my time” while he works on AI. “I have sometimes wondered how I would fare with a problem where the solution really isn’t in sight,” he said of the subject. “I decided that I should give it a try before I get too old.”

It was unclear whether the problem with no solution in sight referred to VR, or AI, or both.

People, if John freaking Carmack can't figure out what VR is good for, or how to convince skeptical consumers to buy in, then VR is probably doomed. Palmer Luckey, who founded Oculus, couldn't solve this problem, either, and finally said that VR could be free and still not find any takers.

Microsoft may finally have stopped trying to make "fetch" happen

Following about a month after the news that Microsoft were finally planning to stop pushing Cortana on consumers who are plainly not interested, comes the news that they're also going to let go of another of their attempts to foist a doomed and unwelcome product on users who couldn't care less. That's right, Microsoft are apparently planning to finally listen to what consumers have been telling them since 2015 about Edge.

As reported by Windows Central:

Microsoft's Edge web browser has seen little success since its debut on Windows 10 in 2015. Built from the ground up with a new rendering engine known as EdgeHTML, Microsoft Edge was designed to be fast, lightweight, and secure, but it launched with a plethora of issues that resulted in users rejecting it early on. Edge has since struggled to gain traction, thanks to its continued instability and lack of mindshare, from users and web developers.

Because of this, I'm told that Microsoft is throwing in the towel with EdgeHTML and is instead building a new web browser powered by Chromium, which uses a similar rendering engine first popularized by Google's Chrome browser known as Blink. Codenamed "Anaheim," this new browser for Windows 10 will replace Edge as the default browser on the platform, according to my sources, who wish to remain anonymous. It's unknown at this time if Anaheim will use the Edge brand or a new brand, or if the user interface (UI) between Edge and Anaheim is different. One thing is for sure, however; EdgeHTML in Windows 10's default browser is dead.

Assuming this is accurate, Microsoft finally cutting the bullshit and doing not only the right thing, but the obvious thing, is great news. The only downside is that Microsoft have taken three years to finally get here, after years of taskbar advertising, questionable battery use statistics, and refusals to allows Google's wildly popular Chrome browser onto the Microsoft store... because Google refused to adopt Microsoft's EdgeHTML rendering algorithm, while ditching the Chromium algorithm which has become the standard for all web browsers.

No official word has yet come from Microsoft, of course, so they might still find some way to screw this up, but considering how well-received this news has been today, it's hard to imagine that Microsoft won't go through with this. If once is an incidence, and twice a coincidence, we're just waiting for Microsoft to prove this to be a pattern by doing it just once more. We'll see if doing that now, after years of coercive bullshit, can win back enough good will among consumers to stop Windows' gradual-but-steady market share decline.

Denial of Virtual Reality

I spotted this accidental juxtaposition in a Google search for VR news, and it couldn't have been more perfect. First, from RoadToVR:

A Road to VR analysis of the latest data from Valve’s Steam Hardware & Software shows that VR users on Steam have not only been growing, but are at their highest point in history.

First generation VR hardware may not yet have had its mass adoption moment, but pundits claiming the end is near for VR are overlooking strong evidence against their claims. Not only has the tech fostered a strong enthusiast community, but that group continues to grow. In fact, in November there were more VR users on Steam than ever before.

And then, from The VR Soldier:

Although there are still four weeks in the year 2018, VR-related forecasts are not looking great. Research by CCS Insight confirms there will be a total of eight million headsets to be sold throughout 2018. This number combines both VR and AR units, which further confirms the VR industry itself may face a bigger uphill battle than originally assumed.

This total figure is down by 20% compared to 2017. While one would assume sales figures to rise as more content is produced, the opposite is coming true. Further growth will occur in 2019 and beyond, according to the research. CCS Insight confirms 52 million units will be sold in 2022. Whether that favors VR or AR, is difficult to predict at this time.

I couldn't have planned a more perfect rebuttal.

The percentage of VR headset owners increased by 0.05% of Steam's total user base, with only HTC Vive and Oculus Rift showing growth that registered as more than 0.00% on the Steam Hardware Survey. Multiplied by Steam's 125 million users, that's about 62,500 headsets sold... in November, which is one of the two busiest sales months of the year.

Even Black Friday couldn't shift VR's market momentum.

The 0.78% of Steam's total users who have VR or AR headsets, by the by, similarly approximate to 975K total headsets, worldwide, since VR's launch two years ago, and to get even that high, you have to include Oculus Rift's two developer kits, which are almost certainly not in the hands of average consumers. Which must mean that the "eight million headsets" cited by The VR Soldier includes non-SteamVR users, also, like PlayStationVR, GearVR, and, presumably, Google Cardboard.

