Image by ​Freel & Gorse

Disrupting Reality

Why the VR Revolution Will Change the Way We Live

The media hubbub over virtual reality (VR) is beginning to reach fever pitch in the lead up to release of consumer headsets by Oculus, HTC, and Sony. Stories about virtual reality have graced the pages Wired, Time, and even Vanity Fair. We’ve seen it on the news and late night television. Even my Grandma sent me an article from her hometown newspaper on the use of virtual reality in football. These days, everyone seems to be talking about how virtual reality is going to change the world.

Many of these discussions often fall short when they try to explain exactly why this technology is so transformational. Instead, they simply apply the explanation that tech journalists have used for everything from smartphones to Snapchat: it’s disruptive. But with every new app claiming to be “disruptive” it’s easy to lose sight of what that actually means and why it matters.

Virtual reality will certainly change how people play video games, watch videos, and socialize, but will it really change the way we live our lives? What does it mean for virtual reality to be a truly disruptive technology?

What is disruptive technology really?

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Clayton Christensen was the first to really lay out a theoretical framework for disruptive technology in his book The Innovator’s Dilemma. In the most general sense, a disruptive technology is one that is initially used in niche applications but due to continued innovation can rapidly move to dominate mainstream markets.

At first, disruptive technologies tend to be inferior when comparing the features that the mainstream market considers important. But these new technologies have different features that make it well suited to dominate a niche market. Due to the rapid advancement in technology, the new technology will eventually achieve the feature set demanded by the mainstream market and the new features will allow it to displace what were once mainstream technologies.

A classic example is the automobile. When first introduced in 1886, it was more expensive, slower, and louder than a horse. But a car never tired, never pooped, and, in the late 1800s, using a machine for transportation was considered the epitome of luxury. Over the next three decades, technology and production methods improved so that by the time Henry Ford began mass-producing Model Ts in 1908, a car was a better form of transportation than a horse in almost every conceivable way.

We’ve seen this pattern repeat itself time and time again in history. From cell phones displacing landlines to the Internet displacing, well, almost everything, new technologies are often ignored or disregarded at first before their rapid improvement makes them superior to their competitors. And once that happens, whole industries that built their business models around the old technology go kaput.

Virtual Disruption

So how does the virtual reality fit into this framework? Virtual reality has a variety of different features — the two most important being total immersion and the ability to interact in 3D — that make it radically different from current technology offerings.

Still, VR is in its early days. Avatars cannot yet perfectly mimic human movement, even the best graphics aren’t photorealistic, we can’t actually touch things or move around freely, a VR headset and rig are relatively expensive, and most people don’t have the processing power to run giant, truly lifelike simulations. So initially VR will be used primarily in the video game market, where 3D immersion and interaction provide significant benefits even with these initial drawbacks.

Not quite real life…yet. Image courtesy of John Norris.

But eventually the technology will improve to overcome these obstacles. Costs will come down, processing power will improve, graphics will get better, and motion capture will be able to record every move we make in a virtual environment.

And once that happens, VR will begin to disrupt everything.

Predicting the Future of Virtual Reality

All of the current developers of VR software and media are trying to predict exactly what markets VR will disrupt and how it will happen. Thankfully, Christensen provided a framework in his sequel, The Innovator’s Solution. He explains that there are two main ways that disruptive technologies find their initial market. The first is attacking the low-end of existing markets by providing a low-cost alternative for goods that have low profit margins. The second is by attacking non-consumption, targeting people that have previously not had access to a product or service because it is too complicated, expensive, or inconvenient. Innovators can use both methods for using VR to disrupt markets.

There are already a number of uses of VR that can be attacked from the low-end. For years the military, corporations, and university research centers have used VR for purposes including product design, testing, and large-scale simulations. The problem is that these companies use huge, expensive VR rigs that are out of the price range of small to medium sized businesses.

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Innovators can use the Rift and other relatively low-cost VR headsets to provide low-end alternatives for these existing purposes, including training simulations and market testing. Then, as the technology continues to improve, these alternatives can move up market and displace existing companies.

Opening Markets with Virtual Reality

But the real potential for VR lies in its ability to open new markets. A number of VR alternatives to real world activities will emerge that will initially be inferior to real life but can attract consumers who previously have not had access to these experiences.

In the early days, this will take the form of 360 videos and live streams. Who hasn’t wanted to sit half court during the NBA finals, dance on stage with Beyonce, or hang glide over Patagonia? Prior to 360 videos, people either had to pay thousands of dollars for these experiences or content themselves with watching these experiences on a screen with a limited viewpoint. VR headsets allow people to enjoy these experiences in an immersive way for a fraction of the cost.

Over the next few years, we will see an explosion of virtual alternatives to real world experiences. Virtual tourism will allow millions of people who have not had the time or money to travel the ability to visit far-flung locales. Virtual schools can guarantee access to a high quality education for kids in bad neighborhoods. Virtual offices will allow people who previously did not have the means to purchase office space or hire employees to start companies with people from around the globe.

Awwww Mom, do I really have to go to virtual school? Image courtesy of Detlef La Grand

Although at first the limits of virtual reality will restrict the growth of these applications, by attacking non-consumption these emerging uses of VR will be welcomed as convenient alternatives. As VR technology improves, the benefits of being able to interact in a fully customizable virtual space with people from around the world will help these alternatives begin to replace their real world counterparts.

In the past we have seen disruptive technologies from personal computers to smartphones sweep over the market as their new attributes overwhelm existing competitors. The sheer limitless potential of virtual reality makes it a prime candidate to be the next massive disruption. As the metaverse takes hold, VR will increasingly take over more and more mainstream activities.

That is, at least until a new technology comes along and disrupts it.

Matthias McCoy-Thompson is a co-founder and COO of AgoraVR. We create tools for companies, organizations, and individuals to present and share their ideas in virtual reality.

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