When is the Right Time to Enter VR?

News has recently surfaced that Apple is building out its own virtual reality (VR) team, with the goal of competing with the likes of Facebook in the VR headset market. As with many VR skeptics, Re/code’s Eric Johnson has since published an article arguing that it is too early for Apple to enter this market. So, when is the right time to play in VR?

For the timing to be right, here is what you must believe to be true:

1. Fundamental Shifts in Consumer Behavior in Favor of VR

• To state an obvious (but important) trend, consumers are becoming increasingly reliant upon smartphones. Smartphone ownership continues to grow, with 77%+ penetration of the U.S. mobile market and a base of nearly 200mm smartphone subs. Why is this critical? Smartphones today have a lot of the features (e.g., camera, accelerometer, gyroscope) necessary to serve as the basis for viewing VR — in fact, smartphone-based displays like the affordable Google Cardboard and Samsung Gear VR rely on these mobile devices to operate.
• Another obvious driver is the increasingly social nature of tech and media today. Consumers are used to using Snapchat, Instagram, Twitter / Periscope, and Facebook as communication / sharing platforms. In a lot of ways (albeit indirect), this has likely made consumers more open to emerging forms of media like VR. Evolving from basic social sharing in the form of Facebook wall posts to richer media such as live video sharing on Periscope, VR has the potential to be the next communication platform as envisioned by Mark Zuckerberg.
• A less obvious consideration is the impact of the on-demand economy, which has disrupted every industry from media to food to transportation. Consumers are now used to immediate access and efficient experiences — VR has the opportunity to build on this. For instance, VR provides a completely new level of “access” and “efficiency” that consumers have never before seen. In gaming, this might mean being able to enter and interact within a completely virtual / fictional world at anytime. In finance, this might mean having access to a virtual trading terminal with an infinite number of screens. As an aside, it’s also worth noting that AR may actually be the more direct beneficiary of the on-demand economy, but my sense is that VR will likely converge with AR over time.

2. Sufficient Technological Advancement to Propel VR

• One of the necessary criteria for mass adoption in VR is a realistic and also comfortable UX. What does that translate to specifically? How realistic the VR experience is hinges on the image resolution (e.g., the eye can actually see pixelated images even in 8K on HMDs, but displays today do not offer higher resolutions), the type of camera used to film the video, and eye tracking and refresh rates (ideally high fps / low latency), among many other factors. How comfortable the UX is depends on the actual hardware worn by the user (e.g., HMD, controllers) as well as tracking, FOV, and parallax, among other potential contributors to motion sickness.
• With sufficient technological advancement and scale, hardware pricing should continue to decline over the next few years, helping to drive wider adoption. Today, tethered headsets requiring high-powered gaming PCs are generally expensive (e.g., $599 Oculus headset + $1K Alienware PC), but arguably provide the best experience. On the other hand, mobile-powered headsets are substantially more affordable (e.g., $100 Samsung Gear VR), but offer lower quality experiences. A third category of self-contained headsets include those that potentially offer the best of both worlds — untethered, mobile-free HMDs (e.g., Gameface Labs), though pricing is likely to be comparable to that of tethered VR headsets.
• Eventually, the cameras used to capture VR will also become less expensive and reach a point where there is a more or less consistent quality and level of freedom within the videos. Today, the disparity is rather large between the monoscopic, stereoscopic, and light field cameras (e.g., Lytro provides more movement with 6 degrees of freedom) used for VR.
• Related to the challenge of standardizing the capture process is the question of how user-generated content (UGC) becomes mainstream in VR, given the high cost of VR-specific equipment. Technology for enabling UGC is critical to driving more users to VR. Start-ups such as Emergent VR (funded by Accel, Rothenberg, and GV) are looking to resolve this issue.
• Post-capture processing, including syncing, stitching, and compression, currently presents another set of challenges to VR, but will likely resolve itself through successful middleware upstarts or full-service players offering end-to-end solutions (e.g., Jaunt).

3. Imminent Cross-Industry Investment in VR, with Directional Consensus in Key Areas

• For VR to become a widespread success, everyone — ranging from large tech companies, such as Google and Samsung, to VC funds, such as Rothenberg and GV, to execs at adjacent industries, such as real estate and entertainment — needs to (1) buy into a general vision for what VR can become in the future and (2) recognize the future “must-have” nature of the tech for various applications. With investments from all sides of this equation, the chicken-or-the-egg problem with the development of VR tech vs. the availability of VR content / applications can be more easily resolved.
• Similarly, the public perception of VR plays a critical role in driving adoption as well. Currently, VR is most heavily embraced by the gaming community; however, for VR to become a multi-billion dollar industry over the next few years, the masses also need to recognize the other, more general use cases for VR.

My view is that the conditions described above are either already in play today or will become imminent in the next couple of years. And if that is indeed the case, it is definitely not too early for Apple to begin competing in VR.