Ownership of leading virtual reality (VR) headsets HTC Vive and Oculus Rift grew only 0.3% in July, according to new figures from digital gaming platform Steam, as reviewed in VentureBeat. August was worse, with Vive ownership flatlining and Oculus growing only marginally at 0.1%. According to Steam, today only 0.18% of users own Vive and 0.10% own the Oculus.
Given that VR is one of the hottest applications in the media industry right now, with millions being invested in it, those are not encouraging figures. Admittedly, they are only for Steam users, but the platform had more than 125 million registered accounts at the end of last year, and analysts estimate that 70% to 75% of all games bought online are via Steam. It also moved quickly to explore the potential for VR, so its user base is likely to be a good representation of early adopters.
Analysts are particularly concerned about data from these two months, since previously existing supply constraints were resolved by July. Consequently, these two months represent a truer demand-side picture for these high-end headsets. And yet, sales have been muted.
The slow pace of headset adoption will do nothing to allay fears that VR will go the way of 3D TV, also seen as the next big thing a few years ago. 3D TV never quite took off, and one of the reasons was that the 3D glasses required for it limited the user experience. Could headsets pose a similar challenge for VR?
The cost of the devices is seen as a constraint. The Oculus Rift, owned by Facebook , retails at $600 while the Vive from High Tech Computer Corp. (HTC) (Taiwan: 2498) sells for $800. Both also require users to have PCs that cost $1,000 or more. Some percentage of early adopters and hard-core gamers were always going to go ahead and buy these products regardless of the price. But as the pool of leading-edge enthusiasts is exhausted, maybe prices have to fall to tempt the next wave of adopters.
Another concern from many gamers is that the next generation of headsets will likely be better, and they may be better off waiting for future products before making such a large investment. Also, cheaper devices from Samsung Electronics Co. Ltd. (Korea: SEC) and Google (Nasdaq: GOOG) offer a lower barrier to entry for many consumers.
I'm not entirely convinced by these arguments. Of course, these headsets are expensive items. But most gamers have expensive, high-performance computing devices already. And the $600 for the headset is the same as the cost of a higher-end smartphone, which people around the world are cheerfully paying. Similarly, there is a next-generation product for almost every technology. People buy mobile devices, TVs and PCs knowing that there will be another, better, faster device launched within months of their purchase.
I think VR may just take longer to develop than many enthusiasts recognize. I also think that as an industry we are still figuring out how to use the 360° visual experience most effectively to create "killer" apps and experiences. And I think we need to be pragmatic about consumer adoption of headsets: Consumers are not used to it, and it will take either a fantastic application, a dramatic fall in price or just time and sustained marketing to drive adoption. In fact, it will very probably take all of the above.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation