VR won't be a "meaningful" part of interactive entertainment for YEARS, according to SONY

Among all the languishing and failed VR products, Sony's PlayStation VR stands out as the closest thing VR has to a success story. Sure, Google's Cardboard VR or Samsung's Gear VR may have moved more units, but PSVR has handily outsold all integrated-display VR headsets, combined. The problem is that even those industry-leading sales numbers are far below VR's early projections; worse yet, they were entirely front-loaded, with basically nobody buying in after that first wave of early adopters.

PSVR fans kept showing up for E3, year after year, hoping for a big VR announcement from Sony, only to leave disappointed. The next-gen PS5, which will land in stores only days from today equipped with more than enough grunt for VR, does have a camera module available for sale, but it isn't PSVR-compatible; if you want to use your last-gen PSVR with the next-gen PS5, you'll need an adapter. The only thing that could speak more loudly to VR being low on the priority list for Sony would be some sort of official statement to that effect, from Sony themselves.

And now, as reported by The Washington Post, we have exactly that:

Though immersion appears to be the focal point of Sony’s PS5 push, Ryan says there won’t be any immediate leaps forward from Sony in the most immersive gaming experience, virtual reality (VR). PlayStation was at the forefront of the virtual reality market for consoles, having launched a PSVR headset in 2016. While 5 million headsets were sold by January this year, sales were slowing in 2020. There are currently no public plans for a PS5-specific headset. Instead, Sony is offering adapters to use the PS4′s PSVR headset with the new console.

“I think we’re more than a few minutes from the future of VR,” Ryan said. “PlayStation believes in VR. Sony believes in VR, and we definitely believe at some point in the future, VR will represent a meaningful component of interactive entertainment. Will it be this year? No. Will it be next year? No. But will it come at some stage? We believe that. And we’re very pleased with all the experience that we’ve gained with PlayStation VR, and we look forwarding to seeing where that takes us in the future.”

And that, as they say, is that. The most successful player in the VR game has no plans for a next play, anytime in the near-to-foreseeable future. Stick a fork in VR, folks; it's done.

VR apologists will likely look to Ryan's "at some stage"/"in the future" remarks as signs of life, but don't be fooled; that's just the corpse, twitching. Sony has to say something to assure buzzword-sensitive investors that they haven't given up on one of tech's juicier buzzwords, because admitting that VR's years-long campaign is ending in defeat could cause the share price of whoever admits it first to drop sharply, something which Sony would rather avoid. 

But their reluctance to flee the VR field first should not be mistaken for a desire to keep fighting the VR fight; Sony is done with VR, unless and until somebody else succeeds in convincing consumers to adopt the technology en masse. With the second-biggest player being Facebook VR née Oculus, who have nailed their VR fortunes to the larger platform's declining user count, that's looking less and less likely to happen.

Of all the companies doing VR business, the only one that might have been making money from VR was Sony. What we've now learned is that even Sony are not making enough money from VR for the tech to be worth any more investment. 

Oh, sure, Facebook and Valve have deep enough pockets that they can probably continue to lose money on VR for a while yet, but don't expect that to propel VR into the forefront of the public consciousness; it won't, and neither will the upcoming Ready Player Two (the sequel to VR-advert/movie Ready Player One, which also didn't more the needle on VR).

It's all over save the shouting; how long the likes of Facebook and Valve will keep shouting into the VR void remains to be seen.

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.

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.

Facebook finally launches the Oculus Go. Will it matter?

VR evangelists have been praying for a low-cost, stand-alone VR headset, with no wires and no high-end smartphone, PS4, or PC required. The idea is that turning VR from an expensive peripheral into a more reasonably priced stand-alone device is just what VR needs to become a thing. Well, on the first day of F8, Facebook has answered their prayers by officially launching the Oculus Go.

As reported by TechCrunch:

Oculus Go, Facebook’s cheap and capable standalone VR headset, is now on sale. It costs $199 for the version with 32GB of onboard storage, and $249 for the 64GB variety.

