My former boss, Jerry Ceppos, once said he worried that the San Jose Mercury News was covering the tech industry without enough scope or context, as if we would have covered the Italian Renaissance by measuring how many cans of paint were sold. At the time he said this, Silicon Valley was going through its own innovation renaissance in the 1990s with the dawn of the commercial Internet. And it seemed like jaded journalists weren’t covering it with the awe and scope that could deliver the big picture to our readers.
I’m reminded of Ceppos’ observation at the dawn of virtual reality as the newest technology platform. Plenty of people are ready to declare that a new age has come. Michael Abrash, chief scientist at Oculus VR, which launched its Oculus Rift VR headset on March 28, wrote a column welcoming us to the “Virtual Age.”
Abrash wrote that the Oculus launch was a “first step into realms that feel even more like science fiction. Despite all the movies, books, and hype about virtual reality over the decades, the dream of high-quality, immersive VR has only just arrived. Oculus Rift is the first consumer VR headset capable of delivering true presence — the deeply convincing sense that you have been teleported to another place. And as magical as VR has become, this is only the beginning of a new journey, one that has the potential to change the world and our relationship with technology more than anything that has come before.”
Is a Renaissance with a capital “R” happening right before our eyes? How can we figure out whether this new age of VR is the real future or if we’re getting ahead of ourselves? I’m getting this question a lot, as some people like tech adviser Digi-Capital are predicting VR will be a $30 billion industry by 2020. Nobody wants to miss the bus to billions. On the other hand, you don’t want your bus to run out of gas before it reaches its destination.
The late Andy Grove, former CEO of Intel, had a way to assess technology revolutions as they were happening. In his bestselling 1999 book, Only the Paranoid Survive, Grove analyzed “strategic inflection points,” when a trend line starts to change and then moves in another direction. This kind of looks like an “S” curve on a graph. The problem is that when you are right in the middle of the inflection point, you can’t tell which direction it will go. You can look at tea leaves and you have to decide if they are “signal or noise.”
“Most strategic inflection points,” Grove wrote, “instead of coming in with a bang, approach on little cat feet. They are often not clear until you can look at the events in retrospect.”
So we’ll see much later whether Abrash is right or not. But let’s try to predict. If we listen to Grove, we know we will see “strategic dissonance,” or conflicting voices about change. But you can look for signals about whether your key competitors are changing or about to change. You can look at your key partner, or whether your own employees are starting to lose it. Do you have “Cassandras” in your organization — people who are doomed to see the future only to be ignored?
VR is certainly coming in a big wave, and we see plenty of signals. We’ve seen hundreds of VR startups form and raise billions of dollars across multiple industries from medicine to entertainment. New funds are being formed to invest only in VR and AR. Boost VC invested in 34 VR companies in the past year. Incubators like the Upload Collective are forming for VR. And the Chinese are even more excited about VR than anyone else. The capital is clearly flowing into the VR ecosystem in a way that is reminiscent of the early iPhone ecosystem.
Samsung launched its Gear VR mobile headset in November. Oculus launched this week, and the HTC Vive, powered by Valve’s SteamVR, is launching next week. Sony will release its PlayStation VR system in October, and Microsoft is shipping developer versions of its HoloLens augmented reality holographic technology. These changes are driving strategic moves at companies such as PC makers, who are all launching new models of hardware to support VR, even in the enterprise PC market. Google is doing a lot of VR work too, beyond its inexpensive Cardboard VR project.
The competitors are certainly all trying to outmaneuver each other. And partners like Samsung and Oculus are in a state of “coopetition.” But what’s the frequency of this curve? Is the curve of adoption going to be steep?
If you recall, Nvidia estimated that 13 million PCs, or just 1 percent of the market, were ready for VR back in December. A new PC capable of running VR will cost around $1,000. Given the $600 price of Oculus and $800 price for the HTC Vive, the barrier to entry for adoption is quite high. Only the enthusiasts will pay that much money for VR. Of course, the Samsung Gear VR is just $99 with a smartphone. Analysts are estimating that each VR platform will be lucky to sell a million or two units this year.
