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Waiting for the Future of Virtual Reality

Despite advancements in the past four years, VR as a means of mass entertainment still seems a ways off. What will it take to change that?

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In the fictional future world of Cyberpunk 2077, one of the first major video games released for the latest generation of consoles, denizens of Night City turn to “braindancing” to distract themselves from their dystopian surroundings. Like SQUID recordings from Strange Days, braindances allow users to immerse themselves in the experiences and sensations of others by donning virtual reality headsets and re-living recorded memories preserved and transmitted via all five senses.

In Cyberpunk lore, the technology behind braindancing was pioneered in the late 2000s and almost immediately adapted for entertainment purposes (not all of which were porn). In the real world, we’re well behind that timeline. Not only do we lack the tech to bring braindancing to the masses, but even the on-screen representation of braindancing in Cyberpunk gave epilectic gamers seizures until the buggy game was patched. Cyberpunk 2077 itself shipped with no native VR support, preventing VR-equipped players from pretending they were taking an authentic braindancing trip.

The latest depiction of a future in which VR entertainment is ubiquitous arrived at the dawn of a new hardware generation that thus far seems like a setback for VR gaming. The last generation was a watershed for widespread access to VR. As of last January, Sony had sold more than 5 million units of its PSVR headset for the PlayStation 4, which launched in October 2016. That figure fell far short of the most optimistic estimates—one overexuberant analyst forecasted 6 million sales in 2016 alone—and it’s a pittance compared to the total number of PS4 systems sold (approximately 115 million). But the PSVR provided an important proof of concept, delivering quality, living-room VR in an easy-to-set-up accessory for a widely available gaming platform.

That tangible progress toward a utopian vision of VR makes the present state of the market more perplexing. For decades, VR was the stuff of science fiction, and either technologically impractical or effectively unaffordable. In the past five years, though, that has changed: The headsets are real and at least somewhat spectacular, if not fully refined. However, the future of VR as a means of mass entertainment remains almost as murky as ever.

“The problem with VR was that four years ago it was way overhyped,” says David Cole, founder and CEO of digital entertainment research firm DFC Intelligence. “It was doomed to underperform by a large margin. However, the devices and content have been improving to make it start to look slightly interesting to a mass consumer base.”

Three prominent pieces of hardware—the Oculus Rift, the HTC Vive, and the PSVR—entered the VR arena within a space of roughly six months in 2016. There were plenty of problems with the PSVR. At launch, it cost as much ($399) as the PS4 did when it launched in late 2013. In the early going, good software was scarce. The headset was wired, restricting players’ freedom of movement by tethering them to the console, and its screen resolution and simplistic handheld controllers—repurposed PlayStation Move wands—were soon surpassed by state-of-the-art PC-based or stand-alone VR rigs.

Over time, though, the PSVR amassed a large library of games that convincingly demonstrated the potential of VR. Some of my most memorable gaming moments of a console generation packed with great games came courtesy of the system. The first time I played 2016 release Star Wars Battlefront Rogue One: X-Wing VR Mission—a mouthful of a title for a roughly 20-minute tech demo—I, like a lot of converts before me, was convinced that VR would be a big part of the future of console gaming. The intervening years have only deepened that impression: Star Wars: Squadrons proved that the promise of X-Wing VR Mission would hold up in a full-length title, while VR-enabled ports added new dimensions to existing titles such as Skyrim, Resident Evil 7, No Man’s Sky, and Superhot and VR-exclusive titles like Moss, Astro Bot: Rescue Mission, Beat Saber, and Blood & Truth showed what developers could accomplish when they designed games around VR functionality.

Yet the purportedly bright future of VR didn’t come closer to arriving with the mid-November debuts of Microsoft’s Xbox Series X/S and Sony’s PlayStation 5. Microsoft’s Xbox One never supported VR, and although the company—which has experimented with mixed reality on PC—promised that its souped-up Xbox One X would add VR capabilities, it later backtracked on those plans. In November 2019, Xbox brand head Phil Spencer discounted the possibility that Microsoft’s next console would support VR, saying, “We’re responding to what our customers are asking for, and … nobody’s asking for VR.” Last February, Spencer confirmed that the Series X/S wouldn’t launch with a VR device, although he added that he hoped that in the future, “it’s something that’s so important that it would be a no-brainer for us to go support it.”

