VR's 2021 Outlook: 14 Indicators in One Place – Road to VR

  • The Entire VR Industry in One Little Email

    The Daily Roundup is our comprehensive coverage of the VR industry wrapped up into one daily email, delivered directly to your inbox. 

    Hard data on the VR market is often hard to come by, while broad ‘industry reports’ are often so general that it’s difficult to see what things look like ‘on the ground’. To get a sense of VR’s outlook in 2021, we’ve collected 14 of the most recent and concrete indicators for your perusal.

    Oculus Quest

    Zuckerberg: Quest 2 ‘on track to be first mainstream VR headset’, Next Headset Confirmed

    Key Data Points:
    • Quest 2 sales drove Facebook’s Q4 non-advertising revenue to $885 million, a 156% increase year-over-year
    • More than 60 Oculus developers have reached $1M+ revenue
    • Estimates based on this data suggest between 500,000 and 1,000,000 Quest 2 units sold in Q4 2020 alone
    • Zuckerberg claims Quest 2 is “on track to be the first mainstream virtual reality headset,” and confirms the next iteration of the headset is in development
    • Takeaway: Thanks to Quest 2’s performance, Facebook is more bullish than ever on VR. While Zuckerberg in years past has described the company’s VR work as long-term investments not expected to pay out for years; he says about the company’s latest results, driven by Quest 2, “I think that this quarter’s results show that this future [that we’ve been working toward in VR] is here.”

      Total Quest Games Reviews Have Exceeded Oculus PC Reviews in Less Than Two Years

      • The total count of game reviews on the Quest store have surpassed those of the Oculus PC store (see chart)
      • The Quest store is seeing many times more reviews per day on average (see chart)
      • 79% of Quest games have surpassed 100 reviews, compared to just 19% of Oculus PC games
      • Games on the Quest store are also rated higher on average than games on the Oculus PC store (see chart 1, chart 2)

      Takeaway: These signals show Quest’s momentum compared to Oculus PC, and why Facebook is largely abandoning the latter. Valve, however, continues to support the PC VR ecosystem through SteamVR, and will likely get a boost in growth as a result of users abandoning the Oculus PC ecosystem.

      PC VR

      Facebook to Discontinue Rift Product Line in 2021, Will No Longer Build PC-only VR Headsets

      • Facebook betting the future of VR on standalone headsets like Quest 2
      • Not just the Rift S will be discontinued this year, but the entire Rift product line (no more PC-only headsets from Facebook)
      • Players can continue to use Quest with a PC thanks to Oculus Link which allows the headset to plug into a capable computer to use high-end VR content

      Takeaway: Once a leader in the PC VR space, Facebook seems content to leave that portion of the market to someone else (namely, Valve). While Quest and Quest 2 can continue to work with a PC by plugging in, the company’s PC VR store has been left to languish. Facebook believes affordable standalone headsets will capture the mainstream market it’s seeking

      Valve: Steam Saw 1.7 Million New VR Users in 2020, 71% Increase in VR Game Revenue

      • 1.7 million new VR users on Steam in 2020
      • 104 million VR sessions on Steam in 2020
      • Average VR session playtime in 2020 was 32 minutes, a 30% increase year-over-year
      • VR game revenue on Steam grew by 71% year-over-year (Half-Life: Alyx accounts for 39% of that growth)

      Takeaway: Steam may not have seen the breakout success of Quest in 2020, but the platform continues to grow. A large portion of revenue growth in 2020 came directly from Half-Life: Alyx, which shows the game cementing its mark as one of VR’s killer apps.

      Analysis: Monthly-connected VR Headsets on Steam Pass 2 Million Milestone

      • Monthly-connected headsets on Steam reached 2 million for the first time in 2020
      • 2 million headset milestone first reached in April 2020, but now held consistently for four months running, with an all-time high in November 2020 at 2.3 million (see graph)
      • It took 40 months for Steam to reach 1 million monthly-connected headsets, but just 7 more months to reach 2 million
      • Monthly-connected headsets up 94% year-over-year

      Takeaway: The number of Steam users with VR headsets continues on a strong growth trajectory. While Facebook headsets make up 51% of connected headsets (see graph), a larger number of induvial headsets now hold sizeable shares, showing increasing competition and choice for consumers (see graph). The five most popular headsets on Steam are: Rift S, HTC Vive, Oculus Quest, Valve Index, and Rift.

      Despite Shortages, Valve Index Among Steam’s 5 Top-grossing Products for 13 Weeks Straight

      • Index has been among the 5 top-grossing products on Steam for 13 weeks running (see chart)
      • The headset has also peaked as the #1 grossing Steam product on eight separate occasions since release (see chart)

      Takeaway: Index may not be selling in massive numbers, but its big price tag means it has been earning as much if not more revenue than many major games on Steam. The data suggests that Index has been a significant revenue stream for Valve—likely much larger than Half-Life: Alyx—showing that the enthusiast VR segment is willing to shell out cash for high-end headsets.

      PlayStation VR

      PSVR Continues to Sell but Slows in Light of Quest and Newer Headsets

      • Sony is believed to be the long-running leader in VR headset sales, but the company has not committed to building a next-gen headset, even four years after the release of PSVR
      • PS5 requires an adapter to work with PSVR, and only runs VR games in PS4 backwards compatibility mode

      Takeaway: Sony has been a leading player in the VR space since the early days but its enthusiasm for the medium waned significantly in 2019 and 2020 as it ramped up to launch PS5. The company has plainly avoided saying anything about its near-term VR roadmap, and some developers have taken this as a sign to focus their VR efforts elsewhere. While not fully responsible, it’s likely that the affordable and standalone Quest has taken some of the wind from PSVR’s sails.

