svvr 2016 - the business of vr (4.28.16)
TRANSCRIPT
THE BUSINESS OF VRAPRIL 2016Sivan I ram
s i van @r i ve r. co@s ivan i r am
“…a new computing platform always
emerges every 10 or 15 years…”—Mark Zuckerberg, 2/28/16
Internet1995
Mobile2006
VR2016
APPLICATIONS
Music Social Live Sports Games Journalism Real Estate
Entertainment Training Retail Health Education Productivity
Virtual Reality Market Forecast
$150Bnmarket
Augmented and Virtual Reality market to hit $150 billion revenue by 2020. [Digi=Capital Report]
13,000%growth
Virtual Reality Market Expected to Grow by Over 13,000% in next 3 Years, Nearly 5 Times faster than the iPhone. [Kzero.co.uk]
12.2mheadsets
12.2 million VR headset devices to be sold in 2016. [Piper Jaffray] 7.7bn
software
Cumulative VR software revenue from 2014 to 2018 estimated at 7.7bn. [Kzero Report]
References: www.digi-capital.com piper2.bluematrix.com www.kzero.co.uk
INVESTORS ARE MOVING IN
AR/VR Investment ActivityQ1’12-Q4-15
Stock Changes In Last 3 Months
17%
30%
13%
16%
42%
$2B $56M $35.5M
$100M $38M $22M
BIGGEST Deal
TECHNOLOGY ADOPTION RATE
Electricity Telephone Radio TV PC Mobile Phones
Internet Smart Phones0
5
10
15
20
25
30
35
40
45
50Time To 25% Market Adoption (US)
1900 1950 2000
• First mobile phone invented
in 1983, it took 13 (!) years to
become commercially available.
• It took smartphones 6 years to reach the early majority.
• If we begin the count with the
release of the Oculus DK1 (3/13), it
early majority adoption will occur in
2019.
• We believe VR would be sooner.
SMARTPHONES ADOPTION RATE
CONSUMER PRICE POINTSHeadsets Content
$800
$400
$99
$30
$10
Free
Vive
Rift
PSVR
Gear VR, Merge VRSmart VR
Cardboard, Go4D
Magic Window
ViveViveRift, ViveRift, Gear VR
Cardboard, All
“The High Cost Of Pricing Low”• Don’t only think about device cost, think Customer
Lifetime Value
• Consumer $ supports content development
• Apple users spend on content 4x compared to Android users - $200 vs. $50 (Fortune 2014)
• Premium prices on devices preserved on content and accessories
Pricing headsets low democratizes access, but also anchors low perceived value.
VR ENTERTAINMENT DISTRIBUTION
• Free for users• Maximum exposure
• Ad-rev model• Requires user volume
User Generated Content (UGC)Marketing
Free Content For Consumers
• Paid by consumers• VOD/Subscription
Film, Music, Sports
Premium Content (Paid)
SUMMARY• Every major tech company is investing in VR, and the
market values it. Early consumer signals are STRONG
• The fact that mass consumer adoption is “4-5” years away, doesn’t mean we can’t build great valuable businesses TODAY
• Not all content is equal. Some content should NOT be free.
• Don’t be pressured to eliminate margins to “force” adoption
• Build KILLER apps. Think 10x experiences
Q&A1. Reach out: [email protected], @sivaniram2. Download our app: RiverStudios (Available via AppStore & Google Play)
3. Visit our website: www.river.co4. Tweet about us: @RiverVR