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Virtual Reality Is Here (Almost)

Trying virtual reality for the first time is somewhat akin to the first time you donned 3D glasses — but only if you multiply that by about 1,000. It’s thrilling, immersive, a bit disorientating and extremely difficult to convey in conversation.

While many in the industry agree the outlook for VR is bright — coming off the heels of CES, Mobile World Congress and Toy Fair, three shows that shone bright spotlights on the category — this future nonetheless is hosting some hefty hurdles to overcome. While generally not deemed a fad, retailers, manufacturers and consumers alike will need to exhibit patience.

“People need to disabuse themselves of the notion that the VR base is going to explode out of nothing,” said Joel Espelien, senior advisor at The Diffusion Group. Espelien and several other virtual-reality pros discussed the prospect of VR in the video space in a recent webinar held by TWICE sister publication Broadcasting & Cable. “It’s going to grow and grow,” he said, “and 10 years out there will be an installed base.”

As video viewing becomes a more personal experience — think not only the rise of mobile devices but also the increase in second-screen viewing — the environment in which VR can succeed is riper than ever before. In the meantime, however, the category has a number of obstacles it needs to attend to.

Hurdle No. 1: The coolness factor. We can’t count the number of people at January’s CES with what looked like a TV strapped to their head, mouths half-open, heads tilted back in a daze. It didn’t matter if they were having the most amazing experience in the entire show; many looked like straight-up fools. Let us not forget Google Glass — a nifty piece of technology with great potential, but ultimately unable to overcome its dorky association.

The good news: As smartphones beef up their capabilities to play well with virtual reality — including improved eye-tracking sensors — headsets will likely get smaller and less, well, cosmonaut-looking, according to Andrew Trickett, co-founder of Merge VR, a manufacturer of VR headsets.

See also: New VR, AR Solutions Come Into View

They will also help bridge the gap between the low-end Google Cardboard headsets and the high-end tethered headsets most often used for PC gaming, contended ABI Research analyst Eric Abbruzzese. These tethered headsets require bulkier designs because of greater hardware requirements, and thus are saddled with higher average selling prices (ASPs), whereas smartphone-fitted headsets can occupy a sweet spot between Google Cardboard and the high-end PC-driven VR models.

“Modular devices like the LG G5 will eventually see VR modules, creating another option for smartphone owners, still in-between low-end Google Cardboard VR and high-end PC-driven VR,” he said in a recent research note.

Hurdle No. 2: Content, or lack thereof. Call it the 4K problem. A demo may be mesmerizing in a store (or at a trade show), but consumers are less motivated to spend money on hardware if it’s not yet supported by compelling content.

The good news: Like 4K, this issue is resolving, and the market should see more content going forward. WearVR expects to launch an app store for virtual-reality content in about a month, co-founder Nic Mitham said at a panel at last month’s Toy Fair. According to Mitham, consumers view VR content in the same manner as they view apps: They aren’t very inclined to spend money on it. Much of the future VR content is anticipated to be free, with micro-transactions and in-content purchases expected to generate revenue for developers, he said.

Hurdle No. 3: You need to see it to believe it. It’s difficult to relay the impact virtual reality can have on an experience. Although it is planting a leg firmly in the education sector, parents remain unnerved by the category (no doubt picturing those creepy dudes at CES). Millennials are expected to be the age group most likely to spend money.

The good news: The see-it-to-believe-it factor means it is a prime for retail capitalization. Best Buy, which has been selling the Samsung Gear VR headset in its Samsung Experience shops for over a year and currently has the Oculus Rift on preorder, gave away a Gear headset to any consumer who preordered a Samsung Galaxy S7 smartphone.

Thrill seekers will also have the opportunity to give the technology a test-ride on VR-equipped rollercoasters at nine Six Flags amusement parks across the U.S., as part of a marketing partnership with Samsung.

Noted Merge VR’s Trickett: “You’ve got a lot of the usual [retail] suspects you would guess are going to start carrying things in Q2 and Q3,” and this will ramp up during this holiday season.