Why: VR headsets where you have to stick your phone in are clumsy and prevent Facebook from controlling the whole experience. Instead of relying on the Samsung Gear headset shell and your iPhone or Android, Facebook gets to dictate everything about the perfect VR rig you can strap on first-timers.

[...]

Oculus wants you to watch TV inside its new Go headset. At first you’ll get Facebook Watch, but expect apps like Netflix and Hulu to arrive eventually.

Why: There just aren’t enough great VR experiences, but perhaps Facebook can get people spending more time in their headsets by creating a virtual big screen for 2D content.

Yeah.... good luck with that. I'm going to stand by my earlier prediction, though: with "just not enough great VR experiences" to drive adoption, it won't matter that FB's new headset is a cheaper stand-alone. It still offers no obvious value to the consumer, which means that its value per dollar of cost is still effectively zero. This is the problem that plagues VR, and the fact that Oculus want you to watch TV in VR, because there's nothing else to do with the Go, eloquently illustrates it.

If this thing sells even as well as Samsung's GearVR, I'll be astonished, given that the hype and excitement around VR has completely dissipated everywhere except in tech media. Look for the Go to sell about as well as the Rift, and for prices to be dropping by X-Mas.

News of Oculus' coming $200 headset met with lukewarm reception.

To say that the Oculus Rift got off to something of a rocky start would be understating things. Once the darling of the tech sector for having single-handedly revived interest in VR, Palmer Luckey's overrated startup first promised a headset that would launch at a price of a couple hundred bucks, with the capacity to run on a budget laptop... only to launch at $599, with the requirement that you drive it with a $1500+ high-performance PC. Oculus then struggled to fill pre-orders for the headset, eventually telling customers to buy their Rifts at Best Buy instead.

The Oculus team have gone on to watch impotently from the sidelines ever since. They tried to force developers and consumers into a walled-garden Rift-exclusive ecosystem, only to find themselves excluded from the bulk of VR development instead. They've fought a protracted legal battle with Zenimax, earning a split decision on that front, while being outsold by HTC's Vive, Sony's PS4 VR, and Samsung's Gear VR (that last carries a touch of irony, since Samsung produced the Gear VR in partership with Oculus). They've cut $200 from the Rift's asking price, only to see sales remain flat, and their share of the VR market remain stubbornly small.

So, I wasn't at all surprised when Oculus went on to slash the price of the Rift by half during their "Summer of Rift" promotion, or when they announced that the new regular price would be only $100 more than that. They did manage to surprise with one move, however: announcing that they had a new, $200, entry-level standalone VR device in development, and were planning to go head-to-head with Samsung's Gear VR, now that they'd lost the high-end market to HTC & Valve's Vive.

Honestly, I wasn't sure what to make of this new move. Yes, a truly standalone headset is something the VR industry needs to move towards, as are lower price points, but could Oculus actually deliver both of those things at once, having failed (so far) to deliver either? And, even if they can, will anyone care? I think my my feelings on this move could have best been described as deep ambivalence, and it would seem that I wasn't the only one to feel that way.

From Katharine Byrne at MCV:

Hot off the heels of Oculus' temporary price cut to its Rift headset last week, a report surfaced on Friday that the company might also be preparing an even cheaper model of the Rift as a kind of budget successor.

Currently code-named 'Pacific', the headset will allegedly bridge the gap between mobile-based virtual reality and higher-end headsets like the Rift. It will also be wireless, according to the report, and operate as a standalone device without the need for additional hardware, such as a PC or phone – much like HTC's new rumoured standalone headset.

Analysts, however, are undecided on whether it will turn Oculus' fortunes around, whose Rift headset has been struggling to match the shipping numbers of both the HTC Vive and Sony's PlayStation VR.

"Oculus is losing the high-end PC race to HTC Vive, but the company has seen the massive potential from Gear VR’s strong market lead," Stephanie Llamas, vice president of research and strategy at SuperData Research told MCV.

"Facebook is not a company for the niche consumer – their selling point is how accessible their services are to anyone, anywhere. So finding something with the potential for mass penetration is a priority, especially with Rift’s bumpy past.

"However, an untethered, self-contained device for $200 seems like either a loss-leader or a highly simplified VR experience (for instance, Google and HTC’s new Daydream device will boast the same conveniences for a much higher price). Pacific may be a combination of both so that Facebook can finally have a long-term stake in the mass consumer market, but it's too soon to tell."

Oculus have gone from being the darlings of VR, the crown princes of virtuality waiting only to be crowned, to the court fools of the industry. Almost every move they've made thus far has been the wrong one, including being bought by Facebook for over three billion US dollars in what could fairly be described as possibly the sloppiest, most rushed buyout of that size in US corporate history. Oculus desperately need to do something to revive their flagging fortunes, and they need to do it soon, before restive shareholders (and the corporate board members who represent their interests) lose patience entirely. But is this Hail Mary play really going to be the thing that saves them?

I don't know; I don't think anybody knows. But Oculus have gone from being the leaders of the VR movement to being its also-rans, chasing already-announced products from other hardware makers rather than setting the next VR standards, and they don't seem to have any real idea what to do next, except to try doing what their competitors are succeeding with already. In a robust industry, there might be money to be made that way, if margins and price point can be kept low enough, but you don't get to be an industry leader by following, and the VR industry as a whole doesn't seem to have a lot of room for budget bit players. And the longer Oculus remain at the back of the pack, the harder it will be to make significant gains. 

Facebook's deep pockets notwithstanding, the team at Oculus are running out of time.

The market speaks: VR really isn't a thing.

Not yet, at least.

From Business Insider:

Facebook is closing around 200 of its 500 Oculus virtual reality demo stations at Best Buy locations across the US, Business Insider has learned.

The scaling back of Facebook's first big retail push for VR comes after workers from multiple Best Buy pop-ups told BI that it was common for them to go days without giving a single demonstration. An internal memo seen by BI and sent to affected employees said the closings were because of "store performance."

[...]

Multiple "Oculus Ambassador" workers BI spoke with said that, at most, they would sell a few Oculus headsets per week at most during the holiday season, and that foot traffic to their pop-ups decreased drastically after Christmas.

"There'd be some days where I wouldn't give a demo at all because people didn't want to," said one worker at a Best Buy in Texas who asked to remain anonymous. Another worker from California said that Oculus software bugs would often render his demo headsets unusable.

"They didn't press on selling," the worker from Texas said of Oculus. "Their main thing was to have us do demonstrations and get people talking about Oculus."

Ouch.

There's a reason why the hype around VR has died down this year, after reaching such a feverish pitch in 2016. It's because consumers really aren't buying it. They're not buying the hype, and they're not buying VR headsets, either, and the nascent VR industry doesn't seem to know what to do about that. The only VR headset that sold at all well is Samsung's Gear VR, which did all of its sales alongside Google's Cardboard -- that was when consumer interest was at its peak, allowing Cardboard to move 5 million units, with Gear VR close behind.

But that was then, and this is now, and right now, consumers have basically zero interest in VR. Google shipped 5 million units of Cardboard during the height of last year's early VR hype cycle, but this year, Verizon is literally giving the much more polished Daydream away with every Pixel smartphone. The likes of Phandroid (who provided the chart at right) are still trying to hype 2017 as VR's year, but for reals this time, unlike 2016 which they said would be VR's year but which ultimately flopped, but it all feels more than a little desperate. You can practically smell the flop sweat.

VR has too many unsolved problems, too few worthwhile apps that make good use of the technology, and no sign that VR's pushers have any idea yet just what VR is really good for; the tech feels like it was rolled out to the marketplace while still being in beta, and the first impression that its made is hurting not only sales of VR, but interest in VR. When the second-highest-profile brand of VR headset can't even get people to try the thing in-store, I think it's fair to say that VR is in trouble. 

Consumers are voting with their feet and wallets, and it's hurting VR adoption across the board. HTC Vive isn't selling that much better then Oculus Rift, and even Sony's PSVR is struggling. VR isn't ready yet, and companies fighting for their share of the VR market may do better to work together on solving the platform's issues, so that they actually have a market to divvy up. Because right now, they really don't.

