The virtual reality industry is booming, and it’s hard to argue with financial projections from companies like Goldman Sachs estimating a total of $35 billion in virtual and augmented reality revenue opportunities by 2025. But are these projections going to hold out, and will the virtual reality industry continue to grow? There are many factors at play: investment firms, startups, and technology incumbents are all scrambling to capture the attention of an ever-evolving demographic: millennials. With so much talk about the technology and market forecasts, it’s easy to forget the importance of reaching the audience that will drive this boom. The challenge will surpass just getting the technology to the public. If virtual reality is going to become a $35 billion industry, enterprise virtual reality must reach the millennial market in a big way in 2017, which must be followed with a strong response to market demands by the three major virtual reality headset manufacturers in 2018.
There was a lot of speculation about virtual reality at the end of 2015 which has long been forgotten. With the successful launch of the Oculus Rift, Playstation VR and the HTC Vive, there’s little doubt about the staying power in the current technology. Consumer popularity has grown significantly, and the advertising space has grasped wholeheartedly onto what was a trend in 2015 and now a buzzword in 2016. The real question we should be asking is can we turn this buzzword into the thriving industry so many of us expect? If you’re thinking HTC and Oculus will follow through with expectations, and Playstation VR will improve their products in less than a year, releasing jaw dropping resolution upgrades and lightweight headsets, I doubt it’s possible.
Can HTC, Sony and Oculus deliver a second wave of updated VR 2.0 products that are drastically better in screen resolution, lens technology, and tracking sophistication, all while maintaining that bottom line? Putting this kind of technology inside the consumer’s home for a price point that makes sense to the market isn’t easy. In fact, it’s still debatable if the gaming market alone is big enough to support the trend. Are there enough consumers who are willing to spend the money on the next upgrade for hardware that makes the virtual reality experience what we expect it to be? Nvidia made a large contribution with the debut of their new GTX 1070 and GTX 1080 cards. But millennials expect lightweight headsets with a far better resolution and clarity, with experiences that deliver the desired social experience. A twelve month turnaround on an already expensive technology niche seems like a far stretch to me, even if content creators could produce the experiences.
Let’s also not forget about the challenge of delivering content in a small, room-scale space. Millennials were raised on movies and video games with an established language that transcends space and time with cuts and editing. This is something that has shown to be a significant challenge in the VR space that shouldn’t be ignored. Let’s also not forget about the growing addiction to social media. Half of the battle for the elevated VR experience lies with content creators, many of whom are just getting their first legs in the space and beginning to explore what is possible with the current limitations in virtual reality. Will content creators engage the audience with social engagement and with an excitement that gives millennials a reason to spend?
There’s little doubt that the wave of VR 2.0 will hit the market with a huge bang. It’s more a question of logistics and timing. It’s not just about the timing of when VR 2.0 arrives, but more about when it should arrive. When content creators got their hands on some of the first viable VR products in 2016, it was a major step. As creators continue to explore the language and imagine the possibilities of VR, technology makers will be expected to be steadfast in their laboratories creating the answers to the problems we see now. A healthy millennial market demands a natural choreography of technology and content in unison. It is here that the opportunity will arise in 2017, and it won’t be for the big guy.
The turnaround time for VR 2.0 products and the price points at which they must sell to consumers for at-home solutions will open the door for smaller technology companies. The little guys will have a chance to catch their breath and debut a wide array of creative approaches to peripherals, content, and new strategies for delivering experiences to the market. In other words, the market will gain options. Options are what it’s all about in 2017. With the growing market and an inevitable hibernation period for the big three, we will see some pretty amazing technology and content arise from the bottom of the ranks. The only question for 2017 is can the creative approach to peripherals and experiences really engage with the market. We will all be watching closely.
Keep your eyes on the peripherals and social experiences. Let’s also not forget about the enterprise technology market. It’s the sleeping giant that has yet to catch the attention of many who follow industry trends. In 2016, major technology creators were already anticipating the enterprise sector benefits. Nvidia has been working on technology behind closed doors to bring the more expensive features of virtual reality to the Quadro line. Meanwhile, strategists at Unity, Unreal Engine, and Cryengine have all opened specific departments to cater to the growing clientele for enterprise virtual reality technology. The business to business opportunities in the virtual reality market are the true hidden juggernaut that could explode with potential. Can businesses create partnerships that deliver products to the market and turn the potential into profits?
In 2017, we will begin to see amazing professional out-of-home experiences that pop up in local spaces. The advertising industry has already laid the groundwork for marketing teams to reach their clients via massive experiential campaigns. Millennials are becoming harder to reach through traditional advertising methods. Banner ads and TV commercials rarely live up to their 1990’s impact. Combine this with the expensive niche that is a VR computer and headset, and you start to paint a picture where big companies reach out to the public through events, something that will naturally harbor an expensive enterprise VR 2.0 approach. Patron is just one of many companies who already pulled off a successful VR event campaign back in 2015 with their “Art of Patron” campaign. The VR experience grew bigger in 2016 with film promotions and the NCAA jumping on board. Expect more from the big car manufacturers in 2017 and companies looking to stay ahead of advertising trends as markets become harder to reach with traditional methods. If advertising and enterprise technology shake hands in 2017, keep your eyes open for opportunities to get out of the home for VR. It could be huge.
The out-of-home experience is the true sweet spot in virtual reality for 2017. It enables accessibility to enterprise technologies and to the peripherals that have thus far been largely unpopular due to the niche nature of the in-home virtual reality market. The majority of consumer response to current VR technology is the desire for a social experience. With Facebook’s inclusion of facial expressions, we could be heading in that direction. But after seeing the solutions they displayed, we were left feeling a little underwhelmed. The biggest VR experiences of 2017 will involve multiple users at events - experiential strategies that bring people together both virtually and physically. After all, there is a much larger market of millennials who like to be out on the town with friends rather than being locked into a facemask in their basement. According to a report by Eventbrite, 80% of millennials will attend at least one live ticketed event, which is estimated at $1.3 trillion in revenue. The amazing opportunity of event-based social experiences for VR is that even those at-home consumers can still get involved. That’s a big opportunity for companies to take advantage of.
With healthy growth in the VR industry projected for 2017, we can guarantee that if millennials play ball, 2018 is set to be an even bigger year. At that point, the big three will have their chance to respond with technology. Let’s hope it answers the demands and we see increased visual clarity and lightweight headsets for a cheaper price. I look forward to seeing the creative space grow as more developers learn the language of VR. As enterprise solutions become the norm in 2017, the bar will thus increase.
The questions for the industry by the end of 2017 will be clear. Will at-home consumer technologies rebound with price points and technology that will drive millennials to spend? Can out-of-home experiences be common enough to transform virtual reality from a buzzword into a viable, healthy market, accelerating business-to-business growth? Last but certainly not least, can content creators deliver on the social appeal that has eluded the VR market to date, making VR feel like we can all join in on the fun? Rest assured, if 2017 delivers on these three key aspects of virtual reality, we shall see a 33 billion dollar industry by 2025.