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Chinese firm DPVR overtook HTC as the top virtual reality (VR) headset vendor in China in Q2 2017, according to Canalys research, shipping 18,000 headsets, resulting in a 30 percent quarter-on-quarter increase. HTC, whose only product is the HTC Vive basic headset, suffered a 6 percent sequential decline, shipping 14,000 units.
Sony took third place in China, according to the research, shipping 9,000 PlayStation VR headsets. According to Canalys estimates, the overall VR headset market in China grew 25 percent quarter-on-quarter to reach 80,000 units. Notable vendors, including Pico, 3Glasses and Hypereal, contributed to growth with new product releases.
DPVR ships a variety of VR products, with a strong focus on standalone smart VR headsets, which accounted for 60 percent of its total shipments in Q2. The company benefited from a better product mix, according to Canalys, with the addition of the newly-released E3, a basic VR headset that tethers to a PC.
“The E3’s biggest selling point is its competitive price,” said Canalys Analyst Jason Low. “By dropping the barrier to entry, businesses are now investing more in VR. DPVR is winning contracts from B2B partners, including media content and service providers looking to deliver VR content to customers at home.”
DPVR shipped 7,000 E3s in Q2 2017, though it still trailed behind HTC and Sony in the basic VR headset segment.
In the second half of the year, Canalys expects the market to move toward smart VR headsets. HTC announced the recruitment of developers for its upcoming smart VR headset during ChinaJoy 2017, an entertainment expo held in Shanghai in July.
“HTC saw the need to quickly launch a standalone headset specifically for the Chinese market to follow the trend early,” said Low. But even as HTC drops the selling price, the current Vive system poses many challenges for both consumer and business adoption due to its complexity and the need for VR-ready PCs. “HTC will regain its top position in China if it produces an appealing standalone headset that is affordable yet capable of providing new use cases for both businesses and consumers.”
China’s consumer market remains challenging, especially for basic VR headsets that need an additional external computing device, according to Canalys. But Chinese vendors have identified opportunities that HTC and Sony missed.
“Hypereal, a newcomer to the industry, released the Pano, an affordable headset suitable for VR gaming on the PC, to fill the void caused by the absence of Oculus in China,” said Canalys Research Analyst Mo Jia. “Vendors must lower prices while improving the user experience and content to drive growth and adoption in the consumer market. Pico demonstrated that it is possible to produce an appealing standalone headset while offering a decent VR experience for under CNY 2,000 (US$300).”
Canalys estimates that worldwide VR headset shipments reached 800,000 units in Q2 2017, with China accounting for 10 percent of the market.
When the Oculus Rift virtual reality (VR) headset burst onto the scene in 2012 as a crowdfunding campaign later picked up by Facebook, a new tech boom had clearly emerged. A virtual reality headset provides immersive VR for the wearer – a concept that was only ever represented in sci-fi films. VR is fully available for consumers today, but at a price. Competitors to the Oculus Rift have emerged in recent years, with VR headsets released by Samsung, HTC, Sony and more. But despite VR’s hot topic status in the tech industry, at the recent Consumer Electronics Show (CES) in Las Vegas, there was little sign that VR has penetrated mainstream culture.
The virtual reality trend has been growing since leading companies like Samsung, HTC, Google, Sony, Microsoft and Facebook entered the ring. However, recent market research suggests that virtual reality isn’t penetrating the consumer market as much as it should be, considering the hype around it.
At the recent CES event held from January 5-8, 2017, there was a dedicated floor space for virtual reality demonstrations, where companies were able to showcase their latest developments with the technology, such as headsets, content, or other tools to better deliver immersive VR experiences.
Taiwan-based HTC used CES as a platform to announce initiatives aimed at encouraging developers to create more VR experiences and also revealed plans for arcades to be erected in public venues so more people could give VR a try. HTC Vive general manager, Daniel O’Brien said HTC had a “great” year with its VR headset and online game venue, but added that they’ve only just scratched the surface of potential.
“Our goal is to build the largest VR platform in the world,” O'Brien said at CES 2017. “2016 was a coming out party for VR; 2017 is developing it in the marketplace and continuing to evolve the product.”
In the competitive emerging VR market, HTC Vive is up against rival Sony’s PlayStation VR as well as Facebook-owned Oculus Rift, and many other emerging brands. Each company has been working hard to win over software developers to give them a leading product that could outshine the others and persuade consumers to fork out money to use virtual reality.
HTC said it plans to expand its VR equipment and will later this year release a “Vive Tracker” device that enables digital versions of real-world objects to easily be put into fantasy worlds. In addition, the company is working on a wireless version of its headset to make it more convenient for users to move around without being restricted by wires.
