Welcome back to Spatial Beats. Meta Reality Labs posted a $3.67 billion Q3 operating loss last month, citing slowing sales for the Quest 2. We shall see what happens this Christmas, but the market for consumer VR may be saturated.
Sony’s original PlaystationVR quickly sold five million units after its launch in 2016. Then sales slowed to a trickle. It seems every console owner who wanted one, had one. Analysts estimate the take rate among 117M Playstation 4 owners is around ~5%. If the 195 M gamers in the US are the market for the Quest2, then sales of 10 M units are in the same ballpark.
This is not good news for PlaystationVR2, launching in early 2023. According to Bloomberg, Sony expects to sell more than two million units in the first year, though there are many fewer compatible Playstation 5 consoles. The Pico 4 VR is already hitting headwinds. It’s owned by China-based Bytedance, which owns TikTok, which is dependent on advertising revenue, which is declining due to business conditions. An expensive consumer launch may be put off.
Meta has lost control of the Metaverse story and, with it, the Metaverse’s connection to VR. Until Facebook’s name changed to Meta, only cognoscenti like blogger and investor Matthew Ball, an admirer of Epic Games’ Tim Sweeny, were talking about the Metaverse. Since then, Ball’s view that the Metaverse is browser-based, and therefore device agnostic, has prevailed. XR devices are “nice to have” in the metaverse. Meta, whose ambitions for VR set off Metaverse mania last year, now finds itself, with all of VR technology, on the outside looking in on a metaverse that looks more like Roblox. Meta is now working to make Horizon Worlds browser-based, and not exclusive to its VR devices.
At the recent 2022 Meta Connect developers conference, the company announced Quest sales have surpassed ten million units, a threshold number to support third-party developers. Meta says that since its launch in 2019, the Quest app store has grossed over $1.5 B. Sounds like a big number until the console and PC game “Call of Duty: Modern Warfare II” raked in a billion dollars in its first two weeks.
Here’s another scary thought. What if better devices don’t create better VR experiences? I bought a Quest Pro and I like it. It’s better than a Quest 2, but not enough to justify the price because the experience is the same. I used an 8K, better-than-human-eye, industrial headset from Xtal several years ago. It was so heavy they needed to cantilever it. It is spectacular. Dizzying. I almost fell over. It may be too good. But the device is not the experience.
Finally, here’s the anecdotal, personal, observational part of my thesis: a personal focus group consisting of several hundred college students. The University lends students a Quest 2 for the course of the semester if they don’t own one. About one in ten students reports feeling too ill to use it, but the biggest complaint isn’t a complaint. It’s faint praise. VR is great, but not great enough to cause students to shift attention away from other screens. I’ve had a thirty year romance with VR, and most of my software is free (I write about VR in Forbes). But I don’t use it as much as I’d like. I’m engaged with other screens. Reportedly Meta employees have this problem, too, much to the consternation of their managers.
Apple continues to be the sword of Damocles hovering over this rapidly evolving technology, at least on the consumer side. While Apple hasn’t revealed much about their Reality One HMD yet, they have crashed the party successfully so many times it’s assumed they can do it again with XR technology. Apple has the potential to sideline the entire Metaverse conversation by introducing a suite of apps so continuously engaging that people’s only reason not to own one is the cost. This is probably magical thinking. The next great thing is around the corner. It always is.
I said in my first book, Metaverse, written in 2017, “XR is going to follow the development pattern of the personal computer, which took 20 years to reach 50% of American households.” I may yet be right. You’d think I’d be happy about that, but the truth is quite the opposite. I want to be wrong, but I also don’t want to be guilty of drinking my own bathwater.
The last week has been a holiday week, so there weren’t big headlines. The Immerse Global Summit (XR), and ITSEC 22 are coming up in ten days. CES 23 starts January 4th. Of course, no tech round-up would be complete without the Meta schadenfreude at the bottom on this column every week.
ITSEC, The Interservice/Industry Training, Simulation and Education Conference (I/ITSEC), starts on Monday. The world’s largest modeling, simulation and training event attracts fifteen thousand people representing all branches of the US and allied military services. It’s where you want to go to find the latest in Immersive Indirect Fire Training systems and Mixed Reality Apache helicopter training solutions. Red6, which is transforming pilot training with AR, will also be there, along with BSim and other top vendors in the simulation field.
Speaking of conferences, CES, which runs from January 5th – 8th in Las Vegas, is back. The seminal event has been sidelined by Covid, but record crowds, in excess of 150,000 people, are expected. Since every product is now an electronic product, CES, which started life as “The Consumer Electronics Show,” is now The Consumer Everything Show. XR tends to be underrepresented as Meta, Microsoft and Snap have their own developer conferences.
Fast Company announced its Next Big Thing in Tech Awards for 2020. Notable XR companies include Activ Surgery, which puts an AR overlay on the patient; Boom Interactive, which uses machine learning to turn flat floor-plan drawings into 3D editable scenes; Emerge, an ultrasound-generating tabletop device that creates an interactive force field within arm’s reach; Lenovo 3D glasses; Moth+Flame simulations; Nvidia Omniverse; and Ryff, which searches streaming videos, new and old, for ideal scenes and spots for product placement – or replacement. Here’s the full list of winners.
Majority Of Meta’s AR/VR Spending Is Building AR Glasses (David Heaney/UploadVR)
The Creator Economy is the future of the economy (Richard Florida/Fast Company)
This Week in Schadenfreude
Meta reportedly fired staff for hijacking Facebook and Instagram accounts (J. Fingas/Engadget)
There’s No Fixing Meta’s Metaverse, Scrap It, Start Over (Paul Tassi/Forbes)
Facebook Is a Freak Show Ghost Town, and I’m Loving It (Isabel Slone/NY Times)
Watch This Video And Tell Me Meta’s Metaverse Has A Future (Paul Tassi/Forbes)
This Week in XR is now a podcast hosted by Paramount’s Futurist Ted Schilowitz and Charlie Fink, the author of this weekly column. You can find it on podcasting platforms Spotify, iTunes, and YouTube. Watch the latest episode below.
Charlie Fink is an author and futurist focused on spatial computing. See his books here. Spatial Beats contains insights and inputs from Fink’s collaborators including Paramount Pictures futurist Ted Shilowitz.