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O ne prevailing misperception in the tech world is that VR is in the gutter. Some have even pronounced it dead. Such sentiments reflect the backlash to VR’s circa-2016 hype cycle. It didn’t fulfill world-changing proclamations trumpeted at the time… and deserves some grief.
But practically speaking, VR is doing just fine and is growing at a healthy pace for an emerging technology that faces practicality headwinds. In fact, signals tracked by our research arm ARtillery Intelligence, indicate VR is on an upswing after declining about 10 percent in 2020.
That decline was Covid-inflected, given supply-chain impediments. But demand remained strong. And that demand was given a place to go when Oculus Quest 2 launched. Not only did it scratch the right quality/price itch, but Facebook made moves to beef up its supply chain.
And this appears to be working, given Quest 2 sales surges (more on that in a bit). The broader VR market has likewise emitted positive signs, which we recently rounded up. Now, two months later, there’s a critical mass of milestones for another VR data roundup. So here we go again…
Report Card
Jumping in, we’ve aggregated several VR data points and milestones for this week’s Data Dive. These follow the above-mentioned early-February roundup, which covered year-to-date happenings. So collectively, the two represent VR’s Q1 report card. Here’s the latest list…
(Announcements happened in Q1, though some track prior-period activity)
Usage Milestones
— Resolution games saw a 500 percent boost in downloads for its casual games (e.g. Bait, Angry Birds VR) following Quest 2’s October launch.
–Oculus’s Android App — an indicator of new VR users that have Android phones — has surpassed 5 million installs.
— Oculus Quest 2 is now the most-used VR headset on Steam.
— The share of VR users on Steam passed two percent for the first time.
–Sundance’s Film Festival’s Virtual New Frontier Exhibition was visited almost 40,000 times.
Revenue Milestones
— More than 60 Quest apps have generated more than $1 million in revenue.
— Beat Saber has sold 4 million copies and 40 million songs, totaling an estimated $180 million in revenue.
— The Walking Dead: Saints & Sinners surpassed $29 million in revenue.
— Superhot VR Surpassed 1-million units sold on Quest 2 alone, totaling an estimated $20 million in revenue.
General/Industry Milestones
— Oculus Quest App Lab reached 100 apps in less than two months.
–Sandbox VR will bounce back from bankrupcy and open a new facility in Las Vegas (formerly occupied by the Void).
— The Information reports that nearly 20 percent of Facebook’s employees are working on VR and/or AR.
— Aggregate stock market performance of VR-forward tech giants shows positive signs.
Funding
— Rec Room raised $100 million in new funding, bringing its post-money valuation to $1.25 billion.
— AppliedVR secured $29 million in funding to accelerate its VR pain management play.
— Pico raised $37 million in series B+ funding.
— Psychic VR Lab raised $8.5 million to accelerate its browser-based XR development platform.
— Interplay raised $18 million for its enterprise VR training play.
— Nanome raised $3 million for its VR software that helps visualize molecular-structures for scientific research.
— SPREE Interactive raised an undisclosed sum in the millions of dollars for its free-roam VR entertainment platform.
— TouchCast raised $55 million to grow its mixed reality-based virtual event platform.
— In-Game immersive ad platform Anzu raised $9 million from investors that include agency-giant WPP and Sony.
— Virtuix is nearing $14 million in funding as its SeedInvest campaign enters the home stretch.
— The Venture Reality Fund II added Telecom giant Orange to its list of limited partners, as part of a 5G-focused XR investing initiative.
— ndreams launched a $2 million fund for VR developers.
— In total, ABI reports that funding and M&A value in AR/VR Ecosystem surpassed $2 Billion in 2020.
Market Sizing
— Superdata projects that standalone VR devices like Quest 2 will account for 87 percent of new VR headset sales in 2021.
— ARtillery Intelligence (our research arm) estimates that Oculus Quest sold just over 1 million units in Q4, 2020, bringing its cumulative lifetime total (including Quest 1) to just over two million units as of January 1st.
Temperature Reading
Going deeper on the last item above, it’s notable that half of Quest 1 & 2 lifetime sales came in Q4 alone. This was Quest 2’s launch quarter, not to mention the holiday quarter. Because Quest 2 continues to lead the way in VR, this momentum is an important temperature reading.
60 Quest titles exceeding $1 million is also important. This quantifiable success for game developers means a clear path to revenue in VR content creation. That will in turn incentivize more content creation (and venture funding), which is needed to get the VR flywheel spinning.
Mark Zuckerburg often repeats this point. There’s a virtuous cycle of content that drives hardware sales, which in turn incentivizes more content….and around we go. For a fully actualized content ecosystem, he says Facebook needs an installed base of 10 million units.
How long will it take to reach that goal? As noted, ARtillery pegs Quest’s lifetime sales at 2 million as of January 1, which could be approaching 3 million today. At that rate, 10 million in-market units (which is different than annual sales) could be reached in the next 1-2 years.
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