Despite the media going on and on about virtual reality, head mounted displays and the advent of immersive virtual worlds, the reality is that a large majority of Americans are completely unaware about the presence of VR on the market. Due to this and a string of other issues plaguing the VR market, research firm Superdata have lowered their revenue projections for the VR market by 22% for 2016, down to $2.9 billion from the projected $3.6 billion they had forecast just a month ago.
According to GameIndustry.biz the drop from the early forecast of $5.1 billion to $3.6 billion and then from $3.6 billion to $2.9 billion came as part of a wave of realizations of Oculus and HTC encountering limited production of the Oculus Rift and HTC Vive, resulting in delayed deliveries and limited quantities of product being moved out onto the market. The next shipment for both units is expected to begin this summer.
The coupling of production woes with another major problem has Superdata refining their forecasts on the potential revenue the VR market could generate in 2016.
What’s this other major problem that Superdata has encountered? Market awareness.
According to Superdata’s director of research and head of virtual and augmented reality, Stephanie Llamas…
“The general public are mostly unaware of Virtual Reality with 50 percent of Americans showing no interest in or knowledge of VR,”[…] “Broad consumer adoption relies on building awareness, but today nearly 80 percent of consumers only occasionally or never hear about VR.”
In Superdata’s report, titled “Virtual Reality and the Next Killer App”, they note that only 13 million Americans plan on purchasing a VR headset this year but the research firm is estimating only 7.2 million to actually ship throughout the year, this includes 3.5 million Gear VR units, 2.6 million PlayStation VR HMDs, and a shared 1.1 million between the Oculus Rift and HTC Vive.
I think those numbers are mostly right… save I would suspect that the PlayStation VR may have 2 million in pre-orders alone if it’s marketed properly leading up to its release.
The $399.99 price point is the sweet spot for VR, and so long as Sony doesn’t royally screw up with the PlayStation Neo 4.5K by fragmenting their install base, the company could easily shift a few million more units if the PS VR’s release is coupled with a drop in price on the base PS4 between $199.99 and $249.99 and the release of the PS4 Slim in the fall. This would easily see people grabbing up both the PS4 and the PS VR in droves.
Of course a lot of the PS VR’s sales momentum will be dependent on the PS4’s price drop, Sony’s commitment to the PS4, the price of the PlayStation Neo, and how many of the 50 of the PS VR games actually make their release window.
Interestingly enough, the biggest hurdle for many Americans adopting VR is price. According to the report, 26% of survey participants said that the HMDs are still too expensive. While market awareness may be low right now, with a decent marketing campaign from Sony for the PS VR, I don’t think awareness will be much a problem, it will all boil down to whether or not Americans can be convinced to invest $399 for something like the PS VR, and if there will be enough decent games to convince people spend that kind of money on the hardware. At the end of the day software sells hardware (unless you’re the PS4, where Microsoft’s DRM blunders sells the hardware for you).