The Brave New World of VR

The future is here – virtual reality is finally launching for consumers.

And this isn’t just the launch of a new product – VR’s arrival represents the starting point of an entirely new market. As of March 28th – when the first batch of Oculus’ Rift headsets ship – we are in uncharted territory.

We simply don’t have the kind of data and business information at our disposal that might help inform the launch of, for example, a new console, PC component or game. So in marketing terms we have to make a lot of assumptions and best guesses,” HTC Europe’s marketing boss Jon Goddard says.

But the team at HTC and Valve are able to draw on our experience both from the hardware and software worlds, which gives us a great insight into what VR enthusiasts and PC gamers will want in a consumer VR system.”

Former PlayStation VR developer Dave Ranyard – who left Studio London last week – adds: Releasing a games console is pretty difficult, but doing it when it’s a brand new medium, it’s like a challenge on steroids.”

"A high initial price point means that companies are
able to balance supply and demand. Over time, that
price will come down as manufacturing costs drop."

Dave Ranyard, former Sony Studio London

Even before it launches, virtual reality is running into some hurdles. The new tech does not come cheap. Oculus has announced a 500 price tag for its Rift headset, and it’s widely presumed that PlayStation VR and HTC’s Vive headset will have similar price points.

As this is a brand new category it’s very hard to really say if a price is high or not because there’s no benchmark,” Goddard explains.

So you end up dealing with perceived value, which is a tough one to overcome. What’s important is that there’s excellent content to match the demand for VR, and that’s ultimately what will drive people’s view of whether the hardware justifies the cost.”

Ranyard adds: That higher price point just means they are able to balance supply and demand. Over time it can come down and they will be able to lower the cost of their manufacturing process.”

Yet there are cheaper options on the market. Samsung has teamed up with Oculus to develop its Gear VR hardware, and start-up Merge VR (pictured above) launched its tech last year. Both of these use mobile phones rather than integrated hi-res screens. And with a considerably lower price point – Gear VR costs 99; Merge has a 49.99 RRP – this could be one way in which VR is adopted by the mass market.

It’s hard to say. Mobile experiences are much easier to show your mates down at the pub,” Ranyard admits. There might be a lot of people who try VR for the first time with that – it’ll be relatively easy. They can get a great experience, but it’s what those experiences are. There could be a first taste that comes through those mobile-based headsets.”

Merge VR co-founder Andrew Trickett adds: Mobile VR is going to allow for earlier adoption, and the higher end systems are going to be quite expensive for a while.

Mobile VR will continue to be the dominant player, at least in terms of numbers of devices out there.”

There will surely be a number of different ways in which the VR giants are going to be selling the tech to the masses. But one thing is clear – consumers need to try the hardware before they will buy it.

The turnaround moment for most people is trying it,” Ranyard says. And once they have, they are on board. That’s the biggest challenge. It’s the exact same one we had when we first made Singstar. Prior to that, nobody had sung at a TV set in a living room and there’s quite a few barriers to that. So that was all about sampling and getting people to play it and play it at each other’s houses. Getting it exposed on TV, the web to get people and so on.

But also, companies need to make content that isn’t just a long-form solo video game experience that’s all about twitch gameplay. That’s not going to sell it to somebody else who comes round to your house. You need more short form, more social ‘in the room’ experiences so people get it.”

Merge tried something a little bit different in pushing its VR headset.

Being a start-up, we used a lot of social media and PR to get the message out about Merge VR,” Trickett says.

We had a fantastic Christmas period and a lot of that had to do with getting on gift guides, rather than the tech press. That’s the way you get the message out to the masses, making them aware of this option, even if they haven’t had the chance to experience it themselves.”

"We promoted Merge VR in Christmas gift guides rather than the tech press. That’s how you get the message out to the masses."

Andrew Trickett, Merge VR

Merge launched its mobile VR headset last October, and in the UK it partnered up with High Street retailer GAME to sell the new tech in its stores.

One thing we have seen is that VR is incredibly powerful,” Trickett says.

When people try it they realise it’s here. Very good, affordable consumer-grade virtual reality is here. But on the other hand, it’s an experiential thing. There’s no way you can appreciate that unless you try it. We’re big believers in physical retail being a key part of introducing it to a mass market.

That will be a lot of people’s first encounter with VR. Over the last couple of years, it’s been early adopters who’ve been seeking it out or they closely follow the tech press. They hear about it and maybe purchase it online. What we’re finding out when we’re going to more general events is that vast majority of the consumer market has not even heard about VR. If we put it on their face it’s an incredible reaction. That’s why it’s a big part of our strategy.”

HTC’s Goddard says that the firm is keen to get into physical retail, but that stores need to work hard to push the hardware.

Having a Vive just sitting in a box on a shelf is unlikely to do much for a retailer,” he explains.

So they will certainly need to work out the best way to excite their customers about VR with creative executions in store, opportunities for demonstration and interaction, and smart targeting of their database.”

THE LONG GAME

Former PlayStation VR dev Dave Ranyard does not think this year, or the next, is going to be when virtual reality takes off.

I wonder if in 2016 or 2017 there’ll be a little bit of an anticlimax,” he explains.

The VR market will grow, but I wonder if it’ll dip at some point where the first wave finishes. Everybody has tried it and gone ‘right, okay’ and virtual reality will stall a bit and then there’s a second surge in a couple of years. It might be the second generation of headsets that make it mainstream and not the first.