What happened to VR?

Well, if you're reading my blog, then you probably already know what happened, but Business Insider has a pretty fair assessment of the state of VR play:

Over the past year, evidence has stacked up that VR isn't as hot as everyone thought it'd be, and it feels poised to go the way of the smartwatch, a once-promising new computing platform that ultimately flopped once introduced into the real world.

The evidence is tough to ignore.

Following the launch of the Oculus Rift and HTC Vive, we have yet to see a breakthrough game or app. Plus, the cost is prohibitive for most people: The headsets start at $600, and go up from there if you want the motion controllers and other accessories. Plus you need a powerful computer to run the hardware, which will run you at least another $500.

Sony was supposed to be the savior of the high-end VR headset. Its new PlayStation VR is designed to work with the tens of millions of PlayStation 4 consoles already out in the wild, giving it an immediate advantage over the competition. But, like with Vive and Oculus Rift, there wasn't much enthusiasm around the games and content for the PlayStation VR.

Google appears to be stumbling too. It slashed the price of its new Daydream View headset this week to $49 following a report from Amir Efrati of The Information that Google is "disappointed" with early usage numbers for the device.

Meanwhile, overall sales of VR headsets are very low, and PlayStation VR appears to have performed well worse than expected, according to data compiled by market research firm SuperData.

Given VR's lack of a value proposition, I was expecting to see that sales of these expensive white elephants had suffered, but I had no idea that sales for VR hardware were this terrible. So far, only Gear VR has actually topped the million mark in sales; PSVR managed only 28.85% of its sales forecast from only a few months earlier; the Rift and the Vive don't have a million users between them; and Google is selling Daydream at fire sale prices, apparently oblivious to the fact that a $50 add-on to an $900 Pixel smartphone still puts its VR offering well above the price point of either Oculus' or HTC's offerings.... for a smartphone-based VR experience.

This is beyond simply "not pretty." This is disastrous. And there's no sign of it improving significantly anytime soon. It's a good thing that Mark Zuckerberg is OK with spending another $3 billion on VR R&D before seeing a dollar in profits, because they're not going to be making a profit on Oculus anytime in the foreseeable future. Neither are HTC, Valve, Sony, or Google. Or anyone else that's pinned their hopes (and futures) to the VR hype train.

BI's article ends with the blunt assertion that VR "is going to remain a niche product at best." Honestly, given how badly VR is performing so far, and how many hurdles it faces, I think that's an overly optimistic assessment. So far, VR isn't even a large enough niche to turn a profit, given how expensive it is to develop for the platform.

VR still isn't catching on, and people are starting to notice

It looks like the Black Friday/Cyber Monday weekend were not kind to VR, because I'm suddenly seeing a lot of stories like this one, from bizjournals.com:

This year was supposed to be a breakout one for virtual reality.

For the first time, motivated fans of the technology can choose from Facebook’s Oculus RIft, Google Daydream, Sony’s Playstation VR, HTC Vive and Samsung’s Gear VR. One analyst estimates some 4.1 million people will buy a VR headset by the end of the year — far from the breakout that had been expected.

In a new report, SuperData says Sony will likely end the year selling just 750,000 PlayStation VR headsets, significantly lower than the firm’s earlier forecast of 2.6 million units. Daydream will likely sell 261,000 units this year, lower than SuperData’s estimate of 450,000.

Meanwhile, sales of the Gear VR, HTC Vive and Oculus Rift will likely come in at 2.3 million units, 450,000 units and 355,000 units respectively, roughly in line with SuperData’s earlier forecasts.

High cost, lack of content, and low demand are cited as the reasons why VR isn't catching fire the way VR evangelists have been insisting was about to happen any day now. Superdata, remember, who are getting all kinds of exposure today for revising their VR sales forecasts downwards, were predicting (not very long ago) that VR would be worth $30 billion a year in revenue by 2020; it looks like reality is starting to reassert itself, instead, reality being the things that continue to be true regardless of what you want to believe.