The more demoralizing development for VR enthusiasts is Sony’s seeming lack of interest in a successor to the PSVR. Although the PS5 is backward compatible with the PSVR, it requires a free camera adapter to connect to the device. PS5 games released to this point haven’t supported PSVR, which means that even new VR-capable games—such as the forthcoming Hitman 3—must be played via their graphically inferior PS4 versions to take advantage of VR. Those PS4-era PSVR games are at most modestly enhanced when played on PS5, which means there’s little reason for a PS4 owner to upgrade for VR-related reasons alone. As if to hammer home the PS5’s aversion to VR, one of the system’s best-received launch games—the pre-installed, Sony-published Astro’s Playroomdidn’t support VR despite being a sequel of sorts to celebrated PSVR platformer Astro Bot: Rescue Mission. Instead, Astro’s Playroom served as a playable demo for the PS5’s DualSense controller, which boasts adaptive triggers and precise haptic feedback.

That’s not to say that Sony has permanently turned its back on VR. In 2019, Sony SVP of R&D Dominic Mallinson laid out the improvements in store for next-gen VR technology, including higher resolutions, wider fields of view, wireless headsets, and gaze tracking that would identify exactly where the player’s eyes are focused. Last year, the company closed a Manchester studio that was founded to create VR games, but it also filed patents that pointed to the possibility of a more immersive, motion-sickness-resistant headset and more sensitive controllers. Bloomberg reported that the company intended to manufacture a follow-up to the PSVR, which one Sony job listing seemed to support.

Yet last September, PlayStation CEO Jim Ryan referred to VR as an “unproven space.” In an interview with The Washington Post that was published the following month, he added, “I think we’re more than a few minutes from the future of VR.” Although Ryan reaffirmed the company’s commitment to the credo that VR would one day “represent a meaningful component of interactive entertainment,” he acknowledged that that day would not arrive until after 2021, adding, “Will it be this year? No. Will it be next year? No. But will it come at some stage? We believe that.”

It’s hard to dispute that the VR market was somewhat stagnant in 2020, a boom time for interactive entertainment. Although gaming growth was expected to be lackluster in 2020 as software releases and hardware sales slowed in advance of the new console launches, the pandemic prompted players to spend more money and time on indoor, socially distanced pursuits. Anyone who’d read Snow Crash or Ready Player One would have anticipated that VR would provide the perfect escape for players who were unable to enjoy real-life outdoor adventures, and for those who were already on board, it did: According to a year-in-review report published by gaming-centric Nielsen subsidiary SuperData, 71 percent of VR headset owners used their devices more last spring than they had previously.

Yet due in part to a slowdown in PSVR sales, VR headset shipments dropped by 15 percent compared to 2019, even as the games and interactive media industry grew 12 percent year-over-year (up from 4 percent from 2018 to 2019). In December, SuperData principal analyst Carter Rogers told me that the company was projecting a 14 percent decrease in overall VR revenue in 2020, largely because of the closure of location-based entertainment venues such as VR arcades and VR attractions in theme parks.

Not all of the news was negative. Although SuperData noted that the premium mobile segment of the VR market had “effectively died” as platforms phased out support for the Samsung Gear VR and Google Daydream, sales of stand-alone VR rigs such as the Valve Index (which came out in 2019) and the Facebook-funded Oculus Quest 2 (which launched last October) increased 19 percent, even though they were often out of stock thanks to pandemic-induced production delays. And as digital game revenue jumped by 12 percent—14 percent after February—VR game revenue rose 25 percent, almost keeping pace with the 28 percent spike in premium console earnings.

Much of the boost to VR software revenue was attributable to the March release of Valve’s Half-Life: Alyx, a highly acclaimed, VR-exclusive entry in the storied series that sold nearly 2 million units in its first six months and generated more revenue than all PC VR titles in 2019 combined. Numerous reviewers praised Alyx as a killer app that could influence future titles and boost the fledgling VR modding community. Rogers says it “rejuvenated interest in the tech among many hardcore gamers.” Alyx’s length and production values stood out in a market crowded with smaller-scale experiences, but a larger install base could make it more viable for major developers to work on bigger-budget VR-only titles, such as Respawn’s Medal of Honor: Above and Beyond (which came out in December) and Ubisoft’s upcoming installments in the Assassin’s Creed and Splinter Cell series. More must-play games by big-name studios—like Grand Theft Auto developer Rockstar, which has dabbled in VR but has left GTA VR support to the modders, possibly because of its parent company’s long-standing skepticism about VR’s broad appeal—could, in turn, encourage more people to pick up headsets.