That's not enough to support any platform, and VR is a platform; headset sales need to pick up sharply, and soon, if this round of either VR or AR hardware is going to be anything other than a footnote in tech history.

Needless to say, I think that's unlikely.

Get 'em while they last...

As one of the relatively few people who actually owns a Steam Link, it's with a certain sadness that I learned that the pseudo-console device has been discontinued by Valve. As reported by arstechnica:

Valve is quietly discontinuing Steam Link, the in-home streaming box it first launched in late 2015. A low-key announcement on Valve's Steam Link news page suggests that production of new units has ceased and that Valve is currently selling off the rest of its "almost sold out" inventory in the US, after selling out completely in Europe. Valve says it will continue to offer support for existing Steam Link hardware.

[...]

The discontinuation of Steam Link hardware wasn't a complete surprise, given that Valve was briefly selling the playing-card-deck-sized devices for a closeout price of $2.50 earlier this year. And though Valve insists it's "still working hard" on Linux gaming and bringing Windows game compatibility to SteamOS, Valve's much ballyhooed circa-2015 hardware initiative has not made a huge impact on the marketplace.

It remains to be seen whether Valve will continue to sell the Steam Controller, after both Steam Machines and Steam Link failed to make an impact on the market; the Controller is currently 30% off, which might just be a Black Friday special, or might be the start of a sell-off of that inventory, as well.

The fact that Valve is, in fact, still working hard on Linux gaming serves to ease some of the sting from this news, but even so... I can't help but wish that things had gone differently. Farewell, Steam Link. We hardly knew ye, and you're gone too soon.

Are we done with the blockchain hype yet?

This week in blockchain...

First, from the BBC, comes the news that the price of BitCoin is still crashing:

The value of Bitcoin has fallen below $5,000 (£3,889) for the first time since October 2017.

The fall brought the total value of all Bitcoin in existence to below $87bn.

On Thursday, 15 November, Bitcoin Cash - an offshoot of Bitcoin - split into two different crypto-currencies, which are now in competition with each other.

And some observers have blamed this for creating turmoil in the crypto-currency markets, with many of the digital assets experiencing falls.

Hmmm.... sounds to me like folks got greedy and over-reached. Maybe that's why mentions of the word "blockchain" was down by eighty percent in corporate corporations' messaging to investors this year.

Facebook announced Oculus Quest, and it's already obsolete... according to its designers!

Remember when Facebook won (and lost) a lawsuit partly waged over the way they poached John Carmack away from Zenimax/ID? I wonder if they're re-thinking that acquisition after Carmack compared their next-generation "all-in-one" Oculus device to last-generation gaming consoles?

For the record, here is how Facebook/Oculus described their new device during the actual announcement, as reported by Gizmodo yesterday:

“This is it,” Mark Zuckerberg said to a crowd of developers and press at Facebook’s annual VR developers conference, Oculus Connect. “This is the all-in-one VR experience that we have been waiting for. It’s wireless, its got hand presence, 6 degrees of freedom, and it runs Rift-quality experiences.”

And here is how Oculus' CTO described the Quest at the same conference, as reported by arstechnica:

In a wide-ranging and occasionally rambling unscripted talk at the Oculus Connect conference today, CTO John Carmack suggested the Oculus Quest headset was "in the neighborhood of power of an Xbox 360 or PS3."

That doesn't mean the Quest, which is powered by a Qualcomm Snapdragon 835 SoC, can generate VR scenes comparable to those seen in Xbox 360 or PS3 games, though. As Carmack pointed out, most games of that generation targeted a 1280x720 resolution at 30 frames per second. On Quest, the display target involves two 1280x1280 images per frame at 72fps. That's 8.5 times as many pixels per second, with additional high-end anti-aliasing effects needed for VR as well.

"It is not possible to take a game that was done at a high-quality level [on the Xbox 360 or PS3] and expect it to look good in VR," Carmack said.

So... it's wireless, but needs a four-camera room-scale setup to work, and it aims to provide a Rift-quality experience, but can't because it just doesn't pack enough processing power. Also, count on it, Quest will cost significantly more than the Go, if only because of those cameras... and Oculus Go isn't exactly flying off shelves. Why does this exist, again?

Virtual Reality Check?