So third-party VR developers should certainly experiment with VR now. They should learn how to make the apps that are the killer applications of the future. But you can see in the early results that we have a long way to go. Tommy Palm’s Resolution Games was able to hit 150,000 downloads in the first five days after launching its Bait! fishing game for the Samsung Gear VR. It’s a free-to-play game, and so a small slice of that audience is likely to buy anything. That’s not enough to sustain a company yet.
But big companies are in motion. Electronic Arts is prepping a VR version of Star Wars Battlefront. And both Abrash and Oculus Studios head Jason Rubin make a good point. VR creates “presence,” or the feeling you are immersed in another place in a way that no other medium can duplicate. We’re seeing early VR apps like painting allowing people to do things they couldn’t do in any other computing environment. Rubin said that designing for VR is the toughest learning curve in games, but if you want to be ready for the big VR market, you have to start learning now. And you have to fail a few times at it before you find that you can have a great success, Rubin said.
“Every medium, from books to video games, provides limited descriptions, from which we have to reconstruct the full experience in our minds, losing the immersive power of reality in the process. When we see Neo look down from a ledge in the Matrix, we may get some sense of vertigo, but no one would equate it to the actual experience of standing on the edge of a thousand-foot drop,” Abrash wrote. “Stand on a ledge in a Rift, and you’ll instantly understand why VR is fundamentally different. You will in fact feel like you’re on the edge of a thousand-foot drop – and, if you’re like me, you’ll instantly take a reflexive step back. There’s no interpretation or reconstruction involved in VR; the experience is as visceral and direct as the real world.”
Presence is really a signal. It is something that makes VR unique, and it is likely to lead to a killer app. I don’t know what is. It could be porn. It could be shooting games. But I firmly believe that somebody is going to create something that takes advantage of the unique features of VR to captivate our imaginations. You can see joy on the faces of people who try out VR for the first time, whether they’re grandmothers or young kids.
But let’s not get ahead of ourselves. I’ve tried both of the consumer versions of the Oculus Rift and the HTC Vive now. I haven’t had much time with them, but I’m enthralled with Lucky’s Tale, the 3D platform game that comes bundled with the Rift, and with Final Approach (where you can trace a landing path for an airplane with your finger) and Tiltbrush (where you can paint with your fingers) on the Vive. But these are demo experiences that I wouldn’t pay a lot of money for right now.
The first round of VR doesn’t have great eye-tracking controls, and you can’t really use all 10 fingers with it yet. These are heavy and bulky headsets that are tethered to the PC. It’s hard to use them in confined spaces. Half the population could get motion sickness from using them. And while the setup process isn’t all that hard, you have to know what you’re doing to troubleshoot these systems. I asked how I could take a screenshot in VR. And the Oculus folks sent back two pages of instructions on how to make it happen. Oculus also doesn’t have its touch controls ready yet; you have to use an Xbox controller to make things happen in the Oculus world.
So while it’s good to dream, it’s worth it to note that people are going to make millions of dollars from VR this year, not billions. VR is going to play out over decades, Abrash pointed out. I think he’s right to identify this moment as the beginning of a new era.
But we shouldn’t forget that some amazing, revolutionary experiences in gaming platforms already have huge mass market reach. Game of War: Fire Age players are spending an average of $549.69 per paying user in the top mobile game, according to Slice Intelligence. If you make a game in VR, you can reach a few million people by the end of the year. If you make a mobile game, you have a shot at reaching more than a billion people. That fact isn’t lost on the contrarians at FunPlus, which recently formed a $50 million fund to invest in mostly mobile games.
Indeed, it would be a crime to ignore the here and now, the $90 billion game industry, while we’re waiting for VR goodness. It’s worth noting that, in spite of the launches of the VR headsets right now, the best game experience coming out at the moment isn’t a VR title at all. It’s Quantum Break, the time travel game for the PC and the Xbox One from Microsoft and Remedy Entertainment. I played through the game, which launches on Tuesday, twice over many hours, and I haven’t explored all of its storylines yet. If you want to have an enthralling experience on an outstanding platform, give Quantum Break a try. And wait a little longer for VR.