Virtual Reality: Start of a Marketing Revolution?
Virtual Reality…once a fantasy, now one of the cutting-edge technologies of Silicon Valley. The hype of VR has been well-documented, but wasn’t a major force in the market until Palmer Luckey, the young entrepreneur behind Oculus Rift, created a VR device that caught the attention of investors and the public alike. Luckey was unsatisfied with the VR headset market, and after running a Kickstarter campaign with the intention of raising $250,000, he ended up raising $2.4m by the time the campaign was done, allowing him to create the first “real” prototype. While developers are figuring out how to use VR to create new experiences, it also promotes a unique opportunity to the marketing and advertising realm of business. Because of VR’s visual aesthetics and interactive experiences, it might be time to implement new perspective on what it means to “market” something.
As we enter the next decade of marketing, it would be foolish to think current marketing trends will remain relevant. Since the early 2000’s and the help of the internet revolution, advertising to consumers has become more than just posting an advertisement on TV and hoping it resonates with potential consumers in their target market. With the use of smartphones and personal data from contributors such as Google and Facebook, the information about individual consumers is more personal than it’s ever been. Companies have had to adjust their marketing budgets and strategies to a more individual level, which can be a challenge with how many options are now available for most products. The technology of Virtual Reality (VR) may throw yet another wrench into marketer’s plans, and once again change the marketing landscape, one that is already changing daily.
Up until recently, virtual reality didn’t have much traction. With the emergence of platforms such as Oculus Rift and Google Cardboard, transforming VR into a real “tangible” product is now a reality for consumers, but the magnitude of its overall impact is still somewhat unknown. Most would consider VR still in the embryonic stage in terms of product life cycle, and as a marketing platform, VR has yet to reach its fullest potential. In my opinion, marketing via VR has a number of opportunities that can make advertising an interactive experience to the consumer, instead of just an annoying nuisance. Many people already use Ad-blocker or DVR to skip advertisements, but what if the overall advertising experience was changed into something customers wanted?
While some property management companies have started adopting virtual reality, the real estate market as a whole could change with the implementation of VR in terms of virtual tours, as well as housing blueprints. With virtual tours, people looking for apartments in cities where they are possibly moving would be made simple. They could enter an office, or even sit at their own home with an app, and take tours of numerous apartments from the couch while making a decision. This would reduce cost to the property management companies, while enhancing the user experience. In terms of selling houses, there would be no need to hold an open house anymore if people could take a virtual tour and just read-over a document with the specifications in front of them. Expanding more on this idea, VR could potentially walk someone through a house they wanted to build before any foundation of the it was constructed using virtual blueprints. If something needed to be changed, an owner could make a modification in the beginning before any building had started. The implementation of VR in this case would benefit all the parties involved in the real estate process.
Similar to real estate, virtual reality could change the way tourism is marketed. States or countries that rely heavily on tourism revenue could offer guided tours and/or pictures of unique landmarks via VR for those who cannot travel to the places themselves. Imagine traveling the world from your living room, VR as your private plane, the opportunities are endless. For those people who have never been to a location before, VR could give walkthroughs on the best places to eat, best hotels to stay at, and where public transportation spots are. Currently, many people use Google Maps or Yelp for this kind of information, but what if it was taken one step further using virtual reality? It is important to consider VR may have a negative effect on tourism as well. If people were satisfied with seeing places they have never been to via VR and not in person, the situation becomes a double-edged sword. This could hurt tourism revenues, as well as small businesses that rely on tourism to operate.
Another industry that could be revolutionized due to virtual reality is the world of sports. If you’re like me, you have probably wondered what it’s like to see Lebron James or Stephen Curry from a court side seat. With the implementation of VR, this could become a reality for any NBA fan, as virtual court side seats could allow teams to have unlimited seating for their arenas. This could boost ticketing revenue overall, while also boosting popularity among fans from around the world. The NBA is becoming more international every year, and with VR, the progress of this could be accelerated. This use of VR isn’t limited to just the NBA, as it could be applied to any sport, and would make seeing your favorite teams and players easier than ever. Marketers of sports franchises would have to find create ways to advertise these “virtual” seats, but with the possibility of endless revenue, it would be easy to measure the success by seeing how many people are using the VR seats to watch the games.
The overall theme with these three applications is the ability to access a place or event without being physically present, which can open opportunities to plenty of other situations that were not mentioned. Assuming virtual reality is integrated is what you’re trying to look at, you can be almost everywhere while sitting down anywhere. The question becomes, will people eventually be satisfied with seeing things through a headset rather than in person, which makes the idea of VR a potential bust. If the answer is no, the possibility of using VR as a marketing tool may not be sustainable long-term. With applications like ad-blocker and DVR, surely there will be a way in the future to block advertisements in VR as well.
One area that may not come to mind when thinking about virtual reality is the healthcare industry. Marketing VR as a healthcare tool has validity. Recently, VR has been used to treat patients with lazy eye, using a therapy-type game from the company Vivid Vision. When a patient is wearing a headset, the game is designed to shine brighter lights and color at a patient’s lazy eye, causing the brain to recognize messages being sent to the eye, and training it to work harder. The other major use in the medical field concerning VR has to do with the treatment of PTSD. Virtual reality has been used to allow patients who experience PTSD to experience situations related to their disorder and use them as therapy sessions to help them deal with their stress. With advancements made in VR technology, these medical complications would be treated more efficiently, and could be marketed as such.
