Is Virtual Reality Worth The Investment?
Virtual Reality technology is here. There is just no escaping it. Industry leaders have already sunk in huge funding into research and development in a race to produce the most stunning, state of the art VR ware in the market. With such enthusiastic investment in product development, VR wares that once belonged to the realm of sci-fi almost simultaneously popped into existence as if by a miracle. In the blink of an eye, consumers are simply drowning with the number of VR options out there.
Meanwhile, the marketing of VR received have reached fever pitch as well. You’ll see them in print via magazines and newspapers, in televisions and more glaringly, on the internet which can only be described as a virtual landmine of pop up ads. In fact, one can’t help but get the feeling that tech companies just want to shove their newly minted VR gadgets down their consumers’ throats.
Will the momentum caused by the current hype be enough to sustain buyer interest in VR? That is, of course, the number one concern for people who have some extra cash and is now considering of diversifying their portfolios by investing in VR companies. The same question also haunts the regular Joe, who is still unsure if buying that latest piece of VR toy could be a wise move. After all, no one wants to own a piece of pricey gadget for it to go the way of VHS, becoming extinct in a couple of years.
Investing In VR: Potential vs. Challenges
The Oculus Rift, PlayStation VR, and HTC Vive lead the pack in the VR headset niche. Considered three of the hottest brands around, the Oculus Rift is said to have impressed Mark Zuckerberg so much that he shelled out a cool $2 billion to acquire the company a few years back, according to Wall Street Survivor. But just because a big shot like Mr. Zuckerberg betted big in VR technology does not mean everyone should too. After all, he can certainly afford to lose some because he has very deep pockets.
No one is saying that the VR market does not have potential to experience explosive growth because it does. In fact, from the $6.1 billion in sales for the combined VR and AR markets, sales figure for 2017 is expected to surge to $13.9 billion, The Motley Fool reported. The report went on to suggest that in three short years, sales could go as high as $140 billion. That would certainly qualify as explosive growth by any definition.
But then, the last figure is just an estimate for now. Ultimately, the market performance of VR and AR technologies will depend on the willingness of consumers to part ways with their hard earned cash for a piece of high tech gadget. In this respect, there are two things that could hamper the growth of VR and AR sales; namely, price and adoption.
Is everyone really willing to splurge around $400 for some top of the line VR headset? Some will but surely not everyone. Simply put a $400 gadget is simply way too expensive and is certainly beyond the budget of most people.
You might argue that people have been buying $800-priced smartphones for the longest time. But remember that those are phones, those can be used in a host of productive ways such as drunk texting you ex or ordering some low-calorie pizza if that even exists in the universe.
But with a fancy VR headset? You’ll be hard-pressed to find one productive way to use those fancy headsets aside from playing a virtual game that is immersive enough to make you forget to wash yesterday’s dishes. And a headset is just considered a peripheral which means you still need to buy the appropriate high-end, also known as expensive, PC or console for it to work. Well, you get the idea. The whole thing is just expensive. Sure, some can afford it, but most would rather not dream of buying.
Aside from cost, one other factor that is pushing down sales is adoption. Not everyone is really sold out on the VR hype mainly because thus far, it has failed to deliver the hype. Despite advancements made recently, the technology still falls short on its promise which, as Wall Street Survivor puts it, is ”the holy grail of VR: fully immersive VR where you can actually move around.”
So you can see why consumers are still reluctant in grabbing the latest VR gear. For such as expensive purchase, will they be able to enjoy it long enough before boredom sets in?
It’s Not The First Time
Also, long-time investors, at least who have been around since the early ‘90s will definitely be extra cautious when it comes to investing in virtual reality. For them, the whole thing would probably trigger some nasty memories they’d rather forget.
Did you know that this is not the first VR revolution? Surprising as it may seem, this is the second attempt for VR to be introduced to the mass market. Back in the early ‘90s, tech companies were united with the common goal of making VR go mainstream. Unfortunately, it was a huge flop, wiping out those who bravely invested in the emerging industry back then. You can’t blame these old-timers really; they’ve been there and got burned.
VR Needs To Go Mainstream
Of course, that is not saying that we will see a repeat of that first attempt. Compared to the early ‘90s, things are definitely better now. Graphics are better; processors are faster, gadgets are miniaturized, gaming technology has improved – signs that today’s slew of VR offerings is going to be more appealing.
VR technology is certainly in a better position to take off this time. However, unlocking the market’s full potential might require some tinkering. The trick is for VR to go mainstream. For that to happen, the industry needs to really understand what the market wants and respond accordingly. It might take the next generation gadgets or the next round of innovations to hit just the right spot.
One thing is for sure; VR is here to stay. As for investors, this could be a golden opportunity if they know how to play their card right. With an industry this young, there are still underserved segments they could study and profit from.
Sources:
http://blog.wallstreetsurvivor.com/2017/12/12/investing-virtual-reality-worth/
https://www.fool.com/investing/2017/08/10/how-can-i-invest-in-virtual-reality.aspx