It feels like the winter of Virtual Reality’s discontent in these early days of 2017. Last year’s sales projections have been slashed, Best Buy has banished Oculus from many of its stores, and the heady excitement of 2016 is all but gone.
And many of the more promising — or hyped — startups from the last few years — including Vrideo, EnvelopVR and River Studios — have been unable to raise more money, and have been forced to sell at discount prices or are bobbling along in a zombie state. Even the industry’s biggest fan, Robert Scoble, now seems more likely to tout the future of augmented — or mixed — reality instead of true VR.
Is it over. Again?
Nope, in fact it’s just beginning to get real. VR is following the same path as many technologies, and in fact is paralleling the growth of online video pretty closely.
I lived those incredibly heady days back in 2006 and 2007 when online video was hyped to the gills. Companies like National Banana, Veoh, Revver and Joost were being funded at crazy valuations and with outsized expectations. My own company, Revision3, snagged 8 million dollars in 2007 and we didn’t look back.
Well, at least not until the fall of 2008 when everything came crashing down. All those outsized expectations turned to ashes as many of our sister companies either faded away or spectacularly crashed and burned. A few of us managed to hunker down and survive until OUR winter ended at some point in 2010. By then it was clear that online video had a bright and promising future, and later companies like Maker and Fullscreen — the ones who timed it right — raised significant rounds of capital and built big businesses.
Online video hasn’t looked back since — even though there were some acquisition hiccups along the way. New studios including Gunpowder + Sky and New Form are seeing success, while Netflix, Hulu, go90 and other new distribution outlets are leading the way to a new bundle of digital first services that for many obviate the need for traditional TV. The dream of 2006 and 2007 is now being realized — only 10 years later.
And that’s what’s happening in VR. It’s in the middle of its own “trough of disillusionment” as Gartner calls it, where the early overly optimistic hype gets washed out and the real, sustainable businesses get built.
VR will be huge. And the winners of tomorrow are building companies today, toiling away perhaps in obscurity, but they’re out there. It’s a great time to invest, as valuations are lower, and these second stage companies have (hopefully) learned from those earlier failures and are poised for great success.
By 2019 the real winners will emerge, like the Phoenix rising from the ashes. So don’t despair, hope. Because that winter of discontent will turn into a spring of beauty and fury.
Unless you’re working in AR. AR is headed for its own winter, probably next year. Magic Leap may well be the harbinger of that doom. But just like VR — and internet video before it, AR will climb out of that hole too. Will AR be bigger than VR? Perhaps. But in the end, it doesn’t really matter. Both will be huge and huge parts of our lives going forward at some point. Just not today.