COVID Presents Location-Based VR a Confusing Path Forward, While Expanding Other VR Opportunities

As expected, COVID has had a significant impact on the VR industry, both in public and private consumption. Location-based VR was once the leading market segment for VR by revenues and active usage, and this has reduced significantly in 2020. The Void, a leading location-based VR provider, has defaulted on loans and is expected to seek a buyer in the near future. Sandbox VR also declared bankruptcy in August. Intel Studios, the volumetric capture effort of the company, has also shuttered; this is not a location-based-specific impact, although pandemic market dynamics have certainly shifted consumption opportunity for high-end VR content.

All that said, the outlook remains promising for location-based VR, once norms return; a significant bounce back is also possible, with consumers desperate for public, social entertainment experiences. And while the short-term outlook for location-based VR is grim, many other VR opportunities have presented themselves alongside the pandemic. Videoconferencing and collaboration are expected to see significant growth, both short term and long term.  

Desire for content at home is at an all-time high, as is desire for out-of-home entertainment. Depending on local restrictions and type of experience, public entertainment activities are experiencing a range of activity, from fully shut down to operating near to normal. This means that impact is not spread equally among location-based vendors, with variances in restrictions and traffic down to the individual city level at times.

The lack of location-based opportunities today is also met with the constant home-consumption limitations that have kept VR from significant growth over the last few years. With both of these avenues of growth slow, the next year for VR looks uncertain. That is not to say there’s nothing exciting and impactful going on; Oculus Quest 2 is shaping up to be the strongest consumer VR hardware launch seen so far. COVID-related stresses are placing emphasis on alternative social and collaborative opportunities, where VR has already proven potential; traditional gaming and social media options are gaining popularity, as are mental health and tele-health opportunities leveraging VR.

Spaces VR pivoted from location-based content to VR videoconferencing, and was subsequently acquired by Apple. Facebook (Oculus) launched Horizon, a social hub platform. Dedicated VR collaboration platforms are becoming more commonplace as well, with companies like IrisVR, MeetinVR, and VRtuoso active. More direct integration into prolific enterprise platforms, such as Zoom, Teams, and Slack are likely on the horizon, if not through first-party investment, then through partnership and plugin support from other vendors.

These dynamics create a complex story for VR today. Gaming remains the dominant at-home consumer opportunity, but it has taken time to mature with unsure hardware appeal for mass audiences. Location-based presented the other large revenue stream, but for now is hampered. These same restrictions leave open opportunity for remote worker enablement for enterprises and social content engagement for consumers; activities that were shared in space before can now be shared in VR.

Streamlining access to this content is paramount no matter the industry or application. For consumer content, showcasing high value content early and often will draw interest, while clearer roadmaps around content development and hardware support can retain interest and engagement. Proving return for enterprise collaboration will assist in corporate endeavors—this can be as simple as enabling collaboration that has not been possible remotely (e.g., design, prototyping), or more complex in enhancing training content efficacy and collaboration for remote workers.

The struggles of location-based VR will continue for as long as the pandemic has a hold on the world, and will continue to claim corporate victims the longer lockdowns and social danger remain. However, those that survive, or time market entrance along with loosening restrictions and increasing user demand, are more favorably positioned than any that have come before. Acquisition remains a likely scenario for promising upstarts, as incumbents in tech, content creation, and entertainment look to capitalize on a pandemic-weary audience. Market dynamics have not been favorable to many, but opportunity exists both today and over the coming years in creating both novel experiences and applications as well as newly highlighted, demand-driven improvement in existing areas.