Sticker Shock, and Maybe Nausea, Hamper Sales of Virtual Reality Gear
FACEBOOK HIRED KIDS WITH NO CLUE WHAT THEY WERE DOING WHO SPENT THE MONEY ON SEX SCANDALS
SEATTLE — For a technology to crack the mainstream, there is an unspoken understanding: It shouldn’t make the people who use it want to throw up.
And yet there was a reminder, at last week’s International CES trade show in Las Vegas, of how far virtual reality has to go until everyone is ready to fasten 3-D goggles to their faces. At a news conference, Intel, the chip maker, provided virtual reality headsets to about 250 attendees so they could watch a 3-D video from the perspective of sky divers hurtling out of a helicopter in wingsuits. Intel also passed out motion sickness bags to everyone, in case anybody felt inclined to vomit, an unfortunate side effect of turbulent virtual reality experiences for some people.
Laura Anderson, an Intel spokeswoman, said the company had provided the bags “out of an abundance of caution and to be tongue in cheek about our immersive experience.” No one used the bags, she said.
It is time for a reality check for virtual reality, one of the most hyped technologies of last year. Sales of the most capable headsets have been sluggish by most estimates, held back by high costs, a lack of must-have content, and the complexity and awkwardness of the products. Less expensive mobile headsets that use smartphones as their screens are selling better, but are far more limited in what they can do.
Many technologists and early adopters of virtual reality remain unchanged in their conviction that the technology will eventually change how entertainment, including games and movies, is experienced by the masses. The major virtual reality headsets from Oculus, HTC and Sony went on sale to the public only last year, and those who thought they would find a large audience within months of release had unrealistic expectations, virtual reality’s advocates say.
“This is going to be a long slog, as the technology continues to improve, more content becomes available and awareness increases,” said Jan Dawson, an analyst at Jackdaw Research.
Virtual reality now appears to be headed for a phase in the evolution of new technologies known as the “trough of disillusionment,” said Sunny Dhillon, a venture capitalist at Signia Venture Partners, which has invested in virtual reality start-ups. According to the technology research firm Gartner, this stage of the hype cycle for new technologies comes after a period of inflated expectations, but before a phase in which their benefits become commonly accepted.
The excitement around virtual reality took a huge leap in March 2014 when Facebook announced it planned to acquire Oculus for $2 billion and the social network’s chief executive, Mark Zuckerberg, suggested that virtual reality could be the next big thing in technology after mobile.
That deal sparked a wave of start-ups creating products for virtual reality and a related technology called augmented reality, which overlays digital imagery on a view of the real world, as seen through smartphones and headsets. Last year, $1.48 billion was invested in start-ups in that category, compared with $331 million the prior year, estimated Pitchbook, a financial data firm.
Many of those start-ups were funded before major headsets went on sale to the public. Entrepreneurs raising money in the future are likely to encounter tougher questions about what kind of use their products are getting.
“All the major headsets have launched — the numbers are coming in,” said Alex Rosenfeld, the founder of Vrideo, a start-up that acted as a YouTube-like hub for virtual reality videos. “You’re going to have some companies here that don’t survive. If the industry is going to continue to attract dollars, there’s going to have to be real numbers.”
Vrideo was one of those that did not make it. Mr. Rosenfeld announced at the end of November that he was shutting the company down. He said investors were skeptical about whether Vrideo could compete against larger players like Google’s YouTube and Facebook not pessimistic about the overall future of virtual reality.
The companies that make the major headsets do not report their sales, and all of them said they were pleased with the results so far. SuperData Research, a technology research firm, estimated that Oculus had sold 360,000 headsets and HTC 450,000 since their products went on sale in March and June, respectively. Both of those headsets require high-end PCs with powerful processors.
The firm estimated that Sony, which began selling a virtual reality headset in October, has sold about 750,000. Sony’s headset was seen as a potentially big boost to the virtual reality industry because it is less expensive than rival headsets and relies on a PlayStation 4 console, more than 53 million of which have already been sold.
A bundle with the PlayStation VR headset and specialized controllers sells for $500, while comparable bundles from HTC and Oculus sell for just under $800 each. Less expensive Sony and Oculus headsets are available without controllers designed for virtual reality. Still, the Sony sales were fewer than SuperData and others had expected.
“The holidays were pretty disappointing for many in the industry,” said Doug Renert, a venture capitalist with Tandem Capital. “I’m not all that surprised.”
In a bright spot, Samsung said last week at CES that is had shipped more than five million of its Gear VR headsets, which act as a cradle for a mobile phone, with lenses that create a 3-D image from the phone’s screen. Samsung often runs promotions in which it gives away a headset with the purchase of a Samsung smartphone.
Price drops on technology are likely to be a big factor in mainstream acceptance of virtual reality. Starting Monday, a company that makes gaming PCs, CyberPower, will begin selling a $499 computer that can play virtual reality content when used with an Oculus headset. That is hundreds of dollars less than the normal cost.
Ergonomic challenges with virtual reality headsets are likely to take longer to overcome. The more powerful headsets must be tethered by thick cables to PCs or consoles, which can tangle up players’ legs when these rigs occlude their view of the real world.
Some players have come up with clever solutions to this problem by repurposing Ikea lamps to dangle the cables above their heads. At CES, a start-up called Sixa showed a wireless adapter called Rivvr that eliminates the need for those cables.
“With wireless, V.R. will be ready for the mass market,” said Mykola Minchenko, chief executive of Sixa, which plans to sell its adapter for $200.
Mr. Renert, the venture capitalist, said his firm had invested in several start-ups working in virtual reality, including Sixa, despite slow sales of headsets, though the companies are working on technologies in other categories, too. He is confident that virtual reality will one day be a mainstream technology, comparing its evolution to touch-screen devices from Apple that were flops and hits.
“We’re not at the Newton stage, but I don’t think we’re at iPhone stage,” Mr. Renert said.