Eight Questions About Virtual Reality in 2017

by Peter Rojas

2016 was a pivotal year for VR. The launch of four major new platforms -- the HTC Vive, Oculus Rift CV1, Sony's PSVR, and Google Daydream VR -- meant that VR was finally coming into its own (even if headset sales weren't as robust as hoped).

It was also a big year for VR for me personally. I helped make three VR-related investments for betaworks (in Boom.tv and two others that haven't yet been announced). I bought an HTC Vive headset, built a PC to power it, converted my guest bedroom into a VR den, and then proceeded to spend a lot of time there (favorite titles include Google Earth VR, Battle Dome, Rec Room, ZenBlade, Tilt Brush, and Smashbox). I started, and then proceed to neglect, a weekly newsletter called VR Links.

A year ago I asked eight questions about VR in 2016, and a few days ago I shared some of the answers I've found. It only makes sense that I follow up with some more questions about VR in 2017, so here are eight more that I'm asking:

Will Apple skip VR altogether?

It looks increasingly likely. I doubt we will see an AR product from them this year - despite some rumors going around, it still feels too early - but there's no sign of them introducing any kind of VR headset either, and Apple CEO Tim Cook has made it clear that while he thinks AR will be big, VR won't be by comparison. I've never seen a CEO of a major tech company go out of their way to predict that a market isn't going to big and then go ahead and introduce a product for that category, so it might be safe to say that Apple is going to ignore VR.

If Apple does ignore VR, does that damage the prospects for VR app and game makers? There's a widespread assumption that one real quick way for VR to go mainstream would be for Apple to introduce a headset. But let's say they never do. It seems like that would result in a stunted market for VR apps and games, right? There are an estimated 90 million active iPhone users in the United States and most aren't going to switch to Android so they can use Daydream VR or buy a high-end headset like the Rift or Vive (to say nothing of the PC required to power it). That means that if Apple doesn't introduce a solution for them, there's a good chance they won't experience VR beyond the very low-end experience offered by existing third-party headsets like Google Cardboard. This brings me to my next question:


Will 2017 be the year we see some high profile VR startups flame out?

Smart founders spent 2015 and 2016 raising enough money to get them through what could be some lean times for user growth this year and next, but there are likely a bunch of startups which will need to either raise more money or get to profitability this year. Both will be challenging. The addressable market for VR will still be relatively small, making it tough for most startups to make enough money from either sales or advertising to survive, and VCs are reluctant to pour more money into unprofitable companies unless they have "momentum". 2017 already saw its first notable casualty when Envelop VR, which raised a total of $7.5 million from investors, announced it was shutting down earlier this week.

Will 2017 be the year that VR breaks out of its niche?

In my post last week I wrote,

One big difference between smartphones and VR is that even before the iPhone was announced it seemed inevitable...that smartphones would become ubiquitous… With VR it is still very much an open question whether it will remain a relatively niche market or find a wider audience.

I do agree with Tim Cook that AR will be more widely-adopted than VR, at least eventually, but it's very hard to tell right now whether VR on its own becomes something that most people incorporate into their lives. It's entirely possible that VR's appeal only extends to those who want the most immersive experience possible, whether that's for gaming, work, or entertainment, while for everyone else VR is a curiosity that they might try out from time to time, but never feel the need to use on a regular basis. That doesn't mean that large, successful businesses focusing on VR can't or won't be built -- I'm betting some will be -- but I doubt that VR ever has the market penetration smartphones do.

If this were to be the year that VR breaks out of its niche, the natural question to then ask is, what drives that change? I have to admit that it's hard for me to see it happening in 2017 given the current landscape. It'd be dumb to definitively rule out something unlikely like a mega hit app or game that gets millions of people to go out and buy a headset, but I tend to agree with Joe Ludwig of Valve, who recently said on Twitter that the market for VR is going to be limited until mobile VR "adopts the features of high end VR." Could that happen this year? Well, that leads me to my next question:

will we see the first all-in-one headsets this year?