I've been writing, more or less non-stop, about VR's failure to thrive, and the reasons behind it. In the process, I've posted links to the likes of CinemaBlend, reporting on how VR's numbers show that VR is in trouble, and TechCrunch, reporting the very same thing.

But CinemaBlend is a self-described entertainment news and celebrity gossip site, and TechCrunch covers start-ups and technology exclusively. Neither one has the cachet of an a major print publication like, say, Forbes. So it's noteworthy CinemaBlend and TechCrunch have now been joined in calling out the VR Emperor's New Clothes by none other than Forbes, under the headline, "Virtual Reality: Steep Decline Is More Than A Hiccup."

There is little doubt that the market for virtual reality has entered the trough of disillusionment and it will take real progress on the limitations of the technology before it comes out again.

IDC’s latest figures (see here) make rough reading and it is likely that even the one segment that is showing growth will soon run out of steam. VR exists in three categories: screenless viewers that use a mobile phone, headsets tethered to a remote computer or console and standalone headsets where the compute is embedded in the unit.

Both the screenless viewers (-59.1% YoY Q2 18) and the tethered headsets (-37.3% YoY Q2 18) are rapidly declining with only the very new standalone segment showing any growth (+417.7% YoY). However, because the standalone segment is so small (212,000 units) it has been unable to offset the impact from falling demand elsewhere, leading to an overall market that declined 33.7% YoY.

Hence, once the initial demand for the standalone units is satisfied, it too will see a similar profile to the one being suffered by the tethered units. This is because the main issues of VR are not close to being solved.

Predictably, Forbes then go on to list price (too high), clunkiness (they're uncomfortable to wear, and can "make the user feel foolish when wearing one"), and comfort and security (lack of environmental awareness, simulation sickness). Forbes, like so many others, have continued to miss the elephant in the room: the simple fact that VR still doesn't enable any activity that can't also be done without the tech, and that people will want to do.

Numbers don't lie: VR is in trouble

Remember back in June, when IDC were predicting that VR headset sales were just about to rebound after plunging by thirty-five percent? Well, here's the thing about that... funny story... it's not happening. At all.

As reported by CinemaBlend:

Virtual Reality gaming is in a unique place. The hardware seems to be doing well, but is that well enough to keep developers interested? According to a recent study, the answer to that question might be no. Over the past six months, it appears VR hardware sales have been on the decline.

The folks over at Thinknum recently conducted a study involving the sale of VR hardware on Amazon. It wasn't a super exhaustive study and pretty much stuck straight to the figures, but you can't really argue that those figures aren't on the decline.

The decline is happening across the board, too: sales of PSVR, GearVR, and HTC Vive were all down. Even Oculus Go, which many VR industry advocates were hoping would be a panacea for VR's troubles, a magic-bullet combination of standalone functionality and low price point, is struggling.

Finally, they took a look at the Oculus Go sales rankings, which have been on a decline since May. As one of the folks in the comments points out, there's no mention of the cheaper core Oculus system, which seems like another odd choice. The Go was a top-item on Amazon in May but, two months later, it's barely in the top 100 items. You can make of that what you will, but the study takes it as a clear sign interest in VR gaming is on the decline.

The declines are not subtle, either, as shown by Thinknum's graphs.

Virtual reality meets commercial reality as headset sales plunge

By now, a headline like the one above, which I nicked from The Reg, should not be a surprise. The article that accompanied it, however, was much more optimistic:

Shipments of virtual reality kit have plunged, but growth is just around the corner.

So said analyst firm IDC’s Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, which found “shipments of augmented reality (AR) and virtual reality (VR) headsets were down 30.5 per cent year over year, totalling 1.2 million units in the first quarter of 2018.”

But IDC also predicts a rebound, for a couple of reasons.

One is that 2017 saw lots of headsets bundled with smartphones as the likes of Samsung and HTC sought to stoke the VR market. They’ve since stopped doing that, so this year’s scary shipment figures reflect the end of giveaways rather than a dip in real demand.

Another is that new products like the Oculus Go are both superior to their predecessors and nicely-priced, so their arrival in stores should spur demand.

A third is that the VR/AR ecosystem has matured and it’s therefore becoming easier to create content, which will see business adopt VR. IDC said it “believes the commercial market to be equally important and predicts it will grow from 24 per cent of VR headset shipments in 2018 to 44.6 per cent by 2022.”

How long, exactly, has a VR breakout been "right around the corner?" It seems like forever, but it can't have been more than two years.

Dispensing with that bit of ridiculous boosterism, though, we can move on to the rest of IDC's case here, which is even weaker.