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13 January 2022

No, 2022 is not VR’s year, but investments are ticking up

The interlinked hype bubbles of augmented and virtual reality markets are back with a vengeance in the opening days of 2022. Misjudged predictions of headset glory grace the Faultline inbox every year like clockwork – but is there any substance to these claims this time around?

Long-term visions of metaverse applications are certainly adding value to the hardware on which these immersive experiences rely, although (as we argued consistently throughout 2021) no metaverse will reach true metaverse potential (we’re talking 100 million+ users) without breaking the shackles of today’s headsets.

One company reportedly not buying into the metaverse concept is Apple, which also happens to be one of the world’s greatest letdowns when it comes to delivering AR/VR products. Apple fanboys and girls will certainly be hoping 2022 is Apple’s year, as the company’s mixed reality headset is rumored to finally be arriving in late 2022 – with some serious oomph.

Whatever form Apple’s headset takes, whether AR or VR or a blend of both worlds, observers close to the company claim the hardware will have the equivalent computing power as the latest MacBook Pro.

Apple looks to be focusing its headset efforts on gaming, media and communications use cases, reportedly with emphasis on short bursts of activity rather than as something you would have strapped to your head for an entire working day. For that, the market will be waiting a few years longer, as Apple’s AR smartglasses are tipped to arrive around 2025, although we won’t be holding our breath.

Meanwhile, the explosion of virtual platforms to host virtual events during the past two years has in turn created new market opportunities for VR headsets. A thirst for live concerts has seen platform start-ups rise from the ashes, one such as AmazeVR which has just this week completed a $15 million financing round – bringing its total raised to $30.8 million since being founded in 2015.

That’s a lot of cash for a company of just 12 people – highlighting the nature of this loss-making industry as well as the intensive capex required for R&D in the VR/AR space. AmazeVR only pivoted to VR concerts in 2019 as a direct reaction to the pandemic and may have finally found its calling. Pushing back against assumptions that the return of brick and mortar concerts will squash its newly-found business, AmazeVR markets itself as a totally new category of entertainment, as opposed to offering VR versions of live concerts.

AmazeVR looks to differentiate itself by putting fans as avatars on stage with artists, requiring some seriously heavy video rendering, which is why technology assets include proprietary 9K cameras and automation software for handling complex Unreal engine-based VR concert VFX modules. A limitation, however, appears to be that AmazeVR can only support around 100 headsets streaming concurrently, which is a far cry from a metaverse-esque stadium concert experience.

A good omen for the VR sector can be seen in a note we received this week from stockbroking company Arden Partners, which informs us that 2021 marked the strongest year to date for private UK fundraising for VR. Its analysis shows that £154 million ($210 million) worth of capital flowed into the private VR space last year, compared to £90 million ($122.7 million) in 2021.

Looking ahead, numerous forecasts have jumped on Meta’s train bound for 2030 and got ahead of themselves. Omdia is one outlet sensibly saying that 2022 is not VR’s year, projecting that just 2.3% of households will have headsets by the end of this year. However, Omdia does envisage an influx this year of something called “passthrough mixed reality” – essentially VR headsets showing live content from external cameras.

Meta’s Oculus VR division is active in mixed reality with passthrough, having released its Passthrough API Experimental SDK in summer 2021, as a way for users to build and test apps that blend real and virtual worlds. Oculus wants these Passthrough API capabilities to get users customizing through composition of layers with other VR layers, blending techniques such as hole punching and alpha blending. Styles can also be applied to layers with color overlays and edge rendering, as well as rendering Passthrough images to a custom mesh instead of relying on a default mesh style.

Custom features such as these puts Meta in poll position to shift 71 million AR and VR devices by 2025, from 11 million sold in 2021, according to CCS Insight. As for this year, the forecaster claims Meta’s products will account for half of all consumer VR headsets sold.

It will take some doing to dislodge Meta’s Quest 2 devices which are leading the charge. One rival vying for a bigger slice of the market is Sony, which revealed plans for its PlayStation VR2 headset at CES last week. PSVR 2 – arriving a whole six years after Sony’s first headset – is still in the development stage, but Sony promises eye tracking, haptic feedback, 4K HDR, 90/120Hz framerates, foveated rendering (a technique for reducing rendering workloads) and 110-degrees field of view. It looks like Sony’s PSVR 2 is set to arrive around the same time as Apple’s mystery mixed reality headset, targeting Q4 2022.