Virtual meets reality

From Jon Evans TechCrunch:

“Despite many pronouncements that 2016 was the year of VR, a more apt word for virtual reality might be absence,” The Economist observed caustically last summer, noting that during that year forecasts of combined sales of VR hardware and software dropped from $5.1bn to $3.6bn to the harsh reality of $1.8bn. But hey, one rough holiday season does not an industry make, right? Surely in 2017 things began to —

— oh. "Shock Stat: In 2017, VR Headset Shipments For Most Top Brands Went DOWN Compared To 2016." So much for the many predictions that VR headset shipments would grow exponentially for years. Crow appears to be the appetizer for nearly every industry dinner these days. But that was before the Oculus Go, right? Except … the Go seems to have sold at most a quarter of a million units in its first few weeks, far behind the comparably priced Nintendo Switch released months earlier, and as I write this languishes well outside the top 20 of Amazon’s “Video Games > Accessories” bestsellers.

[...]

I dropped by the Augmented World Expo in Santa Clara this week, and my main takeaway was that the industry has essentially abandoned the consumer AR/VR space, at least for now. Everyone’s aiming at AR/VR for work now. But how many jobs are there, really, where complex information needs to be accessed in a hands-free way? How many problems can be solved by VR conferencing but not videoconferencing? Sure, they exist, and the tech can be spectacularly great for them; but, again, for now at least, we’re talking Next Little Niche.

[...]

It’s the very early days of a new technology. It’s expensive. It’s still hardware-intensive. We’re still figuring out its best uses, and how it interacts with human physical location, and a whole new grammar of storytelling. But the Oculus Kickstarter launched almost six years ago, and I’ve seen a whole lot of VR/AR/mixed-reality demos since then, and every time, I walk away thinking: “This technology has so much potential.”

But in order to be the Next Big Thing at some point you have to actually start realizing your potential [...] the disheartening truth is that, despite the low-price new standalone hardware, despite all the effort that’s gone into software and design and storytelling, I still don’t feel like we’re meaningfully closer to that than we were two years ago.

Have I mentioned lately that articles like this are becoming increasingly common? Sure, people who are materially or emotionally invested in VR are still trying to sound bullish on its prospects, but those forecasts are looking increasingly ridiculous in the face of clear evidence that VR simply isn't happening, their foundations made of nothing but hype and hot air.

Lowering expectations for VR

Then:

From Kotaku:

STAT | $11.2 billion - The amount people will spend on all VR in 2020, according to a forecast by IHS Markit.

STAT | $30 billion - The amount people will spend on all VR in 2020, according to a forecast by Superdata.

STAT | $50 billion - The amount people will spend on VR hardware alone in 2021, according to a forecast by Juniper Research.

QUOTE | “The number one problem facing the VR industry right now is the lack of high quality, highly replayable VR content.” - First Contact Entertainment president Hess Barber lays out the biggest problem his VR studio will focus on solving.

And now:

Virtual reality (VR) arcades and other location-based VR entertainment venues could generate more than $800 million in worldwide revenue by 2022,  according to the latest Futuresource Consulting VR Tracker Report.

That's right... VR has done from a tens-of-billions-a-year-by-2020 industry to an industry that's now forecast to reach only a fraction of that size by 2022. And, for the record, I don't believe that VRcades will be generating anywhere near $800M a year in four years' time, either, not only because there's not enough evidence of consumer interest in the technology to drive that much business, but because neither North America nor Europe have anything like an arcade culture anymore.

Nobody is making money from VR, and anyone trying to convince you in invest in a VR business is lying, to you and possible even to themselves. Don't be fooled.

VRcades are still not the answer to VR's problems.

From VentureBeat:

Virtual reality in the home is taking off slower than expected, as evidenced by CCP Games’ decision to shut down VR game development. But there’s a good chance that VR will find a way to thrive in arcades, whether in Asia’s Internet cafes or America’s shopping malls.

