Reality Check: Virtual Reality Isn’t A Real Market. Yet.

You’re probably hearing a lot of endless, excessive and short-term virtual reality (VR) hype. For example, at SXSW 2016, a great deal of time and energy is being devoted to VR experiments, new media announcements, and demonstrations. 

The reality? The vast majority of consumers aren’t there yet, don’t know or care about VR, and won’t know or care in 2016 unless they are hardcore gamers. And only a few forward-looking enterprises – digital predators – are experimenting with VR in effective ways today.

At Forrester, we believe that VR will find its place in the pantheon of important computing platforms, eventually reshaping the way workers work, enterprises interact with customers, and consumers perform a variety of tasks. In other words, it's going to be a real market... at some point.

Too many clients think that VR is a platform that they simply must address in 2016. We think that’s premature. Even in the era of hyperadoption, VR must overcome key obstacles to gain mass market status:

  • Need for market education. Most consumers don’t have a deep understanding of VR, nor is there an easy venue for them to learn about it. Retailing represents a challenge: Buyers must experiment with a headset for many minutes to even get sense of what the technology does. In past technology revolutions (smartphones, tablets), the Apple Store played this role… but Apple isn’t in the VR game (yet).
  • High-end VR requires a heavyweight PC. The most immersive, convincing VR experiences come from Oculus Rift and HTC Vive, the two platforms providing deepest VR engagement. But both must be tethered to a high-end PC with a graphics card (NVIDIA GTX 970 / AMD 290 equivalent or greater)… and the vast majority of PCs don’t fit the bill. That means spending $1k more on a PC to go with your VR headset.
  • Mid-range VR suffers from a lack of clarity. So you’ve decided you can’t afford an Oculus Rift or HTC Vive Pre, but you’d like to investigate Sony Playstation VR and Samsung Gear VR. Okay, but, as a buyer, what are you sacrificing in terms of performance? It’s hard to tell, and people don’t know. This lack of clarity and the implied risk of potentially making the wrong choice will inhibit immediate uptake.
  • Free VR might help… or hinder adoption. Google Cardboard is (essentially) free – you can use your smartphone! But it lacks the immersive characteristics of Oculus Rift, doesn’t offer 3D sound, and, candidly, can be a disappointment. For some people it could be the gateway to “I want more!” but for others it will be “what’s the big deal?”

Dipping your toe into VR can be a source of learning and differentiation, but don’t overinvest in 2016 – you won’t see a return on that investment. So what’s appropriate? In the short run, you’ll see a lot of experimentation by digital predators – those early adopters seeking a competitive edge using digital technologies, as in these leading-edge examples:

  • Creating new psychological treatments. Clinical psychologists are using VR headsets for interesting therapeutic purposes. In one study, psychologists treat drug addiction by reproducing the party atmosphere of a heroin cave to help coach addicts about how to avoid giving in to cravings. Similar studies are being conducted on PTSD and anxiety disorders.
  • Reshaping customer experience and business models. Theme park owners face a conundrum: Even the best roller-coasters only receive a couple of repeat visits from customers. But using VR, they can create an entirely new experience, as Six Flags and others are doing. With VR synchronized to the movement of the rollercoaster, you could have many scenarios: The first time, you’re in a spaceship. The second, riding a dragon. The more immersions, the more rides.
  • Extending the value of performances and media. The Coachella music festival will hand out tens of thousands of customized Google Cardboard VR devices to extend and round out the benefits of attendance – you literally won’t miss a thing. The New York Times distributed 1.1 million Cardboard units to its print subscribers so they could experience its new VR content. Both companies recognized that its customers don’t have VR devices, so they gave them the means to view the content.

For true digital predators, VR experiments can be conducted on the cheap, starting with B2B2C scenarios in which you provide the device to your customer in a retail setting. But for most of you, please don’t panic and overinvest. You’ve got a few years before VR becomes a top-tier priority.

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J. P. Gownder is a vice president and principal analyst serving Infrastructure & Operations Professionals. He covers innovation in the context of disruptive devices -- from PCs to mobile devices, augmented and virtual reality (AR/VR), digital signage, and robots. Onalytica named him one of the five most important people in the world in the area of wearable computing for 2015. Follow him on Twitter at @jgownder.



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