The short answer: probably not. But they're not as far away as they once were.

So what am I talking about? Well, right now the headset market breaks roughly into two parts: high-end headsets that need to be powered by a PC or game console (like the HTC Vive, Oculus Rift CV1, and PSVR) and mobile headsets where you pop in a smartphone (like Samsung's Gear VR and Google's Daydream VR). All-in-one headsets fit in between those two categories, offering the wire-free experience of mobile with the room-scale positional tracking (which anyone who has tried it will tell you completely transforms the VR experience) found in high-end headsets.

Oculus teased us with a glimpse of their "Santa Cruz" all-in-one headset prototype at Oculus Connect in October, Google at least was working on a tweener headset (and may still be), and a startup called Eonite Perception recently showed off a solution for mobile positional tracking. Whether there's enough of a market for a third category is an open question, but it could be an attraction option to introduce higher-quality VR to a wider audience which isn't prepared to spend $1000 and up for a PC and another $600-$800 for a headset. And as Kyle Russell suggested when we talked about this a couple of months ago, in places like the US where the high-end of the smartphone market is dominated by the iPhone, offering a dedicated tweener headset might be the only way for Google to get Daydream VR on the heads of people who are never going to buy an Android phone. Facebook might be thinking those same lines and offer the Santa Cruz headset as a solution for anyone who doesn't have a Samsung phone or doesn't want to spend the money on a Rift and a PC. But as I mentioned above, we may not see any of this come to fruition in 2017, the technical hurdles are still significant. 

What will VR look like on Microsoft's forthcoming "Project Scorpio" Xbox, which is due out before the end of 2017?

We know that it will be powerful enough to offer the kind of high-quality VR you can only get with the Rift or Vive on a PC right now, but beyond that we don't know all that much. Will they build a headset specifically for it, or will it be meant for use with a Windows Holographic VR headset? What about room-scale tracking? Will the Scorpio offer something comparable to what the Vive offers there?

Could harassment kill social VR before it starts?

Trolling and harassment are a persistent problem on social platforms, so it's not surprising that they're found on a nascent platform like VR. However, as Jordan Belamaire described in October in a post on Medium about being virtually groped while playing QuiVR, sharing a virtual spaces offers opportunities to harass and intimidate that go beyond what can be done on Twitter or Facebook. You can't enthuse about the potential for empathy and emotional intimacy that presence brings to VR without acknowledging that those same qualities can lead to abusive experiences as well. The only question is what we can do about it, because if we don't, VR risks becoming a medium where bad actors are able to drive out anyone not willing to submit to a torrent of abuse in order to participate. The makers of QuiVR quickly responded with a set of tools to mitigate harassment; I've chatted with other developers building social games and experiences that have been trying to address these issues as well.

How does Oculus respond to the Vive?

HTC made an impressive showing at CES last week, introducing a bunch of new stuff, including the Vive Tracker, a motion tracking device which will make it easy to turn all sorts of devices into VR accessories. The Vive Tracker will expand the range and immersiveness of VR experiences users will be able to enjoy, including highly-accurate gloves which track hand and finger motions. Once the Vive Tracker ships, Oculus, which just barely was able to ship its Touch controllers before the end of the year, will be playing catch up once again and it's reasonable to expect some announcement from them of a similar device before too long.

Also shown off at CES were a handful of 3rd-party wireless adapters for the Vive. Removing the wires that tether users to a PC is a key objective for high-end headsets like the Rift and the Vive, but getting there requires high-bandwidth, low latency solutions based on new-ish wireless standards like WiGig to work. New HTC partner Intel is said to be working on an adapter for the Vive as well, and there are rumors that the Vive 2, which may or may not be announced this year, will come with wireless built-in. We haven't heard much from Oculus here about cutting the cord on the CV1, but again, it's likely that we'll hear something about this sooner or later.

I'd love to hear your thoughts on this, as well as the questions you have about VR in 2017. I’m excited to see what this year brings and I promise I'll have a follow-up in twelve months time!