Here‘s What‘s Stopping Virtual Reality From Going Mainstream [New Data]
While some in the technology industry have lofty dreams of virtual reality (VR) becoming as ubiquitous as smartphones, the reality is that it might be a while before we get there. Despite the impressive technological progress and billions of dollars invested in VR over the past decade, the technology remains far more niche than mainstream.
At HubSpot, we recently surveyed over 1,000 consumers in North America to learn more about public perception of virtual reality. The results shed some interesting light on the key barriers holding VR back from widespread adoption. Here‘s what we found.
VR Adoption by the Numbers
First, let‘s level set on where the VR industry stands today. According to estimates from IDC, shipments of virtual reality headsets grew 27% year-over-year in 2021 to reach 13.9 million units. The firm projects this growth to continue at a 32% compound annual rate through 2024.
| VR Headset | 2021 Unit Shipments |
|---|---|
| Oculus Quest 2 | 4.6 million |
| PSVR | 2.3 million |
| Valve Index | 400,000 |
| HTC Vive | 350,000 |
Data sources: IDC, company reports
While this growth is impressive, it‘s important to put it in context. For comparison, Apple sold over 230 million iPhones in 2021 alone. The entire VR headset market today is smaller than single smartphone models.
Our survey data further illustrates VR‘s niche status. Only 15% of respondents said they currently own a VR headset. And nearly half (48%) said they have no plans to buy one.
So what‘s holding back that other 85% from jumping on the VR bandwagon? Our data points to a few key factors:
1. Lack of a clear value proposition
The number one reason respondents gave for not owning a VR headset was that it "wouldn‘t benefit me" (27%). This speaks to a broader issue with VR‘s value proposition for the average consumer.
Gaming is great, but what else can you actually do with a VR headset that provides real utility or entertainment value beyond the novelty factor? For most people, that answer still isn‘t clear.
Compare that to the early value propositions of PCs (productivity) and smartphones (communication and internet access). VR needs its "killer app" that makes it indispensable for the mass market.
Some potential future VR use cases beyond gaming include:
- Virtual travel and tourism: Immersively explore global destinations and experiences from the comfort of your home.
- Remote collaboration: Host productive meetings, presentations and brainstorms with realistic avatars and spatial audio in VR.
- Education and training: Practice hands-on skills in realistic virtual environments. Already being used for some medical, mechanical and customer service training.
- Telepresence: Stay more connected with far away friends and family through lifelike virtual interactions.
- Virtual events: Attend concerts, conferences, sports and other live events in VR with thousands of fellow participants.
Source: TrendForce
But these applications are still in their infancy. The content ecosystem and UX need to evolve quite a bit for VR to become a regular tool or medium for the average person.
As Apple CEO Tim Cook put it, "I think VR can be great, but it‘s not profound in terms of its impact on humanity just yet. It will get there, though."
2. Cost and friction
Even as capable standalone VR headsets like the Oculus Quest 2 have brought prices down to $299, that‘s still a significant investment for a device with limited functionality. 21% of consumers we surveyed said VR headsets are "too expensive."
Then there‘s the friction involved with using VR. It‘s not as simple as popping in some earbuds. Current headsets are still relatively bulky, you have to make sure they‘re charged, the lenses tend to fog up, and some people experience motion sickness with extended use.
As Benedict Evans astutely notes, "A great VR experience needs to be as effortless as putting on a pair of sunglasses, and a great VR app needs to be as simple and rewarding as checking Instagram. We‘re a long way from that."
3. Awareness and education
Finally, there‘s a basic awareness issue. 23% of consumers said they "need to learn more about VR" before they‘d consider buying a headset. The technology is still foreign to many.
Most people haven‘t tried a modern VR headset and don‘t know what the experience is actually like. So there‘s an educational curve to overcome in explaining the technology‘s potential.
This is a solvable problem, but it takes consistent investment in high-quality content, retail demos, ads and other forms of public outreach. Which is exactly what the leading players are doing.
The Big Tech Players Driving VR Forward
While VR remains a small market in absolute terms, the world‘s largest tech companies continue to invest billions in the space. They‘re playing the long game under the belief that VR (and AR) represent the next major computing platform.
Meta (Facebook)
No company has gone all-in on VR quite like Facebook, or Meta as it‘s now known. The company‘s VR investments include:
- Acquiring Oculus for $2 billion in 2014
- Spending a reported $500M annually on VR content and ecosystem development
- Employing over 10,000 people working on VR/AR products
- Investing $10B in 2021 alone on the metaverse division incubating VR/AR
CEO Mark Zuckerberg sees VR as central to the company‘s future, and is clearly in it for the long haul. With deep pockets and a willingness to sell headsets at break-even prices, Meta is well-positioned to continue driving VR into the mainstream through brute force investment.
Sony
Sony was actually the first major player to bring a modern VR headset to market with the PSVR for PS4 in 2016. It went on to sell over 5M units, making it the most popular tethered VR headset.
At CES 2022, Sony unveiled the PSVR 2 for PS5 with significantly upgraded specs. With over 17M PS5s already sold, the PSVR 2 could quickly become the most popular high-end VR headset when it launches. Exclusive AAA games and Sony‘s gaming pedigree give it an advantage.
Apple
The dark horse is Apple, which always looms large over any new computing form factor. Rumors have swirled for years about Apple‘s plans for a VR/AR headset.
Most analysts now expect Apple to release a premium standalone headset with high-resolution color passthrough for AR apps as soon as 2023. It will likely be priced around $2000-3000 initially, aimed at professionals and developers.
But in typical Apple fashion, it could set a new bar for VR/AR hardware and quickly become the revenue leader in the space. Eventually, many believe Apple will release more affordable AR glasses as well, potentially accelerating adoption of both VR and AR.
The future of VR
So where does this all leave us on the current state and future prospects of virtual reality? Here are my predictions:
VR will continue to grow steadily but remain a niche (less than 10% household penetration) for the next 2-3 years. The technology is still too expensive and clunky for true mainstream adoption.
But in the second half of the decade, several factors will converge to accelerate VR‘s growth:
- Headsets will slim down to sleeker, more glasses-like form factors at lower price points
- Compelling VR use cases like virtual events and education will emerge outside of gaming
- Apple‘s entry will validate the market and spark new waves of innovation and competition
- More accessible and intuitive VR creation tools will democratize high-quality content production
By 2030, VR headsets could reach hundreds of millions of units sold annually, on the same scale as game consoles today. They may not be quite as ubiquitous as smartphones, but could become the primary way many people consume entertainment and connect with others.
At the same time, VR‘s cousin AR will also be coming into its own through lightweight glasses and integrations into things like car windshields. The lines between VR, AR and plain old reality will start to blur.
In the end, VR going mainstream is likely a matter of when, not if. The world‘s tech giants are convinced that immersive computing is the future, and they will continue to invest heavily in improving the hardware, software, and overall experience.
Businesses and brands should start developing VR fluency now so they‘re ready when the time comes. Experiment with the technology. Build VR content. Learn VR design best practices. Test VR-based marketing and sales.
The building blocks for VR‘s eventual ubiquity are being laid as we speak. Don‘t get left behind in the flat world of 2D computing. The future is coming, and it will be made of pixels you can reach out and touch.
