25 Jan

by Ben Delaney

The news hit the VR industry like an atomic bomb. One of the biggest, and most well-known companies in the sector had suddenly closed its doors, eliminating all but one employee. Was this the end of Virtual Reality as an industry? Were the millions of investor dollars gone? How could the fledgling industry possibly survive this crisis?

That panic didn’t happen in 2018. It was actually the hottest VR news of November, 1992! The company was VPL Research, founded by VR poster boy Jaron Lanier. The reason for the failure, according to the Director of Marketing, was that “additional funds were needed, but our previous investors were so full of the hype created not only by VPL, but by the press, that they weren't willing to negotiate…” At the same time VPL's customer base started to erode due to a lack of capital to fulfill orders, or produce new products.

Sound familiar?

One of the xR industry’s biggest dangers is believing its own hype. It is just as true in 2019 as it was in 1992. And the outcome then should be seen as an indicator, and warning, regarding possible outcomes today.

2018 saw the failure of several high-profile xR companies; Blippar (closed, then recently bought at a reduced value), Meta, IMAX VR, ODG, NextVR (still alive, but struggling), Vaunt, and Starbreeze (in reorganization due to financial duress). They all had notable, and well-publicized, crashes. The most common comments from the embarrassed business leaders? To paraphrase, “we thought Virtual Reality was going to be huge, but the sales just didn’t happen.”

Despite NVIDIA reporting more than 4 million HMDs sold, and SONY telling us that they sold 3 million PSVR headsets, home VR gaming has not taken off. At least not to the extent hoped. When Virtual Reality Game vendors look at Xbox, Nintendo Switch and PlayStation sales in the hundreds of millions, and their mouths water. They look at games sales stats like Super Smash Bros. (1,651,501 units through 2018), Red Dead Redemption 2 (1,037,426 units), and Call of Duty: Black Ops IIII (701,380 units), and their eyes glisten. But these vendors miss the point. They have largely failed to create or adapt content so that playing it in a HMD is compelling enough to cause consumers to demand headsets. When playing in an often uncomfortable, $200-1000 accessory is not significantly more rewarding than sitting in front of the large-screen TV players already own, well, why bother?

So what are the developers of headsets, controllers, and tracking systems to do?  Who will buy Unreal and Unity game engines? When will Unity and Unreal start calling them development platforms? Is there a real, growing business in the Virtual Reality industry?

Unequivocally, yes! There is huge business waiting for xR developers. There are millions of users eagerly waiting for apps that they want and need. But these potential customers are not playing games.

The real future of the xR industry, as we are eager to document and explain, is in business, military, universities, retail, marketing and healthcare, as well as many other business sectors. And as even Forbes recently realized, there are big payoffs for the users of xR in these sectors, and big potential profits for the developers, OEMs, and integrators who deliver the systems that move the industries forward.

The good news is that many of the skills game developers have honed can transfer to enterprise xR applications. The military is a leader in the use of Serious Gaming, using it for simulation-based acquisition, equipment specification testing, training, and war-gaming, along with many other purposes. Virtual conference applications are starting to actually be useful, and as they gain business-oriented features, We expect growing acceptance. A recent demo of HTC/Vive’s Sync conferencing system convinced this writer the virtual conferencing could actually add value.
We expect that the same technology that made Pokemon Go an international hit (147 million player in May 2018) will help add AR to the medical suite, factory floor, and the toolbox of millions of maintenance workers. Overlaying information on real-world objects will help repair workers understand new equipment more quickly and find information much more easily that lugging paper manuals, or doing online searches.

We are seeing major implications for healthcare in xR technology. From the class room to the operating room, xR technology is improving the quality of care, with major advancements on the horizon. We have already seen effective treatments for PTSD among veterans, using virtual experiences to desensitize them. We are seeing virtual cadavers replace real corpses and virtual pathologies being used to train students. And in the OR, we are seeing overlays of imaging and vital signs data during procedures, helping surgeons maintain their focus where it needs to be – on the work at hand.

So do not despair when you hear of xR companies crashing and burning. the talent will be absorbed elsewhere. Hopefully, lessons will be learned. But you can bet on it – xR is here, its staying, and it is going to be huge.

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