VIRTUAL REALITY: VR Failing as Platform as Headset Shipments Stall.

Virtual Reality isn't working out as a platform. Below, you'll see the declining popularity scores of the major headsets being sold on Amazon, as scraped by Thinknum. Samsung's Gear headset slipped from the top 100 after November 2016, Facebook's Oculus by July 2018, HTC Vive in June of 2018 and Sony Playstation in April of 2018. IDC also just updated their headset tracker and shipments are down across device types. Headsets that insert smartphones (e.g., Samsung, or Google Cardboard) have declined from 1 million in 2Q 2017 to less than 500,000 a year later. Tethered headsets (those that connect to PCs and devices) fell 37% year over year.

The only category that did grow is standalone headsets, which is a completely independent device for which you need no other peripherals. Oculus Go and Xiaomi Mi VR are examples. And while there might be several dozen million devices installed out there, the technology is not showing the hardware growth of the iPhone, or the software growth of a Whatsapp. So what can we take away from this stalling? First, VR is meant to be a platform war for tech companies, including a dedicated app store, video and gaming content, and the other benefits of owning the customer. However, to be a platform, you need to capture an audience. And to capture an audience, you need to have spectacular differentiated design and proprietary content which forces adoption. The design part is still in wild flux, looking for a form factor people like. 

On content -- today's platforms bootstrapped themselves off existing media. Youtube started out as a place to park bootleg movies. iTunes grew on being able to play pirated music and sync it to your iPod. Facebook gave a home to college kids' digital photos. VR does not have this luxury, because the making of VR content remains far outside the capabilities of the average user. Nor is there a large library of interesting things to digitize. So the bootstrapping is much more difficult, because not only do you have to create all the content from scratch, but you also have to teach your clients about a new experience, which suggests the audience is not built in. That's not to say that the payoff for winning VR is small, but in the short term it is primarily a novelty gaming system.


Source: Thinknum (VR ranks), IDC (Shipments)