      VR Content

      For a Veteran Studio That’s Weathered the Storm, VR Has Become a Lucrative Business

      • VR studio Cloudhead Gamers shared a graph showing its relative revenue from 2016 through 2020 (see graph)
      • December 2020 revenue grew 60% year-over-year
      • In 2020, unique users that played the studio’s game grew by 131% year-over-year

      Takeaway: Cloudhead Games is one of the most veteran VR studios in the industry. CEO Denny Unger revealed the many ups and downs the studio and the industry at large has seen since the launch of the first consumer VR headsets to today. Cloudhead saw the initial VR launch hype dying down by 2018, leaving the studio on the verge a pivot away from VR. Thanks to a new perspective on VR game design culminating in its latest title, Pistol Whip, and the launch of Oculus Quest, the studio has seen new levels of success in 2019 and 2020.

      Google Makes ‘Tilt Brush’ Open Source as Active Development Comes to a Halt

      • Google formerly ceased development on Tilt Brush, a VR painting app which has been called an early VR ‘killer app’ by some
      • Though official development comes to a halt, Google open-sourced the project so that it can live on

      Takeaway: Though Google was very bullish on VR through 2016 and 2017, the company didn’t see the traction it hoped for with Daydream, it’s Android-based VR platform. Having largely dropped its VR ambitions by 2018, the fact that Tilt Brush lasted as long as it did is somewhat surprising. Alas, the company’s history of shutting down projects made this a likely eventuality. For companies like Google, which are only interested in projects that quickly find significant traction, VR remains a difficult sector to enter because the use-cases which can drive mass scale are still limited by the quality and cost of VR hardware.

      ‘The Walking Dead: Saints & Sinners’ Surpasses $29M in Revenue

      • The Walking Dead: Saints & Sinners reached $29 million revenue in just one year
      • In a little over three months, the Quest version of the game sold 10 times better than the Oculus PC version despite being available for one year

      Takeaway: Though the VR gaming market is still small compared to the non-VR gaming market, small teams that understand the medium are finding growing success. The Walking Dead: Saints & Sinners comes from a small studio which has been immersed in VR development since the early days, and has found a strong product-market fit. Quest is increasingly becoming a top priority as a target platform for VR content among studios hoping to maximize their customer base.

      ‘Rec Room’ Now Has Over 1 Million Monthly Active VR Users

      • Social VR app Rec Room has surpassed 1 million monthly active VR users, making it one of the most frequently trafficked VR apps thus far
      • Daily active VR users are spending an average of 2.7 hours per day in Rec Room
      • Quest 2 users make up about half of the app’s VR population

      Takeaway: Social VR applications which also provide activities for users to partake in (rather than just chat rooms) are emerging as increasingly popular apps, though supporting both VR and non-VR players seems to be a key component to growth. Apps like Rec Room and VRChat have both benefited from that approach, as well as growth powered by a broad increase in digital entertainment in 2020 as a result of Coronavirus lockdowns.

      Wave Deprecates VR App to Focus on Broader Distribution of Its Virtual Performances

      • Wave started out hoping to bring virtual concerts to VR as ‘the future of music’ but has pivoted away from the medium to deliver its productions through traditional screens to reach a wider audience

      Takeaway: VR is still far from a mass medium; live-event businesses that require large audience reach won’t find it on VR without either building it themselves through a killer app or waiting several more years for the market to continue to grow. While some VR games have amassed millions of monthly active VR users, such audiences are divided across several content ecosystems and do not easily flow from one app to another.

      Out-of-home VR

      VR Destination ‘Sandbox VR’ Emerges from Chapter 11 Bankruptcy After Reorganization

      • After filing for bankruptcy in August, 2020, the VR arcade company was able to emerge from bankruptcy in December after restructuring $13.6 million in debt

      Takeaway: The slowly growing sector of out-of-home VR businesses, like VR attractions & arcades, was hit exceptionally hard by the pandemic. While many traditional businesses have managed to re-open after putting various restrictions in place, out-of-home VR businesses had an understandably difficult time convincing customers to wear headsets on their face that were previously worn by strangers. While Sandbox VR managed to stave off an outright shuttering, many, like The VOID, recognized as a leader in the space, weren’t so lucky.

      Notable Investments & Acquisitions

      • Coatsink acquired by Thunderful
        Veteran VR developer acquired in deal worth up to $85 million
      • Varjo – $54 million
        High-end enterprise PC VR headsets
      • Rec Room – $20 million
        Social VR-optional game and creator platform
      • Pimax– $20 million
        Enthusiast PC VR headsets
      • Survios – $16.8 million
        VR game studio
      • Osso VR – $14 million
        VR surgery training software
      • Transfr– $12 million
        VR job training
      • Thirdverse– $8.5 million
        VR game studio
      • CREAL– $7.2 million
        Light-field display tech for VR and AR headsets
      • Kuato – $6 million
        Educational games for VR
      • Arthur Technologies – $2.5 million
        VR office collaboration software
      • Immerse – $1.5 million
        VR language learning platform
      • ForeVR– $1.5 million
        Social VR games

      Takeaway: With the pandemic on everybody’s mind, it’s no surprise to see recent investment activity centered around both social VR and VR collaboration & education applications, as lockdowns have highlighted VR’s ability to make distant connections feel more real. In the backdrop we can see investment interest in future VR hardware and technology from the likes of Varjo, CREAL, and Pimax.

      Source: Read Full Article