Reality bites
Sales are struggling; execs are exiting. Has VR’s bubble burst?
Sales are struggling, execs are jumping ship and investors aren’t convinced. Has the VR bubble burst already?
Perhaps, in hindsight, Brendan Iribe was always meant to leave Oculus. The co-founder and one-time CEO of the company that sparked virtual reality’s return has enjoyed a successful career, sure – but it’s one that’s been spent building up companies into perfect acquisition material, then walking once the deal’s done. He was a co-founder of Scaleform, the game UI middleware bought by Autodesk in 2011. From there he went to Gaikai, the cloud-streaming game technology Sony snapped up to lay the foundations for PlayStation Now. Iribe left Oculus in November, having been around since its inception in 2012. The cynic might wonder why he stuck it out for so long: Facebook’s $2.3 billion acquisition of Oculus completed in the summer of 2014.
But it was not a big cheque that prompted Iribe to walk out on Oculus. He’d already taken a de facto demotion on the chin, having been bumped from the CEO’s office in 2016 to head up a new Oculus division dedicated to PC-based VR. According to reports, the straw that broke the camel’s back for Iribe was the cancellation of the planned Rift 2, a powerful next-generation headset that would push the envelope for top-end VR. Since the acquisition, Facebook’s gaze has understandably shifted towards mobile hardware (such as the Oculus Go, a £250 headset released in May). This was always on the cards: Mark Zuckerberg surely never expected to recoup his staggering investment purely through the sales of powerful videogame hardware. Yet that rapid reassessment of Oculus’ priorities – turning PC-based VR first into a sideline, then a footnote – tells you all you need to know about Iribe’s decision to walk.
It also tells you everything about the current, confused state of virtual reality. No doubt Palmer Luckey, who dreamed up Rift and knocked together the first prototype in his garage, knew VR wasn’t going to become a massmarket sensation overnight. Yet over the twoand-a-half years since the first Rift headset released to consumers, progress has been slow. In the absence of any official figures – which in itself is never a good sign – analysts have found out what they can by other means.
One such investigation found that the major HMD manufacturers were selling around 100,000 units per quarter. Another, which used Amazon API data to show that sales of all kinds of VR hardware had slumped, drew a stroppy response from HTC. Sales had fallen, the Vive maker said, in large part because Google and Oculus had inflated the market with their low-cost, poor-quality offerings, Cardboard and Gear VR. Vive sales, however, had been so good for so long that HTC had run out of stock. Conveniently, it declined to provide any figures to support the claim. Great stuff worthy of a White House press conference, though not exactly helpful to those who want to see VR succeed. So, what’s with the hold up? At the core of it is the very reason Facebook paid so much for Oculus. VR could, and should, be absolutely enormous. Its potential impact spreads far beyond videogames into enterprise, education, healthcare and beyond, and could truly be world-changing. Yet each of VR’s prospective markets requires a bespoke solution. VR games require powerful hardware, precise tracking and minimal latency. Classroom VR needs to be hard-wearing and affordable. Enterprise will demand a sleek, unembarrassing design for the boardroom or conference hall, the sort of thing neither game developers nor teachers will give a fig about. And all, naturally, will need different kinds of software. Ironically for a device that sits so close to the wearer’s eyes, VR’s most painful enduring problem is a lack of focus.
With that in mind, the initial drive towards cheap and cheerful smartphone-driven HMDs such as Gear VR and Google Cardboard is understandable. But it hasn’t worked. It makes a reasonable first impression that’s quickly undone by a lack of fidelity and, moreover, content – the latter further undermined by the smartphone user’s expectation that everything should be free, and then even further by the
Its potential impact spreads far beyond games, yet each of VR’s prospective markets requires a bespoke solution
various players’ attempts to build their own software ecosystems, selling games and apps through their own stores on their own terms. If you bought the other guy’s hardware then, well, tough luck.
That’s a problem at the premium end of the market, too, though the bigger factor here is price. We send to press on the eve of Black Friday, and in the run-up to the most important day on the modern salesperson’s calendar, an excitable email arrives from HTC about a £200 discount on the top-of-the-line Vive Pro Full Kit, which bundles the latest headset model with two base stations and a pair of controllers. It’s never been cheaper, we’re told. It costs £1,099, and that’s before you think about the PC you need to run it.
Progress doesn’t come cheap, sure. Yet even for those able to afford it, the Vive Pro’s merits are questionable. While the wireless adapter introduced this year goes some way to addressing the faff and clutter that still makes setting up the Edge game room for a VR review a chore, it does not entirely eliminate it. And while the Pro is certainly more powerful than its predecessor, no exclusive games have been built for it – all you’re left with is the same games you had before, only in higher resolution. Vive was always aimed at the higher end of the VR audience; Vive Pro is aimed at the subset of them who, two years in, are prepared to pay up for a slight upgrade. The mass market hardly beckons.
All, however, is far from lost, and much of our continued, if cautious, optimism for VR’s future lies in the main players’ understanding that they are still in the early stages of a long game. While it might not be the all-singing, alldancing, high-end headset Iribe wanted Oculus to make, the company’s forthcoming Quest HMD represents a major step forward for consumer VR. Due for release next spring, it’s not tremendously powerful, but it’s no weakling either – Oculus CTO John Carmack compares its processing grunt to Xbox 360 and PS3. Yet all that power is on board, with no need for an external PC. And crucially, it is the first Oculus headset to use Insight, the name the company has given its proprietary markerless inside-out tracking system. Inside-out uses outward-facing cameras mounted on the headset to let it both parse the space around it and identify its place within it, removing the need for external sensors or even a defined playing field. A demo of Superhot VR at the recent Oculus Connect conference was playable in a space the size of a double garage. Once the wires and the boundaries fade away, VR should start to feel like less of a novelty. Yet the biggest cause for optimism about the future of VR gaming comes from the company we least expected to define it. Sony has, to put it mildly, a track record of hopping on seemingly lucrative bandwagons, then abandoning them the moment it feels like the wheels might be about to come off. Sales of three million or so units might not be much to shout about, but the company is focusing hard on PSVR this winter. A hardware refresh cut back on cabling, and added the HDR passthrough that the launch device (bafflingly) lacked, without a price increase. As an aggressive TV advertising campaign makes clear, the games are starting to come: the beguiling platforming of Astro Bot Rescue Mission, the intoxicating club-night puzzling of Tetris
Effect, the action-flick fantasy of Blood & Truth, and increasingly more besides. Sony enjoys a luxury few of the VR space’s other players can. To a multinational tech company enjoying a runaway lead in the console arms race, VR is a relatively cheap experiment that can afford to fail. The PSVR project will not have cost Sony anything like the billions Facebook spent on the promise of Oculus. A God Of War or Last Of Us
Part II will likely run Sony over $100 million by the time it has been made, put on shelves and marketed; an Astro
Bot or Blood & Truth will not. Crucially, PSVR to Sony is intended for playing games on, and for that alone. If it ends up in a classroom, boardroom or operating theatre then fine, but that is not what it is built for. Affordable, well supported and with a rare clarity of purpose, PSVR is the only current virtual reality offering that feels even close to essential. In time, perhaps the other companies will follow suit. First, they must learn how to focus.
The biggest cause for optimism about VR gaming comes from the company we least expected to define it