Should VR game makers pivot to the arcades? Greenlight Insights recently staged a whole conference about this opportunity, where 450 people talked about the prospects for location-based VR entertainment and other opportunities. In some ways, it makes sense as high-quality PC-based VR is still expensive to buy, and arcades can write off the equipment over many users.

Yeah... Let's just say that I still have my doubts.

First, videogame arcades are not a thing outside of Japan; even in South Korea, PC bangs may not be similar enough to support a VRcade culture. That means that VRcades must rebuild videogame arcade culture worldwide, starting from zero... while also selling people on the VR experience.

Which brings us to thing #2: Even in Japan, there's no evidence of sufficient appetite existing to support a large number of VRcades. VR is failing to thrive everywhere; it's not only in NA or the EU that consumers are not biting.

Even if enough VRcades can be built/started up in the face of zero evidence that consumers are actually interested in VR, there's the problem of consumers being especially uninterested in partaking of VR in public places. VR's unique combination of isolation, loneliness, and a horrible sense of vulnerability are probably all contributing factors here, but regardless of the cause, the result is consumers who refused to strap on VR headsets in public for free, and who are not suddenly going to discover a powerful desire to pay for that same privilege.

There is simply no evidence that VRcades are viable, or perceived as desirable by consumers, generally. With VR also being rejected by consumers for home use, and repeatedly demonstrated to be counter-productive and even harmful in workplace deployments... what does that leave? What, exactly, is the market for VR? Why would anyone believe the people who were still predicting, roughly five minutes ago, that home and workplace use were VR's target market, when they say that VRcades are now the VR future?

Predicting the future is hard, and I could be wrong, but I don't see a single indicator that points at VRcades being viable, or anything like a rationale for them being able to drive VR development. There's just no gold in them thar virtual hills. Don't believe the hype of those who say otherwise.

Did you ever spend $25.00 on video games in 1 hour at an arcade?

Thinking back, I don't think that I ever did. But that's what 1 hour of VR Gaming will cost you at VRKade, the hot! hot! hot! new VRcade that just opened up in Calgary, making it the 2nd of two VRcades in town, and also VRKade's 2nd location (their other one is in Lethbridge).

Not sold? Just wait until you see their game line-up:

• A-10 VR (Action, Indie)
• Arizona Sunshine (Violent, Gore, Action, Adventure, Indie)
• Audioshield (Indie)
• Cloudlands : VR Minigolf (Casual, Sports)
• Cowbots and Aliens (Action, Adventure, Casual, Indie, Early Access)
• Google Earth VR (Adventure, Casual, Free to Play, Simulation)
• Jeeboman (Action, Indie)
• QuiVr (Action, Casual, Simulation, Early Access)
• Raw Data (Action, Indie, Strategy, Early Access)
• Rec Room (Sports, Early Access)
• Sairento VR (Violent, Gore, Action, Indie, RPG, Strategy, Early Access)
• Smashbox Arena (Action, Indie)
• Space Pirate Trainer (Action, Early Access)
• The Lab (Free to Play)

Wow, Audioshield? Google Earth VR? Shut up and take my money! I mean, just look at all that Indie, Early Access, and Free to Play, baby! Woo hoo!

Seriously, though, they couldn't even pop for SuperhotVR? Really?

If you're wondering if VRcades (or VRKades) will become a thing.... no. No, they won't. Not at these prices, with this kind of stellar games lineup, and all needing to be freaking booked in advance.

VR's "Hail Mary" play.

From DigiTimes:

The establishment of VR arcades will enable VR content and hardware developers to provide facilities for consumers to try out immersive VR experiences and thereby to accelerate development of the VR industry, according to Jack Tong, founder and CEO of JPW International Technology.

The space, services and related equipment provided by arcade shops will serve as the growth drivers of the VR industry, Tong added. [...]

VR arcades will also serve as platforms for continued optimization of related hardware devices and software upgrades, as well as venues for cross-border tournaments of VR games, a business model which is suitable for long-term operations, Tong stressed.

