Awww, is the air slipping out of your balloon?

Posted: 11.08.16

That’s OK, we’ll get you a new one in a couple of years

Hiya folks. Ya say ya lost your job today? Ya say it’s 4 a.m. and your kids ain’t home from school yet? Ya say your wife went out for a corned beef sandwich last weekend—the corned beef sandwich came back but she didn’t? Ya say your furniture is out all over the sidewalk ’cause ya can’t pay the rent and ya got chapped lips and paper cuts and your feet are all swollen up and blistered from pounding the pavement looking for work? Is that what’s troubling ya, Bucky? 

Well, lift your head up high and take a walk in the sun with dignity and stick-to-it-ness and ya show the world, ya show the world where to get off. You’ll never give up, never give up, never give up ... that ship! (With apologies to the Old Philosopher, Eddie Lawrence.) 

Try to have pleasant thoughts. Think back to those happy days when it was going to be a bazillion-dollar market and the greatest things since Saran Wrap or Pokémon. Think back to when you had faith, enthusiasm, hope and believed, you believed, you preached it, the VR market is going to, going to going to explode. It’ll explode. 

 Virtual reality for consumers has been over-hyped, over-promised, and under-delivered, and will not meet the expectations of market size and growth for several years from now – if ever. The exuberance of Facebook’s acquisition of Oculus fueled people’s imagination and hopes they would get to ride on the next market explosion thinking that Facebook could simply make it happen, disregarding the laws of physics, consumer demands (for sickness free comfort and entertainment), and history (e.g., 3D TV).

Or maybe not. 

In April, Superdata lowered its expectations for VR revenues in 2016 for the second time in as many months. The market intelligence firm revised its 2016 global VR hardware and software forecast down 22% from $3.6 billion to $2.9 billion. Its projection at the beginning of the year had been $5.1 billion. 

Also in April, Market researcher Strategy Analytics said it expects global virtual reality headset rev-enues will reach $895 million in 2016 and 12.8 million units would ship, but only 1.7 million would be the expensive PC type (a number that is in line with our forecast). And just recently, the firm adjusted that forecast and said only 6% of Americans will own a VR headset this year, and of those, 93% will be a smartphone version. Others also predicted big sales and lots of units. 

VR isn’t showing up on Steam anyway. Less than three tenths of a percent of Steam users have committed to a VR headset, and they are, generally speaking, the early adopter, enthusiast crowd. 

According to the ReportLinker survey, 58% of Americans have heard about VR, but are unable to explain what it’s all about. Less than a fifth are very familiar with the technology, with Millennials leading the way in having the most knowledge of Virtual Reality, at 26%. half of respondents are unable to name a Virtual Reality brand even when prompted with brand names. 

We’re heading into the home stretch; the holiday buying season will start in a few weeks on Black Thursday. By New Year’s Eve, we’ll know how well VR has sold. We don’t expect much.