#1179 – Continuing the VR Dream!

Big consumer VR developments seemed to take place at the end of September, along with some additional developments that could change the scene. It is important that our readers understand that these developments will have ramifications for the Out-of-Home Entertainment landscape. Consumers’ intransigence to fully jump into the latest phase of home VR, means LBE becomes a prime provider of immersion. We look at these latest developments as we encapsulate them now.

Meta Connect

Taking place at the same time as the IAAPA Europe convention, and while there was no gathering of VR enthusiasts to hold a trade “Watch Party”, as had been for Apple a few months previously, there was still interest to see how the leading consumer VR developer’s presentation to the sector would be impacting this phase of VR.

Meta held Connect (“Meta Connect 2023”) in California, the dedicated presentation for the now Meta VR, AR and MR brands through the coming year. Connect returned to a live event, even though it was streamed, having an audience return to a stage format following the previous recorded online affairs. Those invited were treated to a predominant focus on AI and AR from Meta, with news of their new AI search engine work, and the launch of their new ‘Ray-Ban Meta Smart Glasses’ (following on from the previous released range).

Those in the audience and livestream who were there for the VR and MR news, had to wait some time, and only received a brief overview of the official launch of the new (and highly leaked) ‘Meta Quest 3’ headset – promoting a 30-percent increase in performance compared to the previous ‘Meta Quest 2’, with better graphical fidelity with a 2064×2208 resolution per eye, and a 90Hz refresh rate. This is all achieved using the latest Qualcomm Snapdragon XR2 Gen 2 processor. Surprisingly, the system will get 50+ new titles this year, but none are exclusive, and are made to support both Quest 2 and Quest 3 – with unique enhancements added for the new hardware. All this will come in at a higher price of $499 for some of the range – on a platform heavily promoting its MR features. 

These MR features were illustrated through one launch title revealed from LEGO with ‘Bricktales’, building virtual LEGO spaces within the user’s real world. Focusing on the MR capabilities was seen to shoehorn Meta into the interest in Spatial Computing which Apple’s Visor Pro launch had engendered. VR is seeming to have been relegated to the backburner by Meta, along with some of their more grandiose claims for their Metaverse aspirations. After Connect, Meta’s founder held an interview in a photorealistic representation of their claimed ‘Horizon World’ environment, to try and confirm interest in this approach. Horizon, launching the Beta of the new mobile (smartphone) version of the VR world, hopes to address the drop off in monthly users that some sources reported, as low as below 1,000 per month (compared to 20,000 at the end of last year). All while seeming to be pivoting towards greater AI investment.

Attempting to prove an interest in VR, while not mentioning it in favor of MR, it was revealed that Quest Store games and apps had generated over $2 billion in revenue, but it was also revealed that revenue, over time, was showing that things have cooled off over the last year, generating declining sales. A big reveal for Quest 3 was a partnership with Microsoft, offering buyers support for “Xbox Cloud Gaming” on their new Quest – able to play in flatscreen mode on the VR headset, with a selection of titles. This also came with a new v57 software update for the Meta Quest 2 on this platform, seeing avatars finally getting their legs implemented (achieved through body data through an AI model), to achieve a simulated representation.

The reality of the situation for Meta, needing to distance itself from its PC VR roots and look towards defining and dominating the Standalone VR horizon, was self-evident and was also reflected in several developments that took place before the conference.  For example, the addressing of loose ends that were surplus to the vision Meta had for their VR aspirations; and PC VR content platforms previously originated through the Oculus operation were being cut-off. We already reported on the closing of ‘EchoVR’ – and news followed this that the originally released Oculus PC Multiplayer VR game, ‘Medal of Honour: Above and Beyond’, a big franchise release for the Meta platform, originally envisaged as an Oculus Rift-S release, then moved to Meta Quest and launched by EA/Respawn, now will be unavailable from December. This was later followed by the news that ‘Among Us VR’, launched in November 2022, had reported to have sold some million copies.
It was announced by the developers Innersloth that, from October, the Oculus Rift PC VR headsets would not receive further support of this game – all these are moving to draw a line through Oculus PC store support.  

The position of new games’ availability, especially with the launch of Quest 3 showing ‘LEGO Bricktales’, ‘Assassins Creed VR’, and a handful of only previously announced titles, sparked comments from observers regarding the core focus of Meta going forward, as their VR aspirations migrate into MR. One of these directions was confirmation of Meta’s latest attempt to support enterprise for their hardware. 