Rikard Steiber, head of Viveport virtual reality app shop, said that more than 3,000 titles for the Vive platform would be available by the end of 2017. The vision is to have Viveport serve all VR platforms, including those of Oculus and Sony, according to Steiber.
But even as HTC and Sony have entered the virtual reality arena with exciting VR PC-based and gaming headsets, it’s still unclear just how many consumers are willing to spend up to US$800 on the equipment. Sure, virtual reality headsets are exciting to behold at tech gatherings like CES, but will people really buy the products? That’s the question Strategy Analytics, a research firm, sought to answer. According to their research, just six percent of Americans will have owned VR equipment by the end of 2016.
The situation is looking optimistic for Sony’s VR investment, according to chief executive Kazuo Hirai, who said at CES 2017 that the Japanese consumer electronics giant had sold over 53.4 million PlayStation 4 consoles, which can power its virtual reality headset. To keep up the momentum, he said Sony plans to add more services and content to the PlayStation 4 lineup, including VR games.
Research by Strategy Analytics concluded that the VR industry would drive about $556 million in sales within the US during the period from October 2016 to the end of December 2016. The US is the driving force behind virtual reality for now, according to the research, which suggests that VR consumer penetration in the US is higher than anywhere else, mostly due to aggressive “giveaways,” says Strategy Analytics’ analyst David MacQueen.
For example, Google gave away many of its Cardboard VR units – a cardboard virtual reality platform developed by Google for use with a head mount for a smartphone – as did the New York Times, which reportedly gave away about 1.5 million of the US$15 gadgets for free to print subscribers. However, don’t be fooled by the low price: Google’s Cardboard VR equipment requires a smartphone to work. The Cardboard platform is “intended as a low-cost system to encourage interest and development in VR applications.”
Even so, through January 2016, over five million Cardboard viewers had shipped and over 1,000 compatible applications had been published, according to reports. Following the success of the Cardboard platform, Google announced an enhanced VR platform, Daydream, at Google I/O 2016.
That’s the catch with much of the VR gear on the market today: it requires additional equipment to work. For instance, Sony’s PlayStation VR only works with a compatible game console. Sony’s VR hardware accounted for six percent of total VR headset sales in 2016, according to Strategy Analytics’ research. Furthermore, Facebook’s PC-based VR headset the Oculus Rift and HTC’s Vive VR headset made up just one percent of sales.
Strategy Analytics’ David MacQueen has likened virtual reality equipment in the tech industry to the automotive industry: Most vehicle owners have a low-priced car like a Toyota or a Ford, while some people might fork out and buy something more expensive like a Porsche, and relatively few people own a premium vehicle such as a Lamborghini or Ferrari (the latter representing VR equipment in the tech industry).
It’s apparent from CES 2017 that there are many companies eager to jump into the VR industry, but MacQueen says the reality is that “VR take-up among the US public will be a slow burn and dominated by low-cost headsets,” the same way the auto industry is dominated by low-cost cars, and only a few have the means to splurge on premium, expensive hardware.
There are those, however, who defend the emerging virtual reality industry, like Shawn DuBravac, chief economist at the Consumer Technology Association behind the CES exhibition. DuBravac believes that in time, the sales of mixed reality equipment will grow, and the range of uses for virtual reality will expand beyond gaming which it seems to be stuck in right now. “There’s a lot of investment going into content,” he said. “Sales will eventually come.”
At CES 2017, HTC offered an optimistic glimpse of what the future of virtual reality could behold, expanding beyond its traditional gaming uses. The Taiwanese corporation announced that it will soon launch what has been dubbed “Netflix for VR,” the world’s first virtual reality app subscription.
The service, according to HTC, will be aimed at helping developers reach audiences and make revenue from virtual reality, which will in turn inspire the creation of more VR content. The company also plans to bring VR to shopping malls and other public locations, even going so far as to envision “Viveport Arcades” in operation by the end of 2017.
HTC and Sony were among more than two dozen companies that used CES 2017 as a platform to announce the creation of a Virtual Reality Industry Forum, which aims to “further the widespread availability of high-quality audiovisual VR experiences,” said a press statement.
Those within the forum want to see standards and formats established that allow quality VR content to be equally accessible from the various VR devices, which would avoid “fragmentation” that has plagued the audio-visual media in the past, according to the release.
This is “crucial for the market to take off,” said Sky broadcast strategy chief engineer, Chris Johns in the release, adding that he hopes “2017 will be the year when intense consumer interest in VR spurs a quantum leap in the user experience.”