In the lead up to VRX 2017 in San Francisco this December 7-8, VR Intelligence and YouGov have brought together a panel of industry leaders to talk over YouGov’s recent poll of 3,000 consumers, to give their insights on overcoming the challenges and where the opportunities are for growth. We'll take an in-depth look at: • Finding real consumer audiences - Who are the early adopters of VR… and who are those most likely to buy next? - Why have 70% of those who own VR equipment, bought fewer than 3 VR games or applications? - Why do a third of headset owners only use their equipment once a month? • Pricing and business models for growth - How can the industry make pricing more accessible, for hardware and content? - Which content is seeing the most revenue, and why? - Does location based VR provide the answer to mass consumer accessibility? • The chicken and egg content problem - What’s holding back great content? - With a relatively low install base and high development costs, what’s the incentive for content companies to invest? - What can hardware and software companies do to help grow the content market? • How to drive true immersion - Beyond headsets and content – how can haptics and audio improve full immersion? - Where are the major innovations in audio, touch and smell – and are they working? - What are the factors restricting full immersion? With a panel of experts including Ben Kim, CFO at Survios, Lisa Watts, Global VR Marketing Strategy Lead at Intel and Jeremy Kenisky, VP of Customer and Developer Relations at Merge VR; hosted by Tom Fuller, Research Director at YouGov. Make sure to sign up for some of the biggest insights in VR you’ll hear this year.

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3. Crossroads

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As Virtual Reality approaches this
crossroad, YouGov wants to briefly
examine the landscape, highlight
major issues for the technology
from a consumer perspective, but
then focus on potential solutions
YouGov has fielded 4 waves of our
Virtual Reality Tracking Study,
surveying 3,000 consumers each
quarter.
Their answers to our questions
have informed this presentation.
YouGov looks at Virtual Reality
Virtual Reality faces a very real risk
of being left behind by advances in
Augmented and Merged Reality.
Many companies operating in the
Virtual Reality may be well-
prepared for AR and MR and some
may welcome it.
Others, however, will not.
We will try to offer concrete
possibilities to improve the market
environment for virtual reality
Our panel will dissect our ideas
and come up with some of their
own
YouGov is making a concerted
effort to follow the current wave
of technological innovation,
including VR, IoT, wearables and
more. This study is part of this
effort. We use these technologies.
We’re crazy interested in them. It
only makes sense that we report
on them.

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Virtual Reality: Penetration Trails Other Types of Mobile Tech…
16.7MILLION
VIRTUAL REALITY OWNERS
AMONG AMERICANS AGE 18+
79%
50%
11%
7%
Virtual Reality
Tablet
Percentage of
Americans That
Own and Use a… Wearable Tech
Mobile Phone,
Smartphone

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45%
0%
42%
11%
0%
7%
Tablets (from 2010) Cell Phone (from 2009) Wearables (1985) Virtual Reality
Tablets
(from 2010)
Wearables
(from 2009)
Cell phone
(from 1985)
Virtual
Reality
(from 2013)
…And After a Quick Start, Growth Has Stalled
Cell phone data from CTIA, tablet data from Pew Research
 Which adoption curve will be adopted
is of course of interest to
manufacturers
 That said, penetration has clearly
plateaued in recent months for VR
% Adoption
Among US Adults
By years after introduction
8/5/2017

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People are getting terrible first
impressions of VR due to inferior
hardware (and applications…)
But console and PC gaming didn’t
die because of low quality games
back in the 80s
The three key barriers holding VR back:
• Cost: A high end consumer VR kit can cost more than
$1,000
• Content: Developers won’t commit to high end
applications with such a small user base—consumers see
no need to purchase VR until there are high-end
applications
• Interface: Haptic interfaces are laggy, clunky and thin on
the ground
“
“
Constraints to growth in VR have not been addressed

