2017 VR

China

Two business factors will shape winners and losers in the virtual reality market in 2017: China is already 40% of the virtual reality market. But Facebook is banned in China, so Facebook can’t sell its high-end Oculus Rift there. Nor can Samsung sell its lower-end Gear VR (which snaps onto a Samsung phone), because it’s based on Oculus software. An ongoing saga of censorship clashes with China’s government have kept Google on the sidelines as well. Without these North American market leaders, a massive opportunity has opened for Chinese companies like Pico, Idealens, Deepoon and Pimax. Meanwhile, web giants Alibaba, Tencent and Baidu are buying up dozens of Chinese content and game startups.

High-Quality

High-Quality virtual reality headsets still have to be tethered to a computer more powerful than most people have at home. But they can also be tethered to a new video game console, such as Sony PS4 Neo with 4K resolution, which will be released before Christmas 2016. This is going to give Sony’s new headset a huge spike in sales, and it will outsell competitors by several million units. (PlayStation sales run over 10 million units a year.) Meanwhile, Microsoft’s new Xbox Scorpio—which will work with Oculus Rift—won’t be released until a year later for Christmas 2017. Also, a Sony VR headset is $200 cheaper.

Both factors point to Oculus Rift— the first VR headset most of us have heard about—coughing up the pole position it held from 2014 to 2016.

Sports rights holders will be happy. Especially UFC

Early data shows that streaming video is go-to content for early users of VR, despite the incredibly inventive games available. Seven of the top 10 Gear VR apps are video content, and 80% of users watch VR video daily. Some portion of that video will be live-streamed sports. But which sports in particular? That transformative sense of really “being there” only happens when the action is a few feet from the camera, such as with boxing and MMA, which can perch cameras above the corner posts. VR live streaming becomes 2D when the action is far away, such as across a soccer or football field.

On Christmas day millions of kids will be sick.

It’s antisocial to wear a headset. And you can see the pixels—4K video is sorely needed. But the biggest problem with VR is that it makes users nauseous. At first, it’s amazing. Then it gives you motion sickness. This is caused by a dozen factors that exacerbate the disconnect between the brain’s natural sensing and the headset’s visuals. Ironically, one of the reasons that watching video with a VR headset is popular is because the point of view stays put, so the motion sickness isn’t as bad as it is in games.