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8 August 2019

VR haunted by ghost of 3D

VR has lived under the shadow of 3D as a video display technology overhyped with immersive promise and encumbered by headsets that seem destined to keep it boxed into a niche rather than breaking out into the mainstream. Yet VR’s struggles actually predate 3D in video by at least 20 years as we note a paper published in 1994 entitled Virtual Reality: Real Promises and False Expectations. At least that paper signaled the promise which does separate it out from the narrow concept of 3D in video that surfaced around 2013 with early hopes brusquely snuffed out by debilitating user experiences such as migraines.

VR is an altogether broader brush and already has demonstrable use cases in various commercial fields such as estate agency and travel. The question here though is over the extent and timing of its impact on mainstream broadcasting, for unlike 3D it is a slow but sure burn that will eventually generate some warmth for operators and broadcasters. We can point to various sources of data that substantiate this point in various ways.

ABI Research agrees with our point about the slow burn in a recent report predicting the global VR market will grow to $22 billion by 2024. ABI Research does not state its figure for 2018 but that can be counted at around $5 billion. So even ABI Research is predicting quite a steep climb, although it is substantially less than some of the absurd projections from other analysts such as Orbis Research, which suggests a rise at 58% CAGR from $3.13 billion in 2017 to $49.7 billion by 2023, a rate of gain that is hardly sustainable even if it occurs in any one year.

ABI Research is composed of cooler heads which note how big players that were early evangelists for VR, such as Google and Samsung, have downplayed their presence more recently in the light of disappointing traction.

However, ABI Research justifies its still-optimistic growth projections by arguing that VR will reach a point of inflection in 2020 or 2021 as technologies and hardware mature, with a corresponding drop in price. The firm draws analogies with other sectors such as smartphones and earlier PCs, pointing out that they experienced a period of consolidation if not quite disillusionment. It insists that VR is a different beast from 3D TV and will escape that fate, but will take several years at least to carve out a significant presence in mainstream media and entertainment.

In the meantime, growth will be driven by the enterprise market for those sectors such as architecture, real estate and ecommerce where it has obvious utility, although for the latter more dependent on consumer adoption. There will also be consolidation in gaming around consoles like Sony’s PSVR, Facebook’s Oculus Go and HTC Vive, which have been successful already. ABI Research considers those factors are enough to take the global market up to that $22 billion mark even without puncturing the mainstream, but we consider that over optimistic.

Another survey heading in the same direction comes from Strategy Analytics with data on the VR headset market, which reveals the first ever decline in annual VR hardware revenues, from $1.9 billion in 2017 to $1.8 billion last year. The decline in shipments was far steeper, more than halving from 31 million units over that year to just 15 million units in 2018.

Combining those two totals however reveals the important silver lining that the losses were contained in the lower value segment and that top end systems, that is consoles and PC tethering, actually gained. Winners indeed included Sony, HTC and Facebook, while Google and Samsung were confirmed as losing their bet on low cost VR headsets. The market for Google Cardboard, Google Daydream and Samsung Gear VR evaporated during 2018, being the main causes of that savage fall in hardware shipments. Google’s market share was slashed from 21% in 2017 to 11% in 2018. Samsung has suffered just as badly and has largely ceased bundling VR headsets with smartphones.

Strategy Analytics was right to highlight how brands and marketing agencies are shifting budgets away from VR towards novel AR services such as Snapchat and point to continued growth in the high value headset market. But it fails to note the rising importance of the smartphone in delivering VR – despite Samsung’s experience – and the role of AR in taking the technology into mainstream TV.

The common denominator here is not VR but its close sibling AR, which are founded on the same technology but to extend rather than project or simulate reality. The key then is that in both the smartphone and TV case there will be no additional specific hardware, no dedicated headsets. For smartphones, many of the earlier use cases at any rate may revolve around education and tutorial rather than pure entertainment. Users may for example apply their AR app for demonstrations of how to use appliances or equipment, elicited by pointing the camera at it.

For the TV, use cases will include showing what if scenarios, such as what might have happened if a certain sporting event such as a foul had not taken place. AR could also allow easy access to graphics and player information for individual users without cluttering up the screen for others. It may well become an important differentiator for sports streamers and a reason for rights holders to distribute via their platforms rather than going D2C.

AR and VR do get confused with immersive video in general, as BT Sport has done in promoting its live 360-degree video coverage of select UEFA Champions League matches through its smartphone app. This is juts reality from different vantage points and not VR or AR, although it is all part of the greater immersive movement. The main point is that immersion must be delivered without need for dedicated headwear.