As examined in ARtillry’s recent Intelligence Briefing, there have been about 17 million VR headsets sold to date. And as we discussed in our recent presentation, a few things need to develop — content, price, accessibility — to reach ubiquity.
Unity CEO John Riccitiello agrees. Though excited — and clearly vested — in VR’s consumer growth, we’re far from the penetration needed to sustain a mature and healthy industry. Meanwhile, analysts continue to publish wildly aggressive forecasts.
“One of the forecasts I read recently said that the VR/AR marketplace is going to be 164 billion, 3 years from today.” he said during the recent VRLA keynote that ARtillry attended. “The entire game industry — hardware and software and the juggernaut that is China — is only two thirds that size, after most of my lifetime building to that point.”
For Riccitello, it’s a matter of timing. We’ll get there but most forecasts and industry watchers (read cheerleaders) are a aggressive on the timeline. That does the industry a disservice because it raises expectations and then disappointment, per Gartner’s Hype Cycle.
“I’m not suggesting that it isn’t going to get to 164 billion then 264 billion then 364 billion,” he said. “I think ultimately the world of AR and VR, and 3d compute is ultimately going to be as big as the internet. It’s going to be trillions, but we’re not there yet. And we have to measure ourselves.”
Besides timing, it’s a matter of consumer adoption which is in turn tied to price. And in the classic “chicken and egg,” dilemma that we’ve examined, lack of meaningful consumer adoption will in turn disincentivize developers and content creators from investing.
“If there isn’t at least a near term probability of 100 million devices in the marketplace that can play it, they won’t build it,” he asserted. “And so, what needs to change for our market to get to a place that makes any sense for you to get the ROI that you want, is that we’re going to need to see the promise of that first 100 million and then the promise of the second 100m. A couple hundred million devices creates an umbrella for the entire industry to flourish and I think we’re a few years away from that.”
So what will it take to get to that 100 million units? He says the entire kit — CPU, GPU, HMD, etc — needs to be under $1000 for the consumer. This aligns with a pricing analysis that we recently presented, including consumer survey data from Eedar.
“Ultimately when you’re spending $1500 or $2000 to put a brand new tower PC under your desk and you’re tethering it to the back of your head through a head mounted display, and the aggregate spend for a consumer is $2000, that’s a lot of money,” he said. “And it’s really hard to come up with a product in any form of technology other than a brand new car that sells in any significant volume at price points like that. The price point is going to have to come down.”
You can see his entire presentation below. We’ve programmed the embedded video to play at the right moment. Enjoy and stay tuned for lots more analysis and market sizing.