VR's (not-at-all) surprisingly low sales performance may explain why Ubisoft just announced that all of their VR games will feature cross-platform support for all of the different VR headsets available, including Vive, Rift, PSVR, and the upcoming Windows 10 PCVR flavours. It may also explain why HTC is already hard at work on Vive 2.0, which will apparently be lighter and more comfortable to wear/use, among other things (HTC Vive has only sold 140,000 units so far).

I stand by my earlier predictions on VR. The technology is not ready; it's not only too expensive, lacking a killer app, and suffering from low consumer interest, it has fundamental unsolved problems which will prevent VR developers from solving those three problems for years to come. And until VR is not only more powerful, more comfortable, more portable, more versatile, easier to use, more useful, and less expensive, it's not going to see wide adoption.

Google's Daydream will not start a VR revolution

Google has finally thrown their hat in the VR ring (for real, anyway), and tech media writers can't say enough good things about their Daydream platform.

Here's the important part: Daydream is not a standalone VR headset, and is not competing with Oculus Rift, HTC Vive, or Sony's PlayStation VR. Instead, it's an attachment for your Pixel smartphone (also announced today), which makes it basically the same as Samsung's Gear VR, except for Google's new line of phones.

Gear VR sold pretty well, but the fact that Samsung has recently announced that they're keeping their "standalone" VR headset (in the sense of including the display elements in the headset; Gear VR and Daydream both need your smartphone to provide the screens) offering on the sidelines until they see how the VR market shapes up speaks volumes -- that even a company with a decently-selling mobile VR products is staying out of the more expensive home VR market says quite clearly that the success of standalone VR headsets is no sure thing.

Whether Google will sell enough Pixel phones in a mature smartphone market to be able to sell enough Daydream VR accessories to actually compete with Gear VR's market share is, of course, anyone's guess. It would seem that Pixel is aimed more at the iPhone than the Galaxy Note, but sales of all smartphones have plateaued recently, mainly because everybody already has a good-enough phone, and thus no pressing need to upgrade.

Added to which, Google's previous forays into consumer electronics, including both the now-defunct Nexus phone and the now-defunct Google Glass, don't exactly inspire confidence in Google's ability to compete head-to-head with Apple as a manufacturer of consumer electronics.

The Pixel does look like a good phone, but at prices ranging from US$650 to US$870, MSRP, data plan not included, it's tough to imagine Pixel taking any significant share of the smartphone market away from long-time iPhone customers, or from other Android phone lines. I could be wrong, of course, but I can't help but feeling like this move comes at least a year too late.

I feel confident making one prediction, though: Google's not going to sell enough Pixel + Daydream bundles to make VR into any more of a thing than it is now.

Samsung doesn't know if VR is hype or mainstream, won't launch Rift rival until they're sure

Finally, someone adopting a sensible approach to the VR hype.

From Wareable:

Will VR ever be mainstream? Samsung, which has had one of the biggest VR hardware hits so far with the Gear VR, still doesn't know if or when.

Young Sohn, Samsung's president and chief strategy officer, told an event in San Francisco: "Is hype or mainstream? I don't have an answer." He also said that Samsung is holding off on the launch of its confirmed high end standalone VR headset to match the Oculus Rift and HTC Vive until it's clear that these types of devices will be widely adopted.

Sohn described the VR headset game as having a "chicken and egg problem right now" - to take VR mainstream we need great, affordable headsets but some companies don't want to spend on R&D for headsets until they know it will be mainstream.

Honestly, I'd entirely forgotten that Gear VR had even happened, let alone that Samsung was developing a standalone version of the thing. Among the other tidbits in the article: the Rift and Vive are estimated to have sold only 100K units or so each, compared to the Gear VR (Galaxy Note smartphone not included) which has moved about a million units. 

When the company with the best-selling VR "headset" is wanting to wait before selling a standalone version, thus competing directly with the Rift, Vive, and PS4 headsets... well, maybe the rest of the tech media world can press pause on the VR hype flow, too. Not that I expect them to, of course, but we can dream.