What is the VR market going to look like when it (eventually) takes off? After two years of disappointing sales the OEMs are getting round to seriously refining their products and we are starting to hear various spins on why sales are still bumping along the ground towards the end of the runway.
Depending on which part of the elephant a particular company is touching, we are hearing that the headsets are too expensive or too heavy or the experience is not mobile enough or the installation cost is too high, or, or, or... This is all great (although my opinion is that too much of the hype is still aimed at the wrong vertical, but that's a different topic) and we certainly need better hardware but Chinese company Hypereal has a different slant that takes aim at the business model.
According to John Gu, Hypereal head of developer relations, for the Chinese market at least, the problems start with quality of experience and total cost of ownership. Speaking at the VR developer conference this week, and quoting surveys that show Chinese consumers among the most accepting of the concept of VR, he sees a potential market of over 200 million chinese users locked out by the current ownership-driven business model.
Starting with quality of experience, Hypereal holds that tethered systems deliver the only acceptable experience today and previously-popular mobile solutions like cardboard stimulated interest only to disappoint. Interest in cardboard and other mobile offerings is declining fast as result and these users need to be recaptured by giving them a better experience. This can only be done with high end, tethered solutions, leading to the second problem: cost of ownership.
The problem begins with the cost of a high-end headset, combined with controllers and room-scale equipment along with the additional cost of a PC capable of delivering the right level of experience to it. All of this comes in at several thousand dollars, which soaks up far too much of the disposable income of the target demographic. Piled on top of this is the cost of games, which quickly mounts up. Every library has a few hits with a long tail of items that get played a few times and then sit on the shelf; all too much for the average person's finances to bear, and this doesn't even take into account the issues around devoting space in the home to room scale VR.
Gu sees a combination of VR cafes and a subscription model for AAA games as the solution to this problem. With a network of VR cafes in major centres providing the outlets, games companies can sell subscriptions to cafe patrons offering them unlimited access to a wide range of content at a moderate cost. This is where Hypereal is focussing its efforts, with a plan to develop a complete vertical segment involving the creation of a network of VR cafes that has access to a library of compelling titles available on a subscription basis.
With this approach, Gu is confident that a virtuous cycle of hardware and software availability can be created to break the current deadlock.
Hypereal has no plans to launch worldwide operations just yet; they are a Chinese company promoting a China-centric solution to a problem that might not scale to the international market but given the figures that say China is the world's largest potential market for consumer VR, we'll all be watching closely to see if they have it right.