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February 22, 2017

Castles Made of Sand: VR, PC Gaming, and Hype

Virtual Reality Technology is now being slated for not living up to the hype - despite the hype never being based on cold hard facts and figures.

By Ellie Burns

As the late, great Jimi Henrix once melodiously reminded us, poorly crafted constructions tend to topple easily; the same can be applied to arguments.

When the HTC Vive and Oculus Rift CV1 went on sale last year many press commentators and analysts were falling over themselves with hyperbole. Interestingly, very few such claims of VR taking over the world by the end of 2016 came from the VR companies themselves.

In an interview with Fast Company back in November 2016, Facebook’s Mike Schroepfer declared that they had a 5-to-10 year road map for Oculus, and Valve’s Gabe Newell recently stated that the development of VR and the Vive was going as per their expectations, however BBC News chose to lead with the headline “Valve ‘comfortable’ if virtual reality headsets fail”.VR & PC-Gaming

All three of the major consumer high-end HMD vendors have been conservative with their marketing and advertising effort, a far cry from earlier shrieks from the industry – a particular favourite of mine is the TV commercial for Star Wars the Arcade Game for Atari 2600 from 1983. Early 2017 has seen similar coverage on VR with pieces titled “VR Sales Numbers Are Wet Blanket on Adoption Hopes” and “Virtual Reality Was a Flop in 2016”. Such stories are only true when you base them on the assumption that the industry was expecting mass adoption, but it seems like this idea originates predominantly from news publications and analysts.

When making estimations on the total potential market for high-end VR headsets such as the Vive and Rift, a good place to start is the total number of VR-ready PCs being sold into the marketplace. A VR-ready system is still a big investment, and even upgrading an existing PC to the required specifications can set you back several hundred dollars.

When we look at CONTEXT’s latest PC Gaming figures which segment the market based upon system configurations and not just ranges of PCs, we can see that the VR-ready segment for embedded systems has shot up year-on-year by +1,070% in revenue for the top 6 largest EU distribution markets. In terms of units we are not talking millions of systems, and this data is of actual invoiced sales, not best-guesses or estimations. Even when we include assumptions about GFX sales of VR ready components, the number of Vive/Rift PCs which can comfortably run the headsets is still nowhere near mass adoptions figures.

What the hard data is telling us is that VR is growing alongside VR-ready PC sales, and growing fast from a small base. Whilst increasing numbers of early adopters invest in VR the hardware will improve, more killer apps and AAA titles will be published, and the price-point of the technology will come down.

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PC gaming & VR

Gabe Newell summarised the situation excellently in the aforementioned interview, stating that VR development is akin to that of the first home PCs in the 1980s: people purchased systems without immediate understanding of their best application, but were very excited by the technology all the same and trusted that it was not a fad nor a poor investment.

It is fair to say that VR sales figures in 2016 did not meet some estimations, but VR and Oculus are pushing on as planned. The nascent VR industry both needs and deserves support –  fun Atari ads aside, some first reactions to high-end VR are revelatory – not specious speculation when it fails to meet unrealistic expectations which were applied from without.

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