Virtual reality… millions but not tens of millions… yet

In February 2016, I placed a bet against Greg Linden in these terms:

within the next three years, starting in March of this year, we would sell at least 10 million VR units a year (12 continuous months) worldwide.

According to some sources, around 5 million units have been sold each year in 2019 and 2020. Strictly nobody is claiming that near 10 million units were sold in a single year. Thus I conceded the bet against Greg and paid $100 to the Wikipedia foundation. Greg has a blog post on this bet.

I believe that both Greg and myself agree that though we have not reached the 10-million-unit threshold yet, we will in a few short years. You should expect a non-linear growth: as more headsets are sold, more applications are built, and thus more headsets are sold…

It is important to put yourself in the context where this bet was made. At the time, three VR headsets were about to be released (Facebook’s Oculus Rift, HTV Vive and the PlayStation VR). As far I know, neither Greg nor myself had any experience whatsoever with these headsets. The Oculus Rift was to ship with a game controller so we had reasons to be skeptical about the hardware quality.

I expected that selling 10 million units a year had long odds. I expected, at best, a close call. Yet I still expected that we would sell millions of units even if I lost, which I believe is what happened. I expected that at least one of the current players (Oculus, Sony and HTC) would fold while at least one new player would enter the market. It seems that HTC bet the farm initially on this market but reduced its presence over time while the Valve Index was a nice surprise.

I acquired several headsets. It turns out that the hardware exceeded my expectations. People who complain about the bulky headsets have often not followed through the various iterations. Hardware can always be lighter and finer, but the progress has exceeded by expectations.

I also built a few software prototypes of my own, and it was remarkably easy. Both of the software and the hardware aspect worked out much better than I expected, but the killer applications have not emerged yet.

My own laboratory acquired headsets and built prototypes. It took me months to reach rather elementary realizations. Explaining VR is harder than it sounds. No, it is not like having moving from a 2D surface to a 3D surface. It is an embodied experience. And that is where I conjecture the real difficulty lies. We are all familiar with video games and movies, and the web. But we have a much harder time thinking about VR and what it can and cannot do.

Let me revisit critically my statements from 2016:

  1. Virtual reality is a major next step so that backers will be generous and patient.
    It is unclear to me how much truth there was in this statement. Certainly Facebook, Valve and HTC have invested a lot but I kept hearing about start-up folding up early. The fact that hardly anyone made a lot of money did not help. Meanwhile, a lot of the people working in VR can quickly switch to more profitable non-VR projects, so the talented individuals do not stick around.
  2. I’d be surprised if the existing Oculus Rift sold more than a few hundred thousand units. It is just too expensive. It just not going to be on sale at Walmart.
    The Oculus Rift is on sale at Walmart for $300. But I am correct regarding the unit sales: the Oculus Rift did not sell in the millions of units.
  3. But within two years, we can almost guarantee that the hardware will either be twice as good or cost half as much. With any luck, in two years, you will be able to buy a computer with a good VR headset for a total of less than $1000 at Walmart.
    I did not foresee that standalone headsets like the Oculus Quest would essentially match the original PC headsets at a fraction of the cost. The Oculus Quest is under 500$. Cheaper than a game console. It is light (500g), it has high resolution ( 1832×1920 per eye). It has a low-latency 72 Hz display. Six degrees of freedom. Sadly, you must tie it to your Facebook account which is a turn off for many people. There are rumours of very good Chinese headsets but they have not been commercialized yet where I live.
  4. A company like Sony has more than enough time in three years to bring the prices down and get game designers interested. Will the technology be good enough to attract gamers? If it is, then it might just be possible to sell 10 million units in a year.
    Sony released the PlayStation 5 without stressing VR. Half-Life: Alyx was one of the best-selling game of 2019 but it did not sell in the millions. There are good VR video games but very few high-budget ventures.

Conclusion. VR did not see the same kind of explosive growth that other technologies have seen. But the infrastructure has been built and the growth will happen. Prices have fallen and quality has jumped up. Sooner than you think, VR will enter your life if it hasn’t yet.

Daniel Lemire, "Virtual reality… millions but not tens of millions… yet," in Daniel Lemire's blog, December 15, 2020.

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Daniel Lemire

A computer science professor at the University of Quebec (TELUQ).

11 thoughts on “Virtual reality… millions but not tens of millions… yet”

  1. What do you think of XR devices like Varjo? Will it have impact?

    It’s interesting to note that Apple is starting to push AR in its high-end phones. It’s maybe a matter of time till we see Apple AR glasses or something similar. I would expect that to happen within the next five years or so.

  2. What do you see as the reason to buy a VR setup? If the answer is gaming I don’t know if that’s a big enough market — especially when you consider the complications that arise when you want to move in a game while simultaneously NOT banging into real world furniture…

    (If you visit The Void to play in their VR space, you can see all this in detail. Yes, it’s lots of fun. But the content is limited, and seems like it’s a major exercise to create more of it. Their systems are very carefully arranged to avoid the “banging into walls” problem in a way that can’t be assumed at home. And it feels like going to Disneyland, in the sense that it’s lots of fun as an annual experience, but not necessarily something to do every week.)

    Then there are the supposed educational uses. I’m sympathetic to these in theory, but I’ve seen how this plays out enough times to have zero confidence in reality. There will be piles of shovel ware claiming to teach your kids anatomy, geography, or whatever through VR. It will almost all be utter garbage, just like every previous iteration of these claims from before CDs were a thing. Sure gullible parents and school districts will be fleeced, just like they were in the previous hype cycles, but even parents and school districts can only be fooled so many times.

