Gaming Killed VR: Why VR Hardware Spending Will Remain Supplemental to Games Hardware

VR is dead and gaming killed it. This statement, while overly dramatic, does provide good food for thought. VR hardware spending and buying will remain negligible and less-than-secondary and supplemental to games hardware spending until it shows massive success in gaming.

Look at Samsung with its GearVR. This is a non-gaming VR product on the market for nearly a year ahead of HTC and Oculus. Reviews are positive and yet it is the gaming-dependent Oculus Rift and HTC Vive that seem to hold VR’s success captive. 

Back in 2014, CNN went on record stating, “… People won’t want to buy a VR headset if they can’t use it for a compelling game. And these games need to be ready to go when the headsets hit the market …”

I suggest that VR hardware spending will remain negligible, with success in gaming dictating its proof of concept. For that to happen, first it must capture lightning in the proverbial bottle for the hard-to-please gamer. For VR to get off the ground, it has to be a hit with gamers; otherwise, it will die more quickly than the Steam Machine with its virtually inert market penetration.

Adult Film and Gaming Leading the Charge

To understand why this is so, let’s examine who has fully embraced VR. The answer is live and vivid in front of everyone’s nose. The porn and video game industries have been the only two to extensively embrace Virtual Reality, building and creating content from the ground up specifically for VR. Yet Porn and gaming are not the only players in VR. 

The TechRepulic reports that 9 industries are actively testing and implementing VR, including health care, education, sports and more. However, according to VRtalk, “Searches for ‘VR porn’ have increased 100-fold from November 2014 through April 2016, That is growth of 9,900-percent in 17 months, and it shows how rapidly an idea can take off if it involves new ways to look at naked people. Analysts at research firm SuperData predict that virtual reality could turn into a $40 billion business by 2020, and the demand for virtual porn is more evidence in favor of that outlook.”

As for gaming, VR has been more than embraced. Some, like CNN quoted above, feel like gaming will make or break VR. Struggling handset maker HTC, who also is enjoying great success with the Vive, has decided to break its VR racket off into a completely separate and wholly owned subsidiary company dubbed, HTC Vive Tech. The company writes, “HTC can confirm that it has established a wholly-owned subsidiary, HTC Vive Tech Corporation, as a vehicle for developing strategic alliances to help build the global VR ecosystem.”

Viewing porn and other media made for VR is possible on more casual VR solutions such as Samsung GearVR or Google Cardboard. However, interactivity is more confined to the premium devices like the Vive and Rift available now and PlaystationVR and Microsoft Morpheus VR. Also, VR device makers would most assuredly like to make a name with games, media, educational tools and the like, than they would off the dubious and less reputable porn industry. Unfortunately, cost is yet another factor that will keep VR hardware spending marginal.

Guilt by Lack of Association 

The gaping chasm dividing VR from the mainstream consumer is the cost of entry. Below you see the main players in virtual reality currently. “While this many competitors may seem like a positive for consumer choice, it actually leads to a fragmented market which makes it harder for consumers to know that the system they invest in will have enough content to make it worthwhile. The different underlying technologies, especially different controller inputs, also make it more challenging for both game developers and video-producers to support multiple systems.”

Premium Interactive VR Devices

• Oculus Rift – launched ($599 – requires a high-end PC)
• Playstation VR  – October 2016 ($399- required a Playstation 4)
• HTC Vive – April 2016 ($799 – requires a high-end PC)
• Microsoft HoloLens (augmented reality) – developer-only edition now available to order for $3000

VR Viewing Systems

• Gear VR (by Oculus and Samsung) – $99 with a compatible Samsung Galaxy smartphone
• Google Cardboard – $25+ with a compatible Android smartphone

Let’s not forget that these VR kits and systems are not self-reliant devices. Most of the games taking advantage of the Oculus Rift and HTC Vive require incredibly expensive hardware such as a high-end PC. If we were to compare this to the console and TV game, you can have a console (PS4 or Xbox One) and a HDTV to play them for a total of $600-$700. 

Additionally, IdeatoValue notes, “What these companies need to avoid is trying to replicate the smartphone market, releasing a new version each year, as once someone buys a system they will be unlikely to upgrade it for a few years. I, therefore, don’t predict new versions of these VR systems for about 3 years following launch, when a significantly better version will not only be possible but attractive to consumers.”

Vast Potential Gated by Gaming 

Virtual Reality could really thrust us into the future. Down the road it has the potential to change the way we interface and communicate with one another, media and the very tools and machinery we have come rely on for day-to-day living. When Facebook acquired VR company Oculus, Mark Zuckerberg noted that VR would be more than games.

