

On a recent episode of our podcast we spoke about the VR industry with Matt Hartman, director of seed investments at Betaworks. When evaluating VR companies, Hartman looks for whether the company is delivering a “10X experience.”
Ultimately, can you deliver 10 times the value of comparable offerings with your solution? For VR companies, the vision of their given solution may not be flawed, but is the technology, cost and timing right for consumers?
“Uber could have existed a decade ago, but you would have had to text in your latitude and longitude coordinates,” says Hartman. “The trouble in figuring that out was a much bigger challenge than just raising your hand and hailing a cab.”
Delivering value at scale may be the biggest challenge early VR hardware may face. We’ve seen this before with other products, such as Google Glass. On June 27, 2012, Google’s Project Glass was at peak hype levels. Developers, consumers and businesses were infatuated with the endless possibilities presented by Glass. It was on this day, at the climax of the Glass phenomena, where one of the more awesomely over-the-top demos ever conducted occurred at Google I/O (their annual developer conference). During this demo, Sergey Brin narrated a live coordinated skydiving and BMX showcase into the conference hall of the keynote to rousing applause.

After the conference, the hype lasted another year, until April 15, 2013. This was when, for $1,500, Google started delivering prototypes to qualifying participants as part of their Glass Explorer program. It was at this moment that the hype ended and reality kicked in. Glass may have changed the conversation about head-mounted displays, and likely paved the way for consumer augmented reality, but all this came at a cost. Glass was too expensive for the mass consumer, had a limited ecosystem and developed a negative public perception — the birth of the “glasshole.”

Ultimately, Glass still could have a promising future, but its initial failure can be a critical lesson for the VR industry and, more specifically, the widespread adoption of premium VR headsets such as Oculus Rift or HTC Vive.
Similar to VR now, Glass had strong early hype, but failed to deliver essential use cases that would have made it crucial to our everyday lives.
VR may be in a similar inflection point. However, there’s one approach that could make VR more widely adopted because it can be introduced through something you already own — your smartphone. VR could use this as a bridge to wider adoption — something Glass failed to do. In the short term, Oculus and others should double-down on mobile-powered VR experiences to reach a larger audience and deliver a 10X experience.
At $1,500, Google Glass was too costly for the average consumer. Premium VR headsets, like Oculus Rift and HTC Vive, can be just as expensive as, if not more than, Google Glass. To pre-order an Oculus Rift, there’s an upfront cost of $600-$800. However, what’s not advertised is the cost of purchasing a new gaming desktop (or graphics card) that you’ll likely need to push all those pixels.
When considering Rift, there’s also the additional cost of purchasing the Oculus Touch controllers when they arrive (Rift currently uses an Xbox controller). When you take all this into account, plus the cost of purchasing additional content, many can expect to pay upwards of $2,800 just to get started.
By contrast, Samsung’s Gear VR — powered by a Galaxy smartphone and an Oculus app — is only $100. Google Cardboard — powered by a broader selection of smartphones — is only $15 ($29 for the Mattel View-Master VR). And unlike the Rift or Vive, which requires an additional investment of a $2,000 gaming PC, mobile VR leverages something most consumers already own — a smartphone.
Here’s one reaction to the Oculus Rift price:

These lower-tier, lower-cost alternatives present a huge market penetration opportunity for both premium VR manufacturers and the overall VR industry, the kind of opportunity that Google Glass lacked during its introduction. To capitalize on VR’s accessibility through smartphones, Oculus is wise to play in both camps, and should continue to expand its partnership with Samsung and others to continue to make their mobile VR experiences shine.
Not only was Google Glass tasked with the challenge of introducing consumers to a new idea, but it also had to convince consumers to buy new unproven hardware. This circumstance created a high barrier to entry for consumers and significantly reduced the probability of it going viral. VR, on the other hand, is being introduced through a medium that’s become ubiquitous in our everyday lives.
With the Gear VR or Cardboard, smartphones can double as VR platforms that are always with us. And because these devices by default are mobile and widely accessible, this increases the probability of consumers sharing relevant apps, advocating through word-of-mouth and wholly embracing these experiences.
“App distribution [for the Rift or Vive] may look similar to iPad-only apps,” said Hartman. “If you’re only looking at your iPad once every evening or once every other evening it starts to reduce the ability for these apps to go viral. Similarly, the chances of you downloading an app when you are in ‘VR mode’ are much lower than just downloading an app for an experience powered by a smartphone.”
Typical consumers purchase new computers every three years, game consoles every five and new televisions every seven. If you’ve just dropped $1,500 on a first-generation Google Glass, how quickly will you upgrade? Probably not for at least a few years. And while the same can be said about a new Rift or Vive, VR has a champion with a much quicker product refresh cycle.
Smartphones refresh every 18 months. This means that the propensity for Gear VR or Cardboard to quickly iterate and reach a broader audience over a shorter period of time is more likely. This ultimately will propel the entire industry to new heights and pave the way for premium players like Oculus.
Google Glass aside, there are other challenges unique to premium VR headsets. One of them is actually tracking your movement. With Rift or Vive, this is done with an “outside in” approach, which uses separate laser towers to track your movement. The alternative is an “inside out” approach, where the headset uses sensors built into the device to see and track the world around you.
This summer, devices like Lenovo’s upcoming Google Project Tango smartphone — which contains a depth sensor that can measure the distance of objects — will use an “inside out” approach to help resolve problems like occlusion and navigation for Cardboard-like headsets. This enables future smartphones to do a variety of clever things, such as navigating indoor environments or converting your home into a virtual level within which you can roam freely.
Without question, VR will deliver game-changing experiences well beyond gaming. The most important thing, however, is to ensure that enough barriers are broken down to justify them. This is why, in the short term, smartphone-powered VR is so vital. Because it empowers everyday consumers to casually enjoy the magic of VR with little to no investment.
Smartphones will become the conduit that leads to the widespread adoption of premium VR headsets and experiences. As a result, it would be wise for VR companies to invest more heavily in mobile platforms to broaden their reach and ensure a 10X experience.
