Virtual reality: Once a potential game-changer, now on the road to oblivion

The technology some thought would even replace mobiles phones and TV screens has failed to deliver real economic value to its makers

VR, or virtual reality, was the supposed to be the next big thing. Some even thought it would replace mobile phones and TV screens. But cut to 2019, VR has failed to become mainstream, and is still dangling around to find its rightful purpose.

Of course, hand-core gamers swear by VR, especially the new Sony Play Station VR, and that is probably the only area the technology has had an impact on. People have also tried to use VR in flight stimulation, remote-tours for real estate properties, and entertainment (delivering movies over VR).

But, outside of gaming, VR has failed to deliver real economic value to its makers. Be it the clunky head-mount, which seems anything but futuristic, high price of VR units or the rise of AR, augmented reality (see Pokemon Go), VR has lost its sheen.  

And, here, the viral picture of a cow wearing VR headset at a farm near Moscow, aptly describes the current state of the tech: experimental.

“Virtual reality is still virtual reality,” said Manish Singhal, founder of Pi Ventures, a deep-tech focussed VC firm in Bengaluru.

In the four years of the firm, Singhal has backed a dozen or technologists working on things like chat-bots, AI in cancer diagnostics and machine learning to reduce energy leakage. But he has stayed away from VR. 

The VR fad hit India in 2015, when many start-ups set shop to create VR ‘experiences’, or content for this new medium. SmartVizX, which later raised money from Indian Angel Network and Yournest, is a firm creating 3D 360-degree virtual tours of apartments to excursion sites.

Another company, Kalpnik, started off with the same offering, but later pivoted to ‘daily darshan' from religious sites. Its app VRDevotee offers religious tours of Sabarimala to Vaishno Devi over VR. Over a dozen VR studios were created in 2016.

VR became a popular tool for property portals. In 2016, Magicbricks’ experience studios had people ‘experience’ properties over VR, while PropTiger went a step ahead and acquired VR start-up 3DPhy for the same purpose.  However, there has been no new investment in a VR tech company since 2017.

“There has to be a very strong use-case driving these technologies. In this case, what was happening was that the technology was trying to drive the use cases. VR obviously looks nice as a demo, but if you really look at it, the driving use-cases have been far and few,” said Singhal.

Tracing origins

In 1968, Ivan Sutherland, a US computer scientist, created what was widely considered to be the first head-mounted display for use in immersive simulation applications. Albeit primitive, it was a totally new way of consuming content.

Between 1970 to 1990, the VR industry (mainly in the US) shipped devices for medical, flight simulation, automobile industry design, and military training purposes. NASA started using the tech to train its pilots.

Post-1990, gaming companies came in with products like Sega VR and Nintendo’s Virtual Boy. So did creators, who set up large studios to supply VR content for gaming to education and training. The adoption was still mostly limited to B2B as the hardware was slow and clunky.

In early 2010s, as chips got faster and smaller, VR began to look cool, part in thanks to tech giants Facebook, Sony, Google and Samsung who announced VR as their next biggest focus area.

The golden period

In 2014, Facebook bought Oculus VR, then a two-year old start-up, for $3 billion. Facebook felt that VR is the future of content consumption, a message peddled by its peers at the time. This opened flood-gates of millions of dollars getting poured into VR.

Mobile-maker HTC launched Vive, a consumer VR headset, in 2015, followed in quick succession by Sony, which announced PlayStation VR. Play Station is one of the top-selling games consoles of all times, and teaming that with VR was an enticing proposition. In a year, Sony sold 1 million units of Play Station VR.

Google took a different approach. It created a $5 fold-out cardboard viewer, called Google Cardboard, into which a smartphone can be placed (as a viewing screen). It envisaged that smartphones will be able to play VR content, a smart move to draw people averse to expensive headsets to try VR.

For this Google launched Daydream, a developer tool where any-one can create VR content. Many creators signed up, leading to a proliferation in VR content.

The drop

VR was on its peak in 2015-17. Globally, VCs pumped $857 million into VR startups in 2016, which dropped to down to $280 million in 2018, according to SuperData.

Companies like Sony and Facebook do not share annual sales numbers but it is widely reported that shipments have fallen in the last two year. Facebook, in September, said it has, in total since buying Oculus, sold VR headsets worth $100 million, a measly number.

Sony in March said, total Play Station VR sales in five years have been 4.2 million units, while only 1.3 million HTC Vive units were sold in 2018 year. All figure represent global sales. For comparison's sakes, Apple sold 46 million iPhones on Q3 2019 alone.

The downturn is seen beyond just devices. IMAX, one of the biggest movie cinema chains in the world, had started VR-only studios in 2015. It invested millions of dollars opening locations from Los Angeles to Bangkok, however shuttered the whole thing in December 2018.

Another US company called Jaunt, which developed 3D apps and content for VR, recently said it pivoted to focus on augmented reality instead. Jaunt had raised over $100 million from Disney, and Google, laid off half of its staff last year.

Google, too, pulled the plug on Daydream project in October.

Shift to AR

Many say VR is failing because the clunky headset is un-appealing and cannot be used beyond a certain amount of time. This problem is solved by AR.

AR, which basically juxtaposes virtual imagery on the real world seen through a camera, is replacing VR like wild-fire. Hardware-makers and creators are moving to AR.

The shift was conclusively enabled by Pokemon Go, that became a rage last year. People from Shanghai to Toronto were breathlessly chasing Pokemons on the streets on their phones. The game, which hit 90 million downloads at its peak, is a classic example of AR.

Last year, Apple launched ARKit, a suite of software that enables anyone to create AR experiences for mobile and tablets. The tools, much like Adobe photoshop family, are being extensively used for gaming and education purposes, according to reports.

The next big thing people are excited about is AR googles. Think of it as regular googles with the capability to project virtual images on the glass in a such a manner that it looks like its actually. Magic Leap, an ambitious US start-up, is creating googles that project images on the user’s retina to have this affect.

No surprise, it has raised $2.6 billion from the who's who, including Google, Alibaba and Microsoft, even before rolling out a finished product. If it works, it will change the landscape of AR/VR.