Opinion: AR/VR gaming market remains challenging

Ivan Franco

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A key part of the expectations for the AR/VR market was that consumers would take to the technology and, specifically, that consumer gaming would be a big hit. New data from TECHnalysis Research suggests otherwise, however, as the challenges for mixed reality gaming look to be much more difficult than many initially thought.

Based on a recently completed online survey of 2,030 gamers (defined for this study as people who said they gamed on either a PC, smartphone, tablet, or other device for at least 2 hours a week) roughly split between the US (1,017) and China (1,013), current AR and VR gaming experiences only appeal to a fraction of the overall market, particularly in the US.

First, gaming survey participants were asked to select the types of devices they own and use for gaming from a list of 17 categories, including different PC form factor and operating systems, different smartphone and gaming console platforms, and others, including AR/VR headsets. Not surprisingly, ownership and usage of AR/VR headsets was quite low in the US even among gamers—in fact, it was the smallest category of ownership at 4.2%. This is, in part, due to the fact that the AR/VR headsets category is a relatively new one compared to the others, but it also reflects the limited interest many US consumers have shown towards these devices.

"For AR/VR, the [overall] gaming momentum and seemingly natural tie-in to the category hasn’t had the kind of positive impact on device sales that many expected it would."

Thankfully, the story was better in China, where 13% of gaming respondents said they owned a headset of some type. Even there, however, ownership levels were only ahead of Chromebooks, Nintendo gaming consoles (which used to be banned in China), Chrome-based desktops, iMacs, and Macbooks. Still, it’s clear that there’s generally more acceptance and interest in AR and VR in China than there is in the US.

In addition to low ownership, the average time spent gaming on an AR/VR headset as a percentage of overall gaming time in a typical week was less than 1% in the US and only 2.3% in China. Obviously, platforms like Android phones, Windows 10 PCs, iPhones, and others offer a much wider variety of gaming options than AR/VR headsets. As a result, these other devices consume a large percentage of the time people spend gaming. The result is that even among a dedicated gaming crowd, AR/VR gaming simply isn’t attracting the kind of attention and focus that it needs to stand out as a breakthrough application. To be fair, there are many other types of AR/VR applications available that people could be more interested in, but if strong gaming support isn’t there for the category, that could be a significant long-term challenge.

Unfortunately, the story gets a bit worse when you look at the overall experience and outlook that gamers have with AR and VR gaming, particularly in the US. Respondents were asked to describe their level of experience/satisfaction for different subcategories of AR/VR gaming—PC-based VR, smartphone-driven VR, smartphone-driven AR, and gaming-console-powered VR. As Figure 1 illustrates below, there’s still a challenge in getting people to try these experiences, with an average of just under 38% of US-based gamer respondents saying that they had yet to try each of these new gaming experiences.

What’s even more surprising (and potentially troublesome), however, is that in every single category, more people who had tried each of the experiences said they didn’t enjoy them than those who did. Specifically, respondents were asked if they owned a device in the subcategory and if they enjoyed the experience or not, or if they had simply tried a device in the subcategory and whether they subsequently liked it or not. The fact that the sum of the dislikes (don’t enjoy) outnumbered the likes (enjoy) clearly suggests that the industry has a long, long way to go to really have a big, positive impact among US gamers. It also highlights the fact that the technology is still very immature and clearly needs to significantly improve before it can start appealing even to a dedicated audience that’s highly predisposed to want to like it.

Again, thankfully, the story was definitely much more positive in China, as illustrated in Figure 2 below.

The number of people who hadn’t tried the various subcategories of AR/VR was 5% lower than the US at just under 33%. But even more importantly, the exact opposite comparison exists between like and dislike numbers for those who had tried these devices in China. Every single category shows that more people enjoyed the experience than those who didn’t enjoy it, with a particularly large positive gap in both PC-based VR gaming and console-based VR gaming. Even in China, there was about ¼ of the gaming respondents who didn’t care for AR/VR gaming, but this is certainly the type of outlook that companies who are trying to target the AR/VR gaming market would like to see. Exactly why the numbers for AR/VR are so much better in China isn’t entirely clear, but it’s likely due in part to the wider range of AR/VR gaming titles available in China, as well as the generally more enthusiastic gaming community that exists there.

The overall gaming market is growing quite strongly around the world, as renewed enthusiasm for PC gaming, as well as huge growth in interest for eSports, game streaming content channels like Twitch, gaming competitions, and big budget games like Fortnite all clearly illustrate. (Future columns will highlight more specifics from the survey to support all these points.) For AR/VR, however, the gaming momentum and seemingly natural tie-in to the category hasn’t had the kind of positive impact on device sales that many expected it would.

Certainly, there are other opportunities for different types of AR/VR applications, and right now, there does seem to be some enthusiasm in the enterprise/business segment for AR/VR. While that’s certainly good news, most of these applications are small, niche types of projects that can be difficult to turn into large, scalable businesses. Without consumer gaming, the short and mid-term prospects for AR and VR products is going to be very tough, and without dramatic improvements in quality and large reductions in price, even the long-term prospects could be difficult to sustain.

Bob O’Donnell is the founder and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm. You can follow him on Twitter . This article was originally published on Tech.pinions.

Image credit: Eddie Kopp via Unsplash

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TechSpot Chancellor
"Based on a recently completed online survey of 2,030 gamers (defined for this study as people who said they gamed on either a PC, smartphone, tablet, or other device for at least 2 hours a week)...."