If virtual reality is dominating any industry right now, it would certainly be the video-game industry. With the number of titles available via Oculus Rift, and the hype of using VR as a gaming platform, companies such as Microsoft and Sony who develop the top gaming consoles of Xbox and Playstation have been forced to pivot and add VR into their business plans. Playstation’s VR experience, named Project Morpheus, hit shelves last October to a warm welcome, and as of February 2017, close to a million units have been sold, far exceeded Sony’s early expectations. Xbox is not far behind, as it is rumored that a Microsoft/Xbox VR headset will be released later in 2017, and will be compatible with Microsoft’s Project Scorpio, which is scheduled to launch during the holiday season. These companies spend millions of dollars on marketing every year to promote upcoming games and next-generation consoles, and for good reason, as the video game industry pulled in approximately $100B last year in revenue. Video games have taken significant leaps in the past decade in terms of processing power and presentation, which begs the question, is VR the next step for gaming, or is it just a fad?
This is good reason to believe that virtual reality will eventually have a strong impact in the field of marketing. Oculus Rift, the main company on the forefront of the VR movement, was purchased by Facebook for $2B in March of 2014. This is important to consider, as Facebook’s business model relies on advertising revenue to make a profit. It would be naive to think that after a $2B acquisition, Facebook will not somehow try to incorporate its new VR entity into their advertising plans. With how much money is spent from companies such as Proctor & Gamble, Coca-Cola, and others on Facebook advertising already, it’s not crazy to think what kind of marketing doors will open once advertising is fully integrated into the VR experience. With a company like Facebook leading that charge, I believe those doors will open sooner than expected. When Mark Zuckerberg purchased Oculus Rift, his vision for virtual reality sounded even more comprehensive and futuristic than most people assumed. Zuckerberg stated that one day, he wanted to communicate “our full sensory experience and emotion to someone through thought.” He believes that VR is the stepping stone to eventually achieving that possibility through technology, and wants to build the foundation of the process.
While VR could change certain industries for the better, it also has the potential to cannibalize others, specially the movie theater industry. Currently, movie theaters have the ability to charge customers insane amounts for things such as popcorn and candy, but what if consumers could just skip the movie theater all together? If people had the ability to purchase new movies via VR, the entire movie theater industry would face some serious challenges. As long as ticket prices stayed the same, the box office numbers probably would as well. This situation is similar to the tourism example, as the success would really depend on how many people enjoy going to the movies as an “experience” rather than going just to see a movie and leaving. For those of us who want to see a new movie, regardless of if we want to go with friends, family, or a date, this would be the perfect alternative, especially during long road trips, or layovers at the airport.
We may still be far from shopping and ordering products via virtual reality, if this trend were to catch on, it is interesting to think what this would mean for brick and mortar retail stores going forward. Imagine walking into a store via VR, and looking at all the products you would as if you were walking into a brick and mortar store. A VR store would also not be restricted by space as a normal store would, and could display all products a company offers. A user could use hand gestures to pick which product category or aisle they would like to browse, and interact with the items they are interested in. Like the movie theater industry, this could cannibalize or seriously threaten the retail chain environment, as the movement to start ordering everything online has already begun due to the business model and success of companies like Amazon.
Another area that VR could potentially turn upside down is personal content creation, specifically concerning Youtube. As Youtube has become popular, the market for personal content has become over-saturated. While there used to be only a few specific channels with large followings, now there are hundreds, often with similar content. We may be entering the next wave of content creation with VR, assuming specialized VR cameras become a commodity among society. As of now, influencers use Youtube and other social media channels to build their personal brand, but with VR, this could be expanded to an even greater extent. It will be interesting to see if there is a new platform developed in the future for this new content, similar to the Youtube we have now.
One effect that virtual reality has that may get overlooked is its overall impact on society, specially isolation. Currently, there is a societal debate over whether or not social media has actually made people less social. Sure, we are all interconnected, but how much harm as that done to our daily relationships? Our family relationships? Dating? While the benefits of VR are apparent, what effects would it have physically and socially if most of our entertainment could be seen from sitting on our couch? While traveling the world from our living room sounds like a unique experience, would we begin to miss the overall point of traveling? All these questions pose serious concerns about virtual reality, as it’s not impossible to imagine people becoming quickly addicted to it because of its substitutive capabilities.
The potential impacts of virtual reality can not be ignored, but can also not yet be fully understood. It’s implications on industries such as real estate, tourism, video games, sports and content creation could be revolutionary to the point that it would change they way we interact and use these activities. As a marketing tool, VR has the ability to give advertising an industry overhaul, possibly allowing the way brands and consumers communicate in a completely new way. As we look at VR one year, five years, ten years from now, it could be something that was a flash in the pan, or something that revolutionized how the world works. Personally, I believe virtual, as well as augmented reality will become integrated parts of our lives moving forward. The ability to make experiences more visual and compact is something I think will be popular among people. When looking back at the beginning of the smartphone, it was hard to conceptualize a device that makes phone calls/sends texts, can access and order things off the internet, and hold/store photos and music, all in one, but now almost 80% of the population uses one. If VR is able to hold carry out the ideas that I have mentioned in this article, I find it hard to see how it wouldn’t become just as popular as the smartphone. I think the real challenge that VR faces is the functionality and usability. As of right now, using hand gestures is still a work in progress, as is voice commands and voice search with products such as the Amazon Echo and Google Home. As those processes become more defined and exact, they can become integrated into VR, and that’s when the real potential can be reached. Experiences will change, advertising will change, industries will change, consumer habits will change.
This article was written and published by Max Conroy, a Senior at the University of Montana, graduating with a Marketing Degree in Spring ‘17.