Why VR Games Should Matter to Your Business
[NOTE: This is an extract from Beyond Media–Life After Smartphones, a new book I am writing with Robert Scoble. It is an extract from Chapter 1: What Zuck Saw
We are interested in games on two levels: Early adopters who will drive adoption, and the very young who will grow up with new digital experience expectations.
Overwhelmingly, the early adopters are Millennials. According to VentureBeat, the average gamer age is 31. Most play on pricey consoles such as Microsoft Xbox, Sony PlayStation or Windows-based PCs, souped-up with powerful-but pricey– graphics cards, usually from Nvidia.
Price is a consideration here, and is a reason that we discount some media scenarios that paint pictures of great herds of gamers tossing down thousands of dollars for the most elegant headsets and connecting them to the most powerful game computers that are turbocharged with game cards laden with the most graphical Nvidia chips.
That picture might have happened in times where people felt less economically constrained. If the sweet spot of the gamer marketplace is filled with Millennials, many of them are, by necessity, budget minded.
For this reason, hardware makers are generally making modest forecasts for VR products in this first year.
Still, early purchases indicate sales may run better than forecasted. At $800, the HTC Vive is the most expensive headset as we write. To operate properly, it must be tethered to a PC that costs a few thousand dollars. To be played properly, someone needs to dedicate 15-square-feet of their homes to open playing space.
The only people expected to buy them early were supposed to be people who attended tech shows such as CES, where they could get a feel for a device in a ten-minute demo. Yet, when the headset went on sale in February, it sold 15,000 headsets in the first ten minutes, revealing more pent up demand than anticipated.
While we consider ourselves good trend-spotting futurists, we don’t try to be bean-counting futurists. Yet, we’ll predict that high-end headset sales will top 200,000 in 2016, not counting the low-end Google Cardboard versions, literally made of cardboard. Millions have already been given away through business partnerships.
One reason we are so bullish is that collectively, hundreds of thousands of people have tried on a headset for ten minutes or so, and a very large percentage of them immediately want a headset. They also immediately start talking about their experience and their desire for more in their social network, where friend influence friends far better than brands can do for themselves.
As we write, Millennials seem to overwhelmingly crave VR headset ownership far more than automobile ownership.
So those who try it become product evangelists and start championing VR headsets before they actually own one. They may not even bother to recommend a brand: they are championing the new experience. And they aren’t just chatting it up with a few pals: they are going online and lighting up the boards of every social platform we know with excitement for the new VR.
And just to be clear, there are a lot of gamers.
Venturewire estimated there were 1.2 billion of them worldwide in 2016 and 700 million of them play online. . 80 percent of all US homes have game-playing devices, and there are an average of two players in every home according to the Software Association [ESA].
Based on early enthusiasm and this huge, growing global base, we believe that VR adoption will come faster and be bigger than the adoption of any other platform including smartphones or desktop computers.
By the year 2020, there will be several hundred million people with VR headsets, and the only reason that the numbers will then taper is because VR will start to converge with AR into Mixed Reality, as Zuck predicted: It will become one setting on one device that will ultimately replace the handset as the product central to most people’s lives.
Cannibalizing the Traditional
Of course, not all gamers are Millennials. They skew into all age brackets and can be found in both senior and day care centers. Please remember that—like technology– age is also in motion. Ten years from today, the oldest Millennials will be celebrating their 45th birthdays. Many will still be gamers, but they very well could enjoy more discretionary income than they do today.
Marketers, by then, may better understand the Millennial mindset, but by then, there will be another emergent generation, this one slightly more numerous than the Millennials.
Global Industry Analysts, Inc. [GMI] follows preschoolers as a market category. It does not separate toys and games; nor does it split out computer games from traditional board games. However, they do note that from 2016 to 2020, the factor that will most change the market will be that interactive toys and games will cannibalize traditional versions. The result will be that the market size will triple to $135 billion.
These toddlers are important to Beyond Mobile. They are the second generation of digital natives. Sociologists note that the single most defining characteristic of the group is their comfort with technology. Many started using digital devices before they entered grade school. In general, they have been exposed to more technology in more ways than any generation that preceded them.
According to Sparks and Honey, a U.S.-based consultancy, in 2014, 41 percent of this new generation spent more than three hours per day using computers for purposes other than schoolwork, about double the time spent ten years earlier by Millennials. We have to assume that much of that time is spent in games and in social activities—which are often one and the same.
What is important for us, is that most of this new generation was starting grade school when the iPhone was introduced. The mobile device has been that generation’s starting point. It is very likely that as a generation they will nearly all move beyond mobile and into MR.
A decade from now, today’s preschoolers will be college seniors. They will have grown up using VR and other new technologies, and be ready to use them in many other ways as they become your customers, employees and competitors: you will want to be able to use the technologies that they prefer and to hang out online where they hang out.