I quote; “This is just the start. After games, we’re going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face – just by putting on goggles in your home.” 

Well, we definitely are not there yet. In fact, many could argue that Oculus is further from this goal than ever. Facebook bet heavily on the company that seemed like a shoe-in for the dominant position in the burgeoning VR market. Yet now Oculus is surrounded by equally growing competition from every sector.

Microsoft, Sony, Samsung, Razer, HTC/Valve (Vive) and even Acer are all throwing money at VR research and development. Only the Oculus Rift and HTC Vive have hit the market. Still, initial reviews favor HTC’s Vive offering over the more widely known Oculus. Moreover, reports show the more expensive Vive out-selling Oculus 2-to-1. RoattoVR has noted Steam has announced nearly 100k units sold for the Vive. Analysts put the sales at about half that.  

Film & Education Potentially More Lucrative 

As stated above, cinema and movie production is another key area VR could find a more lucrative home than gaming and adult entertainment.

Consulting firm L.E.K. writes, “Major movie studios…are already gearing up to produce VR trailers to promote their films. Some say every big tent-pole movie release will have a VR trailer. Lionsgate has already shown the appetite for VR advertising promotions by partnering with Samsung and investing in ‘Shatter Reality,’ a virtual reality experience aligned with the film ‘Insurgent.’ We sat down with a digital effect artist, animator and executive producer from up and coming movie house, Have Not Films, a company formed in 2014 to specialize in the development, packaging, and distribution of motion pictures for global theatrical, television, and digital-delivery markets. When asked, how crucial is gaming to the success of VR? Wayne replied “The success of VR is only limited currently by what could be considered as practical application. The area of entertainment for VR has been romanticized since early Sci-Fi movies. I see VR playing a larger role in the medical fields. Such as performing delicate surgery on patients with cancer. Imagine a Doctor being able to see the cancer from all angles. However, I do agree that gaming will have an impact on VR but by no means do I think it will be the cornerstone to its success.”

Sadly, success in gaming could chop up VR’s momentum. Hopefully, it can break out into its own. We also asked Robinson, where can VR find the most success/revenue? “I believe VR will find the most success in the medical, educational, and telecom industries.”

Number Crunching & Wrap Up

Even with the first VR shots fired, one can easily argue that VR will remain tertiary to the video game market and only thrive beyond gaming if it can succeed within it. VR will largely substitute other game spending on console, PC and mobile simply because this is where the trail of money begins. Gaming is the biggest area of spending for VR development and consumer purchasing.

Nonetheless, the interest is massive from consumer and developers. This year’s Game Developer’s conference released its State of the Industry report revealing, out of 2000 developers polled, “42% of developers said they were interested in [VR] technology, and 75% believed that VR/AR was a sustainable business.”

Superdata reports, “6M Americans say they intend to purchase a PlayStation VR this year versus 5M for Oculus Rift and 2M for the HTC Vive.” Again, this indicates that the lion’s share of VR revenues will be generated by hardware sales, spectator content, and live viewing formats — again, gaming and porn will lead the charge.

Superdata also informs that 28% of Americans have heard of PlayStation VR versus 22% for Oculus Rift, 21% for Samsung Gear VR and just 5% for the HTC Vive. And while PC and mobile manufacturers are touting sell-outs and fanatic consumers, most Americans are still not sure what the technology is: 52% are uninterested in purchasing a device or do not know what VR is. Only 16% are sure they will purchase a device at some point. 26% say devices are too expensive. 49% have not heard of any headset brands.

With this extensive lack of understanding and therefore dearth of desire for the devices, VR is hoping to reach the tipping point with substantial increases to the adoption rate with big ticket sales in smaller quantities within a bombastic glitzy and glorified industry like film or gaming. This is not impossible.

Yet exorbitant hardware costs, beholden to “killer apps” that excite gamers, the focus on adult entertainment and the consumer’s lack of understanding and awareness regarding VR’s capabilities and requirements leave its success firmly in the hands of the gaming industry. We just hope VR can break away, as the industry is turbulent and unpredictable.

This journalist agrees with our interviewee from Have Not Films who stated above that VR will find the most success in other sectors like the medical field, education and how they converge in areas such as senior living quality of life, individuals with special needs, occupational therapy and physical re-learning and more.

The other very lucrative and relatively untapped sector is entertainment, where things are just now heating up with VR trailers and the like. There is a lot of opportunities for VR to succeed in and out of gaming.  

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Henley Johnson

Henley currently works as a sales representative for Direct Liquidation, assisting businesses with product sourcing of liquidated merchandise from the largest retailers in the world. Whether you are looking for a pallet or a truckload Henley is here to help you grow your business.

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