Will the Oculus Quest be the answer to VR’s prayers?

Stephanie Llamas

 

 

 

Source: SuperData XR Data Network

 

  • Virtual reality hardware revenue will reach $3.5B in 2019. This will largely be driven by Oculus’ untethered headsets and the PlayStation VR. The Oculus Go sold close to 1M units in 2018, which demonstrates consumer interest for the next wave of VR headsets, and the Oculus Quest will make VR even more accessible for new consumers coming into the market.
  • Standalone VR is poised to earn 68% of the total revenue for consumer hardware in 2019. Standalone devices will likely hold the greatest appeal for mainstream consumers going forward, while more specialized PC and console headsets are set to continue attracting enthusiasts.
  • 43% of VR consumer software revenue will come from games, growing the segment 40% by the end of this year. Gamers have been the early adopters in the space so far, and as non-gaming content finds its footing in the market, games will remain the primary source of VR entertainment. However, IP holders and game franchises will need to create more content to truly drive adoption.

 

Oculus announcing the May 21 release of its new Quest headset today is a pivotal moment for the current virtual reality market. As previously noted, standalone devices (headsets that do not require a connection to other devices) are the future and Oculus is tapping into a key early-adopter group: gamers. They understand the influence and appeal of this user segment since they have largely been the ones to push VR forward and gaming is a clear use case for this nascent technology.

Although Oculus’ major competitor HTC VIVE has created untethered solutions as well, the HTC VIVE Focus is not currently available globally. Secondly, the traditional HTC VIVE is fundamentally the same device with the same price and PC requirements, just with an add-on wireless capability.   (It will be interesting, however, to learn more about the upcoming HTC Vive Cosmos’ wireless capabilities since little is known right now).

Approaching the Oculus Quest’s launch optimistically, it could be a major game changer. The future of consumer VR requires untethered mobility and this could be the answer. PC-tethered headsets are bulky, expensive and require a connection to likewise bulky and expensive high-powered devices. While the PlayStation VR is easier to connect to the PlayStation 4 and more affordable, it still has its limitations in quality and ease of use. At the end of the day, consumers want to grab their headset, turn it on and get immersed, and for a reasonable price (the Oculus Quest will be available for $399-$499, which is a little pricey but much better than buying a full PC rig). Oculus also has the brand cachet of Facebook behind it so consumers who are not at all familiar with VR will at least recognize the company behind the headset.

However, if we think about the market more realistically, Oculus Quest won’t be the market’s holy grail. Yes, it will help adoption among non-enthusiasts, and it will be the best selling headset this year. However, 1M shipments may not be material enough to truly push the entire market forward. It mainly comes down to content, and right now their launch titles mostly consist of apps available on other devices, or indie titles (it does have a Star Wars experience, but Star Wars hasn’t been enough to push VR forward so far). Oculus really needs to get every VR user, from Vive owners to Gear VR owners, to adopt the device first opening access to an audience of roughly 50M people. That will provide the critical mass encouraging more IP holders and large studios to create content that will attract mainstream consumers.

I’m a true VR believer, and I hope Oculus Quest will be the near-term answer for the industry. In the long-run, gaming will be the prime use case for VR so a gaming-first headset makes sense. However, the market is still at the chicken-and-egg stage as a large audiences drive popular content and popular content drives critical mass.

 

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