At VRLA Unity CEO John Riccitiello expressed his opinion about virtual reality market in the future… he has been very realistic and so I loved what he said.

The reason for so much love is that he showcased a cold analysis on the VR market, based on his expertise and the numbers owned by Unity, which is one of the most important solution for VR experiences development.

So, finally an analysis not driven by what we want, what we’d like to happen and by what we see in our biased surroundings. Because yes, let’s be honest: we see virtual reality everywhere just because we are a lot involved in the VR ecosystem: reading reddit posts or my twitter feed, it seems that VR is everywhere, while all my friends here own a smartphone but do not have a virtual reality headset. And a good number of them do not even want one.

VR isn’t already arrived… yes, Oculus and Vive are good products, Microsoft cheap headsets are intriguing, but these are surely not products for final customers: too complex, too big, too expensive… with too few applications. There are too few people owning VR headsets (if you compare smartphone numbers with VR headsets numbers, well, the second ones are very small). Big studios still do not invest in VR because of the little user base, so there are not AAA experiences for VR. Sales numbers are far below the ones predicted by analysts.

This usually leads to the “ah, then VR is a fad and it’s dying like in the ’90s” reaction. But this is not the correct way to analyze a market… because you’re just putting emotions in that. It’s like when someone told that PSVR would have sold millions of devices only during the Black Friday weekend, then this obviously didn’t happen and so bloggers started saying that PSVR was under-selling, just because it didn’t respect some non-sense numbers that someone had established.

Riccitiello, instead, being a gaming professional, managed to make a great realistic analysis. I invite you to read the interesting article written on Road To VR about it. First of all he started talking about the problems of VR (the ones cited above), then he said that he has his own prediction. In his opinion (with which I agree), analysts have made too optimistic predictions about VR in these years, then they complained because these predictions have not been respected. According to Riccitiello’s data, a more slower adoption curve has to be predicted.

Unity CEO VR market prediction
Riccitiello predicted market for AR and VR for the following years (white line) compared to analysts’ one (purple line). As you can see, he predicts a slower adoption (Image by Road To VR)

The reason for a such slow adoption is mainly due to lack of valuable applications and especially for the high price of VR hardware. VR hardware to become mainstream has to be:

  • Cheaper;
  • Wireless;
  • More user friendly (e.g. all those cables for tracking cameras and headsets have to vanish, since they are really a mess);

For Riccitiello the main point is the price, and I agree: when I tell people that I’ve spent more than 900€ for my Rift&Touch + 2000 € for a brand new PC, people just get crazy (I know, I’ve bought top-notch hardware… there are cheaper VR-ready PC out there… but anyway you need money to afford a high-tier VR system). What is the right price point for the kickstart of the ecosystem, according to Riccitiello?

the whole kit—I believe has got to be significantly under $1,000 for the consumer

That’s a great reduction of overall expense… but it is necessary. When we showcased our ImmotionRoom solution at WTT 2015, we asked to people how much our full body VR system should cost. We’re talking about a solution featuring a DK2 headset, a VR-ready PC, 3 kinects, 2 NUC mini-PCs and various accessories. And the response for such an interview has been…

Unity CEO Virtual reality market analysis
Results of a survey we made in 2015, asking the ideal price for a full body VR solution: actual hardware price was more than $3000, but people wanted it to cost less than $500!

So, more than 93% answered proposing a complete solution costing less than 1000€. John Riccitiello should have made similar market analysis, arriving to our same response… but with a 2 years delay!! (Ahahahah we of Immotionar were too ahead of time!)

To arrive to a similar low price, we’ll need time. We’ve already seen that all vendors are making huge efforts to reduce the entry price point to VR (ad es. Oculus ASW or Vive new sensors setup), but arriving to $1000 is really hard.

When this will happen, the VR users base will increment a lot, so more and more developers will be interested in producing VR content. Which is the ideal user base according to Riccitiello to have the interest of big corporates?

all of the sci-fi or superhero movies cost over $100 million to build. And for those products to show up—for them to have a reasonable chance of penetrating a market well enough to break even or better—[…] if there isn’t at least a very near-term probability of 100 million devices in the marketplace that can play it, they won’t build it. They won’t build it because it can’t make money. And so, what needs to change for our market to get to a place that makes any sense at all for you to get the return on investment you want, is we’re gonna need to see the promise of that first 100 million [devices], and then the promise of the second 100 million. A couple hundred million devices creates an umbrella for the entire industry to flourish. And I think we’re a few years away from that.

Yep, 200 million people. Oculus + Vive sales combined don’t reach 2 million… and if we consider all headsets (even crappy Cardboards that people have found for free somewhere and don’t use), we’re around 20 million. So we’re at the 10% of our path towards the success of this wonderful tech.

So, when the miracle will happen? If things continue going this way…

My sense is we’re going to see that in full flower in 2019, and we’re going to see the beginnings of that shape [of device adoption] in 2018. […] it will happen, it’s guaranteed to happen.

My guts agree. When people told that 2016 would have been the year that VR skyrocketed, I was skeptical… that had no sense. In fact it didn’t happen… 2016 is the  year that VR has been just kickstarted towards consumers. 2017 is also too early… I think that at the end of this year we will see just see some second version of headsets. End of 2018 can be a good period for the beginning of mass adoption of VR, because we’ll surely have wireless and foveat rendering in all headsets… and the price for a VR-ready PC will surely be lower (my super-expensive GTX1080 is far cheaper now… in 2018 it will be a mid-class graphics card).

I like how Riccitiello comments on other analysis. First he says a golden sentence about predictions we’re all making:

It won’t happen at the time-table that people tell us it’s going to happen. It’s going to be slower than that because the pieces still need to come together.

So, calm down enthusiasm: there are lots of things that must happen for VR to succeed and this will need time. Then, he makes another comment about the prediction of market analysts (copy and pasted from the Road To VR article I invite you to read):

One of the forecasts I read recently said that the VR/AR marketplace is going to be $164 billion three years from today. Now… the entire game industry, hardware and software—including the juggernaut that is China—is only two-thirds that size, after most of my lifetime building to that point. Now I’m not suggesting [AR/VR] isn’t going to get to $164 billion and then $264 billion, and then $364 billion; I think ultimately the world of AR and VR, the world of 3D compute, is ultimately going to be as big as the internet—it’s going to be trillions, but we’re not there yet, and we have to measure ourselves. So if you look at the shape of my line there, through at least 2022 or thereabouts, I’m a little under the industry forecast. So if you happen to be an industry analyst, and if they show up to events like this, look… I think it hurts us to the degree at which people write articles for the major press and say that our industry is underperforming […] and we should write this off. It is going to work. It’s just not going to work in the timeframe that we like to talk about.

This is a gigantic burn towards market analysts! Ahahaahha loved it… They always predict too high numbers that don’t happen in reality.

Oh yes market analysts… (Image from Meme Super)

So, VR and especially AR will be huge, but more in the feature than we may expect. I know, we would all like to see VR skyrocket tomorrow, but this won’t happen… conditions have to become more favorable. So don’t illude ourselves that this will happen… because then we’ll be disilluded and that will lead us to think that VR is a failure. VR isn’t a failure, is just a little slowly moving snail. Give it time. It will arrive to the lettuce in 2019.

Unity CEO Virtual reality market analysis
VR is a snail (and my Photoshop lvl is over 9000!)

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(Header image by Road To VR, courtesy of VRLA)