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Are We in a VR Winter?

by Michael Szul on tags: vr, ar, virtual reality, augmented reality, oculus, hololens, xrspace, ben evans, benedict evans
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It wasn't that long ago that people believed virtual reality and VR headsets were dead in the water. The popularity of the Oculus—and the emergence of the Oculus Quest as a wireless option— seems to have quelled that talking point, but now we've reached another moment of knee-jerk reaction by pundits and analysts: VR is currently experiencing a winter.

What does that mean exactly? Artificial intelligence (AI) experienced a lot of growth decades ago before advances in algorithms exceeded advances in hardware and the availability of data. This led to a period of AI stagnation that many refer to as the AI winter. Some even speculate that we're headed towards another AI winter as backpropagation is reaching the end of its innovation cycle and contribution.

Honestly, a VR winter is a way for business and technology analysts to key on language stored in the cyberian lexicon to illicit a reaction tied to the metaphor.

I'm actually writing this piece as a response to Ben Evans' suggestion that we're currently in a VR winter. Ben is a good business analyst, and if you're going to accept an opinion based on the current state of the market today, and the financially extractive economy we exist in, by all means, take his opinion over mine. I'm not a business analyst looking mostly at the economic markets; I'm an analyst and technologist looking at technology trends deep within the sector. I imagine the future based on data, but unshackled from the restrictions of economic and government systems of control. This means imagining a future of technological progress: One based on how science can move humanity forward in the long term, rather than one of quarter-to-quarter growth measures for stakeholders.

Enough ranting though… Let's take a brief look at Mr. Evan's thesis. His entire argument can be summed up by this paragraph early in his post:

However, we haven't worked out what you would do with a great VR device beyond games (or some very niche industrial application), and it's not clear that we will. We've had five years of experimental projects and all sorts of content has been tried, and nothing other than games has really worked.

When the personal computer was first launch, there were many in the industry who thought it would be a failure. When I consulted with a technology division of AIG back in the early 2000's, my supervisor used to talk about all his work on Series-I IBM machines and how he thought the personal computer was a bad idea. Who would want one? After all, it'd likely only be good for word processing and games. Sound familiar?

Evans' entire shtick is to compare virtual reality devices with gaming because the initial experience is awe-inspiring, but the games have yet to catch up to the introductory experience. He seems to forget that the most popular VR headset today (the Oculus Quest) is essentially an Android cellphone. That speaks a lot to how far mobile technology has come with graphics rendering. Many of the games from 3rd-party developers are not VR-specific games, but ports of mobile and PC games, as they attempt to diversify their monetary streams. This has resulted in an application store with less-than-ideal resolution. Evans' acknowledges this. In fact, Evans makes several key points about excuses that VR apologists come up with:

One is that you can't really do apps and productivity yet because the screens aren't high enough resolution to read text, so we can't yet work in a 360 degree virtual sphere, and that will come. Another is that the headsets need to be even smaller and even lighter, and do pass-through so you can see the room around you. Yet another is that we just have to keep waiting, and in particular wait for a larger installed base (presumably driven by those deep-and-narrow games sales), and the innovation will somehow kick in.

You can disregard the last point. Even if the installation base isn't larger enough, a lot of enthusiasm and innovation is coming from the developer base and niche areas. Microsoft's XBox Kinect was a failure, but people are still innovating with it for facial recognition technology and robotics. Sometimes outcomes aren't readily apparent, and the natural shift to "installation base" as a reason is simply the default stance for business analysis in an extractive economy: Value can only be gained or apparent with consumption.

The first two points are incredibly valid. Even with 4K resolution, YouTube 360 in the Oculus is jarringly blurry with most videos, especially when combined with the screen door effect. In fact, I would argue that the screen door effect is a bigger detractor than the resolution. Some high definition and 4K videos look great, but are held back by the nature of pixel-based screens. These things have made gaming the default utility of the device because without clarity, real-world explorations through video are simply a novelty.

Additionally, with VR, productivity applications aren't going to be useful with a headset as bulky as the Oculus. Actually, despite the bulkiness, the headset is quite comfortable. Nobody wants to sit with it on his or her head for 8 hours though. If we accept Moore's Law (and we should never accept this as the sole component for forecasting, but we'll speculate here), we can assume that headsets will reduce in size. Although Magic Leap has been a disappointment as a company, the device is lighter weight than the Oculus. Google might have given up on Google Glass for consumers, but the augmented reality (AR) device showed the potential for size reduction. Now with rumors every other month of Apple jumping into the VR game, we can expect that competition to corner the mark will push innovation.

This is an aspect of technology where monopolies actually provide some value: Large companies with huge purses can afford to be loss-leaders in order to corner a market. VR can lose money for two more decades and we will still see large amounts of investment because research and software continue to see potential.

Instead of the size of the device, a bigger detraction is the control of the device. The Oculus does well with the controllers, but hand-tracking is still terrible and voice control is non-existent. You can't use a VR headsets too effectively for surgery, productivity, or remote controlling systems with game controllers unless specifically trained.

Evans' suggestion is that gaming is a subset of the hardware market and that VR is a subset of gaming, so VR isn't going to have the installation/adoption base of smartphones and PCs. I disagree because VR (and subsequently AR) has a learning, working, and world-building capability disconnected from PCs and consoles that will eventually give it an edge. To Evans' credit, I am certainly speculating here, but I'm not talking about the 10-year future; I'm talking about the near future. Even as far back as a decade ago, VR and simulation was being used by the military to help with PTSD. Microsoft's HoloLens has in-roads through several industries, and our current COVID-19 pandemic has made VR a necessary point of experimentation for college and school studies requiring hands-on approaches.