A new subscription service for corporations, called ‘Meta Quest for Business’, was announced, which has been running a Beta program since 2022. This includes the sharing of devices, with the ability of manging of accounts – with all headsets in the program needing a Meta account. This program offers access to Microsoft Windows 365 on the cloud from Meta Quest 3, and uses Edge and various business/commercial software. All this with 24-hour support for administrators. With the continued confusion regarding Microsoft’s ‘Hololens 2’ production (more information on this situation in our IAAPA-Europe Expo coverage), the Quest 3 offers an obvious platform of interest, especially if supported by MS. Sadly for VR arcade, the reality of this program towards using Quest 3 headsets in venues continued to prove opaque. As seen with the Meta removal of ‘Beat Saber’ from commercial use, the VR arcade scene needs to be cautious (especially considering this is the sixth launch of a business initiative for their VR/MR hardware since acquiring Oculus).

As we went to the wire, reports from Chinese analysis close to the supply chain for fabrication of the new ‘Meta Quest 3’, reported that sales expectations for the first year had been revised significantly. Seeing forecasts change from 7m units shipped, now to just over 2m units. This reflects a potential decline in 2024/25 regarding consumer VR headset sales. This will have significant impacts on estimations regarding this phase of growth of the VR/MR scene – including planned new releases (see below) and will raise questions on software development returns for studios looking to enter the market.

Beyond Connect

The news of the new release plans from Meta was beaten to the punch by numerous leaks prior to Connect. In other leaks it was reported from South Korean news sites that Meta was negotiating a partnership with LG Electronics – towards working on a competitive MR platform (tentatively labelled the ‘Quest 4 Pro’) that will be sub-$1k and aim to go straight after the market – expected to be opened by the entry of the ‘Apple Vision Pro’ next year (these leaks suggest Meta is aiming for a 2025 launch). At the same time, additional leaks suggested a sub-$200 VR standalone headset is also being planned for rollout – as Meta attempts to control the low-cost VR scene, as they attempted with their short-lived ‘Oculus Go’. All this prior to reports of revised shipping forecasts for future headsets.

Regarding another manufacturer gaining momentum towards offering serious competition in this sphere – PICO revealed at an Asian summit a new line of headsets they intend to go into battle with. The PICO product line is going to feature the ‘Pico 5’, ‘Pico 5 Pro’, and ‘Pico 5 Pro Max’ for 2024 launch. Unlike some corporations, PICO has a dedicated “Business License Agreement” plan – many VR arcade and LBE operators are using the system. In our coming IAAPA-Europe coverage, we will chart those who have migrated over to the hardware, and news of a new update to the systems available, offering “hot swapping” of batteries. The company reacting to requests by LBE operators. Attempts to deflect interest in the PICO hardware, in part due to its ownership by Chinese conglomerate ByteDance, seem to have fallen flat as operators and buyers prove to be only loyal to quality and price.

In other consumer VR news, Valve revealed an update of SteamVR – one of the foremost hubs for PC VR content and reflecting the aspects of the VR sales window, which has seen some ups and downs. The update also caused many consumer VR observers to speculate on the appearance of a ‘Index 2’. Much speculated, information seemed to be firming up on a serious plan by Valve to release an updated version of their high-end PC VR headset. Sources pointed to rumors that the new system may be married to a new Steam PC “streaming hub” approach, allowing wireless (Standalone) capabilities. Although, those same sources indicated that, while a Valve new VR platform was in the works, its release may still be some years off. We have already reported on the change in other Valve TOS, seen impacting some HTC headset-based hardware in commercial sectors. How many more changes can be expected? We will have to wait and see.

Additional rumors in the VR community revealed claims that Google was working with Nintendo on a VR headset. This comes as Google was reported to have abandoned previous plans to launch a XR headset (under the ‘Project Moohan’ codename). This project had been linked to a partnership with Samsung and was reported to have been abandoned for as restructuring of market focus. Now, with the Nintendo partnership rumor, a lot of the amassed VR/MR experience from these projects will be employed in support of this partnership. Nintendo is building off the success of their standalone console (Switch) and could mark a serious entry from the console game scene into immersive tech, since Nintendo’s toe in the water with the ‘Nintendo Labo VR Kit’ (2019), and the obvious investment into the Playstation VR headset series from Sony.

