At CES in January 2014, I saw the Oculus Rift virtual reality goggles when it was first shown to the public. It was the talk of the show. Those who got to test it said it was the future of virtual reality. Most saw it as a game changer for gamers while its use beyond gaming was in question at that time. Later that year, Facebook bought the product and has made it one of their unique projects they hope will impact the future of gaming as well as social interaction.
I have also used a number of other virtual reality goggles, including Sony’s Morpheus, and a couple of no name versions in the works. Samsung also has the Gear VR Goggles and, while I have not used it yet, I understand it is similar to the competitive models on the market today. Of course, Microsoft has its Hololens that marries VR and AR (augmented reality) to deliver an even more unique experience.
Personally, I love the idea and concept of VR specific goggles, especially for how it delivers a rich and immersive gaming experience. However, if anyone in the VR space thinks we will sell millions of these to consumers any time soon, they need to step back and look at historical adoption cycles for how consumers accept new technologies. If they understand this, they will realize we are at least 5-10 years away from these types of products gaining strong consumer acceptance.
While the VR goggle makers would like to make these useful to everyone from the beginning, the fact is their first market will be what is called vertical. We already know how these VR goggles are used today in military, industrial, pilot training, medical simulation applications, and specialized business settings. At this level, these VR goggles are very pricey. These types of goggles have been in use in these high end markets for well over 15 years.
If you look at the traditional adoption cycle, the very tip of the marketing pyramid represents this upper end use of a new technology. The next segment of user adoption is under the pyramid tip and represents what we would call a small but broader audience. However, most of these are still early adopters and are mostly vertical markets bought by companies or businesses that could not afford them when priced at the upper end of the price curve. Also, most of the apps available in this cycle are specifically designed for vertical markets and are now attractive since prices go down while in this segment of the pyramid. VR goggles are now in this next section of the pyramid and, while most will be business vertically driven, the current models take aim at gamers, which helps broaden the market adoption even more while.
The bottom part of this marketing pyramid spreads out to even more users and, in tech terms, this is when a technology gets to prices and use cases acceptable and of high interest to the consuming masses. From 35 years of experience, I have found from the time a technology gets to the second section of a marketing pyramid to the time it gains acceptance for a broad consumer market is anywhere from 5-10 years. This is true for new hardware-based technologies. In software and services, adoption cycles are faster but, with new hardware, the move from the top of the pyramid to the bottom is a long process.
I recently met with a major consumer brand that told me how they were going use Oculus to show off how they made their product and use it as a branding tool. Like a lot of companies I have talked to, they seem enamored with the concept of VR and want to take an early position to show they are innovative in how they use a technology like this to market a product. I told them I liked their idea but, from an execution point of view and because of these long adoption curves, very few people will actually see their VR promotion for many years. I explained my view of adoption cycles and suggested they make sure they do a Web and mobile app of this promotional material if they want to get any benefit from it now.
I do have one caveat with VR goggles and any potential use of them by consumers. As I mentioned, new software and services adoption cycles move much faster. One of the reasons I believe Facebook bought Oculus is to integrate their social network into delivery of virtual 3D chat rooms to meet. If the experience allowed for friends to be in a 3D VR room and it looked as if they are all together like the real experience, this could be a killer app for them. If these and other VR goggles can be priced well under $500 and focused on these social networking applications, it could move adoption of VR goggles down the pyramid faster. We now know the first generation of Oculus will cost $1500, a price vertical markets and gamers might tolerate. Mainstream consumers, not so much.
There is one other consumer application I am not comfortable talking about but have to be realistic when looking at hardware adoption curves. VCRs originally came out at very high prices and were used by movie and TV studios and video professionals at first. But as the prices came down, the X-rated video market kicked in and their programs were the catalyst to get VCRs into broader consumer usage. Once more people brought VCRs into the home, the traditional movie studios started making software or movies for them and that market exploded.
Interestingly, from a marketing pyramid standpoint, the time from when VCRs came to market and then got broad consumer adoption was about 20 years. However, the X-rated industry actually sped up the latter part of the adoption cycle and eventually VCRs became a standard companion to most people’s TVs.
The other issue is a chicken and egg problem. Even if the prices are high, it is the software and applications that drive demand at any level. However, software developers are not interested in creating apps unless they know the hardware it will be used on sells in the hundreds of thousands and grows to millions in the future. It may pay for them to write vertical apps they can charge a great deal for but they wait to do broader apps for a consumer market until prices go down and they are sure they have a broad group of users who could buy what they create.
In early June I will be attending the Augmented World Expo + VR experience and am willing to be proven wrong. However, if history is our guide, the adoption of VR goggles by broad consumer audiences is not going to happen any time soon.