OK, first things first. Yes, if enough VR arcades are opened, and if enough quality VR experiences are available in them, and if enough people can be convinced to frequent them, then VR arcades could provide all of the benefits that Mr. Tong claims. But those are necessary conditions, not merely sufficient ones; in order for the benefits to be realized, all three conditions must be met.

Which bring us to the first problem: outside of Japan, videogame arcades are not a thing. There are still coin-op videogames to be seen, mostly off to the side, in other businesses (e.g. movie theatres, which seem to be the places where I mainly see videogame cabinets these days), but the specialized "destination" arcades which boomed during the 80's all slowly went out of business during the 90's. Basically, outside of Japan, the only other market where people routinely leave home to get their game on is South Korea, where the PC bang reigns supreme.

So, Japan and S. Korea both boast a robust arcade-like gaming culture, and have existing businesses which could expand their operations to include VR. Everywhere else, though, VR arcades will be starting from scratch, having not only to start new businesses catering to VR enthusiasts, but also having to revive an arcade-going culture that died out decades ago. And, to be sure, some intrepid entrepreneurs are already doing exactly that, drawn in by VR hype, but the necessary condition isn't for some "VRcades" to be opened, but for enough VRcades to be opened. 

How many is enough? Nobody knows, but I'd say that it's probably more than one per million residents; e.g. Calgary (pop. 1,235,171) boasts exactly one VR Arcade, one VR consultancy business, and one VR game rental service, and that one "VRcade" is run by the local "escape room" business, and needs to be booked in advance. With VR sales lagging, and no sign that consumers are interested in VR at all, those numbers are unlikely to increase much in the near future... which is exactly what's needed, if VR is to develop the way Mr. Tong is predicting.

And that brings us to the 2nd problem with this scenario: even if enough VRcades are built, consumer interest in VR is essentially nil right now. There's no guarantee that they will come, if you built it; in fact, the opposite case (you build it, and nobody comes) is looking to be much more likely. That will make it very hard for VRcades to succeed, even if they are established, and if VRcades show a tendency to struggle (or fail) then there's even less incentive to open them in the first place.

The fact that VR currently lacks any compelling content to draw in customers doesn't help, either. This is the biggest problem with VR, generally: it simply doesn't enable any experiences that are unique to VR. Existing experiences can be enhanced with VR, yes, but while something like Superhot VR may well be a more immersive experience than its "vanilla" version, it's still the basically same game, and playing it at home (on Steam, XBox, PS4, Linux, and Mac) will only cost you US$27.99 for unlimited playing time, with the added convenience of being available any time you feel like playing. Calgary's sole VRcade has to be booked in advance, remember; I'm not sure what their rates are, but if it's less than CAD$25.00 per hour, I'll be very surprised. After all, they have employess to pay, and rent to pay, and bills to pay, and obviously would like to realize some kind of profit on top of that.

So, outside of Japan and S.Korea, we're unlikely to see enough VRcades established to make any difference; consumer interest in VR is virtually nonexistent, so even those VRcades that do exist will struggle to attract customers; and if any VRcades do manage to lure customers into their buildings, they'll lack for compelling VR experiences to off them. Which brings us to the next question: what about Japan and S.Korea? With existing videogame arcades and PC bangs that can simply expand by adding VR, can Japenese and S. Korean VRcades convince enough skeptical consumers to try VR, and offer them enough high-quality, unique-to-VR experiences, to drive not only VR interest and adoption, but also VR technological development?

Because that's what Mr. Tong's scenario boils down to. With the EU and NA markets having essentially turned into VR wastelands, Mr. Tong is hoping that Japan and S. Korea can, by themselves, provide enough momentum to drive the development of VR technology and content to fuel a VR revolution that is stubbornly failing to materiallize. And it does seem more like wishful thinking than rational analysis. It smells like desperation, expecting that VRcades will spontaneously emerge, for no apparent reason, and propel us to a glorious VR future that's looking less and less likely all the time. 

This is VR's Hail Mary pass. If it works, then the results could be amazing, but it will be a miracle if it works.