It’s tough to say how many non-PSVR players already have. “Facebook made a decision years ago, it seems, to be nonspecific when discussing how many VR headsets were shipped,” says Ian Hamilton, managing editor of VR/AR news site Upload VR. “That’s made it exceedingly difficult for anyone to measure the scale of adoption.” Based on the subset of Steam users with VR headsets—1.7 percent in December, down slightly from the immediate aftermath of Alyx—Hamilton estimates (based on announced Steam user totals) that there are “likely a couple million VR headsets in regular use on PCs,” in addition to an unknown number (also “likely in the millions”) of stand-alone headsets that aren’t connected to a PC.

In October, consulting firm Activate Inc. projected an eightfold increase by 2024 in “spending by U.S. consumers and businesses on virtual and augmented-reality products.” Although there are many non-gaming-related applications of VR technology, analysts predict that gaming will be the biggest driver of revenue growth, with recent estimates of global gaming-related VR revenue projecting totals of nearly $50 billion (or more) by 2026 or 2027. For now, though, VR is still a niche entertainment market, accounting for only $589 million of the $126.6 billion spent on digital games last year.

Rogers reports that stand-alone headsets like the Quest 2—which, with a little technical legwork, can play any PC VR game without wires—will spur most of the coming VR uptake among mainstream consumers. “In the past, the main barriers to growth for VR were the price and complexity of ‘tethered’ headsets, and the fact that consumers weren’t very willing to pay for content on phone-based headsets (e.g., Samsung Gear VR),” he says. “Stand-alone devices have sidestepped both of these issues, and we expect steady growth going forward.”

Hamilton agrees that wireless headsets have been a boon to VR gaming, saying, “Wires are terrible for VR—you get tangled and twisted up and never forget the wire is there. The wires need to go away across the board for PC VR (and console-based VR) to grow significantly.”

Even without wires, though, the mechanics and convenience of VR remain much more onerous than those of regular gaming. Hamilton has called the $299 Quest 2 an “uncomfortable facebrick,” and he adds that “this bulk is a massive barrier to enjoying VR.” Hamilton isn’t the only reviewer to critique how the Quest 2 feels, and that’s the state of the art. Others have taken Oculus to task for forcing owners to log in to the device via Facebook accounts and for tracking and storing user data.

Currently, no company is investing the resources to compete with Oculus, which controls more than 51 percent of the PC VR market per the latest Steam survey. “I really think a company more focused on a consumer electronics product and infrastructure needs to come along to drive growth,” Cole says. “Sony and Microsoft have their own areas of focus, and VR doesn’t push the needle much for them. The challenge with going against Oculus is Facebook has focused on getting the price way down. They are going with a ‘make it cheap and they will come’ strategy. I think there needs to be a large company with a ‘make it fun and they will come’ strategy. Right now there are just not many companies willing to make that effort or take that risk.”

Cole still sees Sony as the most likely to step up, despite the console maker’s silence about its road map for the PSVR. Rogers concurs. “VR really doesn’t fit with Microsoft’s gaming strategy of everything being cross-platform on console, PC and streamed via the cloud, so they’re unlikely to focus on hardware that requires very distinct gameplay and controls,” Rogers says. “For PlayStation, we’re projecting that a successor to the PSVR won’t arrive until at least 2022, as Sony likely wants to keep the focus on the PS5 itself in the near future. However, this is poised to be a major force in the market based on the early success of the original hardware.”

Whichever manufacturer ultimately grabs the most market share, gamifying fitness in VR could become another lucrative route to consumer spending. “A $300 Quest 2 headset and a $20 per month subscription to Supernatural is a legitimately fun way to exercise,” Hamilton says. “I believe we’ll see Facebook and possibly others, like Apple, focus more on this use for VR in the next couple years.”

The prospect of sweating in a VR environment may be more appealing when advances in technology enable hardware with a smaller, lighter, glasses-shaped form factor, like the theoretical Cyberpunk-style design Facebook’s VR research division presented last year. Hamilton continues, “When full-body movement tracking is a standard part of an affordable VR headset, we should see social connection via virtual reality become a far more compelling and common thing than it is today. Any and all of these improvements will expand the addressable market for VR.” They might also decrease the risk of accidentally whacking one’s dog with a Move controller, a mistake I once made during a heated Beat Saber session. (She was fine, but I still felt bad about it.)

For all its virtues, VR is still expensive, still cumbersome, still space-intensive, still isolating, and still evolving too rapidly to be comfortable buying now. It’s also still so impressive in person that it seems certain to stick around and fulfill its promise—someday. “VR has been five minutes away from some kind of breakthrough for about eight years,” Polygon’s Ben Kuchera wrote last year. Those eight years have spanned three generations of consoles. Maybe the breakthrough will come before a fourth arrives.