Yes, these are specific areas of utility, and not general purpose, but that's where it started with the personal computer, and although the smartphone wasn't required to build on niches, it was able to build on the PC, since smartphones are really just small computers in your pocket.

Mike Verde was a noted skeptic of VR as well. The Oculus Quest made him so much of a believer that he eventually joined Facebook to work on it:

Verdu put it on. "And it was just magical," he said. "I thought, 'Wow, somebody teleported this thing back from 10 years in the future, and it feels like the iPhone of VR' and, 'Oh my God, VR is actually now,'" Verdu said. "It was very profound."

This was after the initial hype cycle died down too. People thought VR was going to take over your living room and it didn't, but advances in the technology never reduced the enthusiam of the VR evangelists, and they've slowly gained ground. It's a mistake to assume that VR hasn't made a dent. Facebook keeps the Oculus Quest numbers close to its chest, but on the one year anniversary of the Quest, Facebook announced over \$100 million in game and application sales. Playstation VR had higher sales, but that's tied to the Playstation platform as an add-on device, whereas the Oculus is a standalone device and environment attempting to reach beyond gamers.

This, of course, speaks to apps and games, so it seems to back up Evans' point; however, I never said that VR wouldn't be used for games. My argument is that the utility is much larger, whereas Evans believes this is the stopping point.

Despite the hype cycle dying down, major investments are still occuring in VR and not just for gaming. Peter Chou (former HTC CEO) is leading XRSpace—a company not just designing a high-end virtual reality device, but also a virtual world named Manova to go along with it.

Manova, meanwhile, looks sort of like Second Life crossed with one of Facebook's social VR experiments. According to XRSpace, it will contain a variety of public and private locations, including individual "home" hangout areas or viewing party spaces, neighborhood-like areas like a "city center" where people can meet up with friends, and a place called MagicLohas that will include fitness classes and other healthy activities. There are also links to third-party games and apps.

Note the mention of Facebook's Horizon—something we're all waiting to experiment with. This shows the desire is still there to build virtual worlds. Every person who experiences the start-up introduction when first putting on an Oculus (including Ben Evans) notes the awe-inspiring experience of the virtual world—offering a glimpse of what could be. That could be isn't a far off future though. It's so inspiring and appealing because we can all tell that it's right around the corner.

Lastly, let's not dismiss the value in games. In a conversation with a colleage on Twitter, Justin Boland mentioned:

I don't actually play any games at all, but talking to an Everquest dev at a party back in '00 woke me up early to the value of virtual systems full of real actors with complex rule-sets

He also brought up the corrupted blood incident:

One aspect of the epidemic that was not considered by epidemiologists in their models was curiosity, describing how players would rush into infected areas to witness the infection and then rush out.

Gaming is a way of modeling human behavior, influencing newer generations (re: Microsoft's purchase of Minecraft), and building innovation. Of course, there's also the fact that Disney used the Fortnite engine to film The Mandalorian. Gaming is much more than games.

Circling back around to the original premise of this post: Are we in a VR winter?

No. Investment is still there. Desire is still there. Innovation is still happening. As long as progress is being shown year-over-year (and we've seen progress in hardware, software, and research), and as long as investment is still occuring, we can throw out our attempts to use headline grabbing metaphors.

But what was Ben Evans' original point? Ultimately, his conclusion is that virtual reality is not the innovation of the future that we've all hoped, but instead a subset of gaming, destined to be a niche item.

The Institute for the Future tells us that the future is 10 years from now, and that's where Evans talks about sci-fi speculation and wishful thinking. I could tell you how VR might be a bridge technology to something greater, but that brings us out of the discussion of the VR headsets of today. Instead, let's look at the 3-5 year period, focusing closer to the front-end.

Is there utility to VR headsets beyond gaming in the next 3-5 years?

Yes. Following Moore's Law, and excluding any potential innovation in screen resolution, as long as headsets embrace an AR/VR combined approach, there will be signicant utility in world-building, healthcare, education, exploration, and productivity. One simple example: A smaller AR/VR headset used as a heads-up display for all of the remote workers we currently have. Rather than having to use the machine you're productive on (i.e., the computer) to disrupt your flow between applications in order to chat or answer a phone call, the heads-up display could solve this like a hands-free phone with video.

There are two pieces in that scenario that play into Evans' hands: It assumes smaller headsets and it assumes pass-through or see-through technology (i.e., combining AR and VR utility). Does that make my premise wrong? No, because I don't believe Evans' effectively addressed these areas as things that could not or would not happen. Oculus already has built-in camera technology in case you pass out of your guardian zone—letting you see the world around you. It's not a matter of if, but a matter of when this ability is more highly integrated into applications. Facebook has yet to move into AR completely, but they will. As far as devices getting smaller, again, we have precedence to believe this will happen, but we also have examples of other devices that are smaller. That's not a far stretch. There's a reason why VR advocates stress these points, and it's because they've watched the growth of the industry and the technology. These aren't wrong arguments.

In the near future, VR could be relegated to simply a gaming device… but that's only if we fail to have imagination as technologists, or if we fall victim to an extractive economy only concerned with quarterly growth. The latter has happened plenty of times before, but the current crop of companies and CEOs are much different than the ones leading during the first VR hype cycle.