    I think there’s a reason Apple and MS are pushing AR much more than VR, at least right now. The use cases may be less gee whiz than VR, but there are more of them and they feel like there’s the potential there for more on-going value. This still means glasses (AR on phone or tablet works, sure, but it clearly sucks), but it means a rather different stance regarding software.

    The usual Future Nauseous
    pattern suggests that this will be in fact how VR becomes reality; not via dedicated VR glasses and use cases, but via AR use cases that are an obvious extension of the way one normally uses glasses (and associated optical equipment like binoculars, magnifying glasses, thermal imagers, …)

  3. I think this underestimates Facebook and the Oculus Quest and their commitment to creating content. The Quest 2 has a 90Hz and higher resolution screen if I remember correctly and a lot more power, as well as bringing the cost way down, compared to PC tethered headsets, and also is $100 cheaper than the original Quest.

    What I’m saying is that your 4th prediction is accurate, but it’s not Sony.

    I’m seeing more and more content on the Quest over the last half year. Echo VR is a standout multiplayer experience, for me, for example.

    I wouldn’t be surprised if the Quest hits that 10M mark in 2021 or 2022, and I think most the other players in this space will either be extremely high and and niche or get killed by the Quest.

    1. I am also very positive regarding the technology behind the Oculus Quest, but I fear that the strong association with Facebook is also a negative for many. The idea that Facebook must know what you are playing and when, and then sells this information to third parties is not a positive.

  4. Sadly, I think VR didn’t have its due because of maximalist capitalism. Without a big market to exploit, the small vr market remains Balkanized and unserved.

    The Microsoft mixed reality hardware is more consuner friendly, but the software and store gave been abandoned for two years. In the old days a future Jay Allard could have made a name running this division but modern stack ranked Microsoft doesn’t care.

    Steam VR is active software, but the hardware is off putting to normies and the communuty is toxic (no tech support except angry, aggrevied young men). Even the new, said to be great Index is painful to set up because of the new controller style.

    Facebook has good hardware and software, but just alienated a big chunk of the tech community via lies about logins. The Oculus store is terrible – I couldn’t get Tetris Effect to work or get support.

    So it’s a perfect storm, VR remains janky because it hasn’t crossed the chasm but can’t cross the chasm because it keeps losing the early adopter momentum necessary for growth. I am a nerd, own two vr systems, and still spend at least an hour a week fiddling with drivers and cables.

    Oh yeah, it’s also impossible to buy a good video card now. Or buy a PS5 and PSVR. Like toilet paper, stores don’t have video cards in stock anymore.

    Just to make sure we’re absolutely clear about the VR issue being a market problem: it is harder to buy the video card and equipment needed for VR now than it was in 2016 unless you surrender to the Zuckerverse. #progress

    tldr: all current VR headsets are Treos and the VR industry needs an iPhone.

    1. tldr: all current VR headsets are Treos and the VR industry needs an iPhone.

      There is truth in that except that I think that the Quest is de facto the iPhone, but it is an iPhone sold by Facebook.

      I am a nerd, own two vr systems, and still spend at least an hour a week fiddling with drivers and cables.

      I am very negative regarding VR headsets connected to a PC via cables. It is “fiddly”.

      Oh yeah, it’s also impossible to buy a good video card now. Or buy a PS5 and PSVR. Like toilet paper, stores don’t have video cards in stock anymore. Just to make sure we’re absolutely clear about the VR issue being a market problem: it is harder to buy the video card and equipment needed for VR now than it was in 2016 unless you surrender to the Zuckerverse. #progress

      With Greg, with discussed the issue of supply limitations, but I don’t think I could convince myself that it was a driving force. That is, for example, there is no shortage of Oculus Quests, the Oculus Rift is widely available. The prices have fallen. Yes, it can be hard to build a super powerful PC or a PS5, but you do not need the latest video card to do VR.

      I expect that supply is a factor, but even if supply were plentiful, we would not get tens of millions of new users.

      1. I agree that the Quest should be an iPhone, but it’s a dud. I could not get Tetris Effect to download from their store onto my PC so I neer connected my Facebook account (now deleted). You need a cable and a PC to have the “best” Quest experiences, like carrying a G3 laptop in your pocket to power an iPhone. The Oculus ecosystem is bad and Facebook association is brand poison in 2021.

        My VR story: I upgraded video cards for Doom Eternal, it is terrible, bought a used VR headset, Alyx | Beatsaber | Pistol Whip, and Quar VR magic.

        I think like all video games you need a system seller, Alyx, and the hardware…

        Facebook could have cracked it if they’d left the silos next to each other with a conveyor belt between; Zuck strangled Oculus by pouring all its data in the ever expanding Facebook silo.

        I love VR, even with the cables and duckduckgo-ing answers. My two hopes for mainstream VR in 2021 is Euro law forces interoperability and some plucky startup makes the Roku of VR (I promise if there were an EASY way to use VR exercise 1/10 Rachel’s Ray’s enthusiastic audience would have bought their husbands VR headsets for Christmas) OR that Warren and a Biden admin break up the Facebalkans before all the Oculus mojo is monetized to meet the next quarter.

        You are definitely right about the wires 🙂

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