Nintendo entering this latest phase of VR will mark a big moment for the sector, still finding it hard to achieve mainstream recognition. The entry of Apple, with their MR plans, has opened the doors to continued investment in VR after flagging sales in the consumer sector and a mixed reaction to Meta’s considerable investment. Nintendo investors will be mindful of the dangers of jumping on the VR bandwagon, with nightmares of their 1995 ‘Virtual Boy’ failed console project still very sharp and painful (holding the record of their lowest selling console with only less than a million units shifted before being abandoned). 

Speaking of further closure of services, Magic Leap announced the “end-of-life” for their ‘Magic Leap 1’ AR headset platform – launched in 2018. The development forum support will end in September, while December 2024 will see the suspension of complete support. The corporation revealing that the platform is no longer available for sale. The company is attempting to encourage interest to their alternative ‘Magic Leap 2’ headset – focused wholly on commercial application.

Magic Leap has seen the completion of its majority stake taken by Saudi Arabia’s Public Investment Fund (PIF) for $450m. The operation is looking to restructure its business approach in the wake of the pivoting of business towards enterprise, and the developments in the AR business following the ‘Apple Vision Pro’ announcement and immanent 2024 launch. The operation is hoping to survive off its patents in the face of AR reinvestment. There is a need to now restructure the whole business approach for Magic Leap, as the company evaluates its future after previously raising some $4b from minority investors such as Google and Qualcomm when launched.

All these developments come on the heels of the latest announcement from Apple – seeming to have reinvigorated interest in head-mount display technology. The corporation launched their latest version of their phone brand during their own “Wonderlust Event 2023” – taking place before Meta’s Connect. With the reveal of the ‘iPhone 15 Pro’ and Pro Max range, Apple also doubled down on its investment in Spatial Computing. It was demonstrated that the new phone will be capable of recording “Spatial Video” – the new phones’ camera is able to capture spatial video (3D parallax encoded video) that can be viewed natively on the soon-to-be launched ‘Apple Vision Pro’ headset. Apple has distanced itself from VR or even MR labels, doubling down on Spatial Computing, to describe their entry into the immersive scene. And, during the ‘iPhone 15 Pro’ launch, the corporation revealed that most new iPhone and iPad apps will be accessible on the Vision Pro within the visionOS spatial interface. 

Apple is investing in a similar path of application that established the original iPhone – initially an expensive concept that became a must-have accessory, once supported by essential apps. Apple has been actively wooing developers onto their platform – although it seems that most projects in the works are more MR/AR applications than dedicated VR titles. While many observers have attempted to associate the ‘Apple Vision Pro’ to the VR scene, the reality seems to reveal a dedicated spatial initiative as the ultimate smartphone and workspace visualisation platform. The added impetus seems to also be driving the visionOS, with the non-controller interface – with Apple revealing a new “double tap” hand gesture feature, emulating many of the gesture capabilities demonstrated on the Vision Pro, and a feature of ‘Apple Watch Series 9’ deployment (hoping for cross compatibility). 

Information from Chinese sources close to the supply chain, suggest that Apple is looking at a maximum production capacity for the $3,499 Vision Pro in the 400,000 to 600,000 range – and has even cut back on plans, for the time being, for a low-cost version of the Vision Pro that has been rumored for 2025. A long evaluation period of how the audience reacts to this first entry into the headset market is expected to be undertaken – with speculation of a possible Vision Pro 2 aimed for 2027. Apple is able to play a waiting game where others may have shot their bolt early.    

While Meta’s dreams of a “Metaverse” have failed to achieve the reality they had hoped for at this point, investment is still strong in the idea. It was reported that the Spanish Government had announced that it would invest €3.8m ($4m) into companies working on Metaverse and web3 technologies, as the latest European country to jump into this sector. Meanwhile, others are now realising that commercial (enterprise) is the real battleground for domination of the next phase of application. But for enterprise, it is the LBE VR scene where things continue to be most positive. This is best illustrated by the perfusion of VR and MR on the Vienna show floor for IAAPA-Europe Expo 2023 – full and exclusive coverage of this and more coming soon.