VR by now has dreadfullydisappointed…will it change ?

Jürgen Goeldner

FIDIUS TRUST

THE MARKET

Many reports predicted that within 10 years, AR and VR would produce revenue in the tens of billions of dollars. We are far away from that…..

Success factor: complete ecosystem including hardware, operating system, developer base and app distribution channels.

But….the industry is still evolving and adoption remains limited. During the ramp-up phase of any new hardware segment, device quality/specifications and components are the main focus.

To reach a larger user base and improve the adoption rate, the hardware needsto be capable of delivering a smooth and sophisticated user experience.

Eventually, to complete that user experience, the hardware must also offer a wide body of software.

Expectations (16.5m) vs. Facts (2m) (HARDWARE)

Hardware landscape continues to be fragmented…hindering mass adoption for some time. SuperData says:

Vive:420K units

Sony:750K units sold (vs. 2.6m estimate)(marketing focused to sell PS4 Pro)

Oculus Rift:250K units(develop Touch or non-Touch?)

Mobile GearVR at 4.51mDaydream at 261K

Expectations vs. Facts (SOFTWARE)

Gaming –VR/AR is already enhancing the experienceGaming community most passionate about VR….Why ? immersive experience significantly enhances players’ experiences of gamesVR is already being adopted by mainstream titles / brands.Sony as of November enjoys 230 studios contributing to PSVR

Early adoption of VR/AR technology:● gaming;● education;● shopping/e commerce;● business;● real estate; and● sports.

After established, others will follow:● military;● healthcare;● construction/real estate;● field servicing;● engineering, and● automotive/transportation.

Developers now recognizing VR

Investment areas have changed…..

Investors have changed…OLD• Accel• Andreesen Horowitz• Colopl Japan• Dolby Family Ventures• Formation 8• Google Ventures• Intel Capital• Iris Capital• Jafco• J.P. Morgan• Partech• Qualcomm• Rothenberg (incl. River)• Shanda• Warner Bros.

ca. 300 companies with VR investments

“VR has to bring a significant incremental value-add—not just an enhancement to existing technologies and experiences.”

“More public demonstrations are necessary to promote AR/VR to the general public, as typical means of advertising are inadequate at explaining the technology to the unfamiliar.”

“We need to see some financial ‘hits’ in gaming and live action.”

“Until headsets/technology are streamlined and less clunky, it will be difficult for consumers to experience VR in everyday life experiences.”

“A few more generations of hardware will need to come along to lower total cost. Market needs to grow and killer apps are needed.”

“We need better technology, smaller devices and more content directed at specific use areas, rather than promising the moon to consumers.”

Investors have changed…NEW

Investors have changed…NEW

Financial investors: Fidelity, Intel Capital, Softbank,

Kleiner Perkins Caufield and Byers, Sequoia, DCM,

Qualcomm Ventures, Raine, CITIC, etc.

Corporate investors: Amazon, Alibaba and News Corp.

Barriers….fear of consumers

Barriers….fear of consumers

So WHEN will it change…

2017 should be key for VR

Simple prediction: 1. Compelling content will drive demand. 2. Demand will drive technology. 3. Technology will drive the masses. 4. Masses will expand the markets and

make the content commercially viable andthe chain will follow.

So WHAT will change…

Mobile first…..

So WHAT will change…

So WHAT will change…Multiple use cases (compare to smartphones before) :- Use a single VR device to

- play videogames- watch videos and live events- shop 60% of revenue

So WHAT will change…THE PLAYERS

So WHAT will change…develop different !

So WHAT will change…engines

Investment in detail

Preparation for investor approach:

1. Headline (content, technology, hardware, tools, analytics etc.)

2. Target Hardware / Audience

3. Concept

4. Business Model

5. Time table

6. Resources overview

7. Funds needed

details

Investment in detail 2Concept

• What is the „awesome VR feature“ convincing the consumer ?

(walking/running/ducking/crawling/body tracking/haptic feedbacks)

adrenaline rush for real (draw weapon, swing katana, pump shot-gun)

• Can it work across the platforms / devices ?

• Is your immersive (entry point) ACTIVE VR is the key word

(feeling an experience across your mind and body)

• Patents possible / filed / granted ?

• Social needs bigger than movement/multiplayer (safe-bet answer)

Investment in detail 3

Business Models

• Licensing

• Premium price

• Freemium

• F2P

• Subscription

Base projections on conservative (!) hardware forecasts !

Investment in detail 4

What else…..

• Is contingency built into funding requirement(developers ) ?

• Incentive schemes at your location available ?

• Prove that you and your team have a DEEP understanding in VR

• Show…don‘t just tell (prepare visuals)

• Drive presentation on quality of product, not the promise of the future

CONCLUSION…stick to the leaders…..

CONCLUSION

DO NOT BELIEVE all the forecasts !

VR is going to happen….may still take up to 10 years!

These first years will not be boring……………………..

THANK YOU