Virtual Reality’s Launching Pad

Oculus Rift: the Atari of a New Generation

Last week, at an event preceding the annual Electronic Entertainment Expo (E3), Oculus unveiled the shipping version of its Rift virtual reality (VR) headset, due for sale in the first quarter of 2016. The launch was expected, but Oculus went further by announcing a partnership with Microsoft: the Rift will ship with an Xbox One controller and work closely with Windows 10 and the Xbox One games console. The news is certain to be the talk of the trade show, and presents new challenges to Nintendo and Sony.

VR, like so many major tech trends before it, is being commercialized by gaming — the segment has consistently been the low-hanging fruit of the consumer electronics industry. Targeting holiday shoppers eager to pacify demanding family members tends to be a quick and successful method of reaching scale.

In a few years, this first iteration of the Rift is likely to appear as bulky and quirky as early Atari and Mattel gaming devices, but the long-term potential of virtual reality is significant. CCS Insight believes that consumer and publisher interest is sincere, and that VR has the potential to be a disruptive technology across several industries. The substantial commercial prospects — and the disruptive potential demand — of virtual reality justify the investments made by companies such as Facebook (which acquired Oculus for $2 billion), Google, HTC, LG, Samsung and Sony.

Virtual reality will begin as a high-end accessory for gaming (the Rift is expected to initially cost about $350), but developers will find many more applications covering entertainment, marketing and educational uses. Films, virtual tourism, immersive advertising and instructional videos are several examples of VR content we expect to become common in the next few years.

The fact that the world’s leading social network invested in a prominent VR firm indicates Facebook’s belief that the technology will affect the way people experience personal updates — users will be able to share immersive moments from events such as weddings and graduations. CCS Insight predicts a phenomenon called “see what I saw”, whereby users capture and share content from GoPro-like head-mounted 360-degree cameras. The imaging devices to capture true VR content are a few years off from consumer commercialization, but we believe it won’t be long until all the pieces fall into place. Many of the Kodak moments of millennials will be shared on devices like the Oculus, meaning new opportunities for companies making imaging components.

Microsoft’s partnership with Oculus would appear to put the software giant in a leadership position over gaming rival Sony. Microsoft is pushing Windows 10 and Xbox to new boundaries, future-proofing the platform by making it compatible with devices and technologies yet to come. Microsoft introduced a head-worn augmented reality device in January this year (see Windows 10 and HoloLens Reflect a New Chapter at Microsoft), but doesn’t have a virtual reality product of its own yet.

The Oculus Rift is the current poster product of virtual reality, but many people are experimenting with inexpensive accessories (like Google’s Cardboard) that use a smartphone and its sensors to provide a VR experience. It’s whetting the appetite of the audience to virtual reality content. Google provides the blueprints for Cardboard, many versions can be purchased online, and LG is even bundling such a headset with one of its smartphones (see Daily Insight: LG’s Humble VR Bundle).

Virtual reality is in the process of getting its killer content. Stand-alone VR headsets and imaging devices are several years away from reaching mainstream pricing, but publishers are gearing up. After the gaming industry, others will follow — it won’t be long before new blockbusters are introduced with 360-degree trailers, and entire films will be next (see Daily Insight: Virtual Reality Making the Rounds). Viewers could be able to experience sitting in the back seat of the car being driven by James Bond during a high-speed chase: killer content indeed.

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