I've always felt VR gaming was a niche product crammed down our throats like 3D TV's were. And a dead-end for gaming until they get a sizable library of decent games and work the headsets down to sunglasses size. But that's one lousy survey sampling.

Only 2k surveyed and 2 hours gaming per week?? Plus including tablets and smartphones? Serious VR gamers don't even remotely fall into that category. You want to do VR right, you need a hefty gaming PC. And anyone who is going to own a hefty gaming PC is going to do a helluva lot more gaming than 2 hours a week.

All they needed to do was look at the Steam stats to get their figures. Which clearly shows how few people are engaged in VR gaming.


TS Guru
VR is in the wrong market, well kind of. VR won't completely die in the gaming world but it would be better suited for driving schools, porn industry, medical field & maybe the army.


TS Evangelist
"What’s even more surprising..."
There's nothing remotely surprising at all about this that people didn't already predict 1-2 years back. As TomSEA said - VR is just the PC equivalent of 3D-TV - something almost completely "push driven" by marketing hype with almost no "demand pull" at the consumer end to actually match up. It was so obvious how that was going to end up the only real surprise is that tech sites still haven't figured out they are often far closer to the audiophile crowd in that niche products over-hyped as "The Next Big Thing" (tm) are mostly being pushed by a tiny number of enthusiasts selling it to themselves than mainstream anything...


TS Evangelist
"Bob O’Donnell is the founder and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm."

Words should be taken with a grain of salt given he's commenting on his own information and has a vested interest to do so.

You guys already know my position on this so I won't bore you with the details. I will state that the numbers reflected in this do not at all reflect what I've personally seen. Out of the 100+ people I've demoed PCVR to, nearly every last one loved it. The only 2 people who liked but didn't love it were those who easily get motion sick and even those people still wanted to try again.

Of those people were 8 over the age of 45 and guess what? They were not gamers but they adapted to VR gaming faster then any traditional gaming system I've ever seen. That's likely due to the fact that controls on the Oculus are natural. Grabbing in real life is to grab in the game.

Squid Surprise

TS Evangelist
Were these numbers a follow-up to any previous study? Can we have the numbers from 2 years ago?

What I'm saying here, is that the data we are seeing is merely a snapshot of 2000 people.... unless we see the same questions asked at a later date, we don't know if these numbers mean anything!

For example: I could tell you that 3 out of 10 people eat strawberries... you'd say "well, that's pretty terrible, it's only 30%!"

I could then show you data that says that 2 years ago, it was only 1 out of 10 people.... Now you'd say "Wow, it's tripled! That's crazy!!"

Without any other information, however, the numbers we see are basically useless. Yes, VR is rare... duh... it's new.... if we see the same number in a couple years, THEN maybe we can panic...

Until then, I suggest we wait :)


TS Evangelist
I think part of the problem is that there's this mentality in the tech industry, at least as I see it, that thinks that in order to make any money, your company must either jump on the latest fad or create the latest fad. I think that is exemplified by companies like nWidia charging what seems to be widely regarded as far too much for the RTX cards, crApple charging far too much for its latest "flagship" iPhone, and Samsung following suit with its latest "flagship" phone. It is as if the marketing departments of these companies think that waving the latest flagship in front of people will hypnotize their customers into irresistibly buying their latest way over-priced product.

In fact, I see these ridiculous ads for phones on TV that display the "Whatever Company's" phone as if it were the most irresistible model of the opposite sex. IMO, they are totally ludicrous.

So, we get something like VR/AR that appears on the market which, in the right context, is arguably a useful technology and has the side benefit for gamers as potentially making gameplay much more enjoyable.

Yet just like 8K TVs, there is not all that much content that has been designed with these devices in mind. Arguably, some of the "enthusiast gamer" crowd has used them in various games with what sounds like good success.

However, since these AR/VR devices are not literally flying off the shelf as predicted by the marketing wonks in the various companies that make these devices, there is a knee-jerk OMG reaction, extreme panic, and grumblings like "maybe we should be making another product."

As I see it, it is about time that marketing departments and companies that subscribe to this model realize that people are not sheep waiting to be hypnotized into buying a product. At best, as I see it, VR/AR is a niche market at the moment. Those in the business of making AR/VR gear have to accept this and wait for the payout. If they are not willing to do so, then they should consider getting out of the business.

This is absolutely not the first time something like this hit the market. In the 90's, there was a brief period when there were 3D goggles available for various games, such as Descent 3D. However, there were a very limited number of games that supported it, and the resolution of the devices was even for the time, poor. I bought one and returned it because its resolution was 320x200 at a time when 1024x768 was state of the art. That said, it was a very interesting experience in Descent 3D even if it did make me dizzy.

I am willing to bet that IF the AR/VR players stay in the market, it will, eventually, catch on. However, such device makers, IMO, are not at all likely to make a killing in the market as much as they would like to. So my suggestion to them is LIVE WITH IT.
VR headsets will continue to fail until:

#1 A wireless HD standard is created - similar to Bluetooth - but for video.

#2 A lightweight headset that's rechargeable, wireless and easy to recharge is made.

#3 all developers develop games with a "VR MODE" which is standardized across headsets.

Think: All you need to understand why VR is failing is to look at Bluetooth stereo headphones. They are easy to charge, easy to sync, easy to use and all devices instantly adapt to their individual standards.

What we need is a leap frog product.
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Morris Minor

TS Addict
This reminds me of when gaming became a thing and all the people said it was a gimmick for sad geeks. vr is a long way from mass-market but the potential is clear to anyone with an ounce of sense.