Last week, Google announced the Daydream Android VR Platform at its annual Google I/O developers conference, naming eight Android device manufacturer partners who have committed to offering "Daydream Ready" smartphones.
If Google Cardboard represented the company dipping a toe into VR's waters, Daydream is Google making the splash the industry has been waiting for. Of course, it is not alone. Virtually every major tech company, including most of the big device manufacturers, are making a VR play too. We're seeing new equipment, more content deals, emerging ecosystems - and it's still only the beginning.
In the early stages of this virtual reality reboot, success will be determined by which leaders can offer easy access to physical demo opportunities, put an end-to-end play together, and pay close attention to what early adopters want to spend and see in initial VR offerings.
U.S. Online Consumer VR Awareness and Interest Analysis
Last week, IBB Consulting published the "Consumer Virtual Reality Views" report. We surveyed over 8,000 U.S. online consumers and leveraged IBB Consulting's product launch experience, convergence expertise and industry predictions to offer a current perspective on VR market opportunities and launch strategies. We found that VR market awareness is high – only 12% said they "do not know what virtual reality is." However, of the 17% of consumers who said they are interested in VR, only just about one-third actually tried it. This points to an opportunity to convert the high awareness of VR into direct interest.
Wireless Carriers Well-Positioned To Convert VR Awareness Into Interest
VR is on the radar of almost every client we work with and the most frequent question we get is whether this makes sense right now. The answer varies of course, but one thing that's clear is that the sidelines are starting to get rather lonely. In the meantime, consumers are giving thought to what their individual VR experiences might look like.
More than three quarters (77%) of respondents expressing an interest in VR told us they are willing to spend on VR head-mounted display (HMD) gear, with 18% saying they'd pay more than $250. Because virtual reality is an emerging market, we expect that consumers will want to physically try VR-enabled smartphones and HMDs before making purchase decisions.
While companies like Google push strongly into VR, many are missing a component that IBB believes will be initially important in converting early users: brick and mortar locations that will make it easy to demonstrate VR.
On the other hand, U.S. wireless carriers own thousands of physical stores that represent prime real estate for promoting and demonstrating VR to customers, and leveraging existing channel sales teams to help guide purchases.
While brick and mortar stores started to look like a liability for carriers in the mature smartphone market, these ubiquitous physical retail presences could prove an advantage when selling an emerging technology like VR. Wireless carriers have an opportunity to provide hands-on customer experiences, drive upgrades to higher-spec smartphones that can better support immersive VR content and sell high-margin accessories and services.
Of course, great real estate alone will not guarantee success. Wireless carriers will also need to create a thoughtful set of VR demos that appeal to a range of consumer segments.
Knowing Your Customer To Create Compelling Content Plays
Among consumers interested in VR, IBB found that "movies and TV" had about 50% interest in almost all age groups from 18 – 65+. No other content category attracted a higher level of widespread appeal.
Wireless carriers should consider trends like these when designing initial content packages. For instance, creating a set of VR demos centered on popular movies and timeless TV shows would give customers a personal movie theater experience. This could be one of several interesting ways to demonstrate an amazing VR use case that doesn't require VR-specific content.
Understanding your audience is crucial in creating demo experiences that drive further interest and uptake. Although movies and TV attracted broad interest across almost all age groups, interest varied across content categories like gaming, travel, live events and user-generated. Interestingly, while men expressed more interest than women in most categories, women are actually 35% more interested than men in travel-themed VR experiences.
This type of insight can expand beyond in-store demos and content portfolio strategies. Wireless carriers could work with a travel partner to give subscribers an opportunity to experience the sights and sounds of a foreign country before taking the time to plan and spend on a vacation. Carriers could also work with travel-themed programmers to create VR experiences for advanced age customers that want to experience sights and sounds but are unable to travel.
These are just a few examples from our research that point to opportunities to experiment and create a unique market play targeted to individual subscriber bases.
VR Here To Stay, AR & MR On The Way
A majority (54%) of consumers that are interested in VR told us that they think it is here to stay. IBB Consulting advises clients that VR is not the end game, but rather, the beginning of migrating computing power from a device consumers carry to one they wear. This will have major implications on the long-term opportunities in the space but stakeholders need to plan for this inevitable future when designing strategies today.
Eventually, VR will coexist with augmented reality and mixed reality. For now, the market is wide open for the right players with the right strategies to win share.
Jefferson Wang is a senior partner with IBB Consulting, leading the firm's wireless and mobility group's work with network operators, device manufacturers, and content providers on technical and business strategy from product innovation through launch. Follow him on Twitter at @jeffersonwang13