8. How to Spend $1,000 Without Even Trying
M o b i l e p h o n e
g o g g l e s
Te t h e r e d
h e a d s e t
H a n d
c o n t r o l l e r s
S p e c i a l l y
c o n f i g u r e d
c o m p u t e r
S p e c i a l l y
c o n f i g u r e d
p r o c e s s o r
H i g h E n d D i s c r e t e
G r a p h i c s C a r d
V R G a m e C o n s o l e
Pieces
of the
Puzzle

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56%
23%
17%
20%
16%
13% 13%
10%
51%
19%
16% 16% 15%
10% 11%
8%
50%
19%
16%
18%
14%
12%
9%
7%
55%
21%
17% 16%
14%
11% 11%
9%
Too expensive Leads to isolation Motion
sickness/Fatigue
Not enough good
games
Effects not realistic Too complicated Expect delays and
glitches
Ethical concerns
Wave 1 Wave 2 Wave 3 Wave 4
Cost Counts
Cost is still perceived as the biggest barrier to adoption of VR—and by a large
margin
Other concerns taken alone would not be troubling—but together they present a
significant obstacle—to date, YouGov has not seen a concerted effort to address
any, let alone all of them
Perceptions4: Which of the following are barriers that might reduce your interest in virtual reality or prevent you from purchasing/using virtual reality products?
Wave 1 (n=2741); Wave 2 (n=2942); Wave 3 (n=3032); Wave 4 (n=3122)

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37%
9%
5% 4% 3% 3%
18%
21%
35%
7%
3% 4% 3% 3%
16%
29%
32%
7%
4% 3% 3% 4%
9%
30%
36%
7%
5% 4% 3% 3%
0%
24%
Gaming Adult entertainment Training / simulations Films / TV shows Social media Health / fitness Other Don't know
Wave 1 Wave 2 Wave 3 Wave 4
Perceptions1: Thinking of the overall prospects of virtual reality, which specific category of virtual reality applications do you think will see the largest
growth in the next 3 years?
Wave 1 (n=2741); Wave 2 (n=2942); Wave 3 (n=3032); Wave 4 (n=3122)
Respondents continue to hold strong to the belief that Gaming will be the
future of growth in VR applications
 Little movement is seen among the competitive set
Content 1: Respondents Think Virtual Reality’s Future is Gaming

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While games are the most popular application that owners are interested in, penetration
stays relatively low
Content 2:
25%
42%
22%
8%
3%
23%
45%
23%
5% 4%
None 1 to 3 4 to 6 7 to 10 More than 10
Games Non-game apps
W2_2. How many virtual reality games do you own?
W2_3. How many non-gaming virtual reality applications do you own?
Base (n=246)
 A quarter of owners do not own any games
 Around two-thirds own 3 or less applications

12. Gathering Dust
In A Closet?
12
We asked almost owners of Virtual Reality
equipment how often they use it.
we were surprised.
Use their rig at least
once a week or more36%
35%
Use daily27%
Use their rig at once a
month or less

13. The Industry View:
We’re Stuck
In The Middle
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Consumer
Why would I spend more
than a grand for VR
equipment when there are
no compelling
applications?
Application
Developer
Why would I spend tens of
millions developing high end
applications for such a small
user base?
“
“

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Is There A Content Crisis—or at least an issue?
1.
Again, do these
numbers feel
right to you? Does
your own
research reflect
this or conflict
with it?
2.
Will the first major
content success be a
VR original or
migrate from
another tech
platform?
3.
To what extent is
this a repeat of the
PC gaming industry
back in the 80s? If it
is, would that be
good news or bad
for the VR sector?
For the panel:

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Interface—58% say they need a haptic upgrade
24% 19% 15%
VR Owners say they need
hand controllers or other
devices to make their VR
environment better
Say they need wands,
sword or sabers
Say they need mats or devices
to mark out a VR stage or
play area.

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Are We Being Too Tough On Haptics?
1.
What are the
most exciting
developments
you see in terms
of controllers,
wands, devices,
etc?
2.
How tough is it for
interface
manufacturers to
deal with a basically
unformed and
heterogeneous
environment?
3.
What level of
support is available
for haptics builders
from the major
hardware
manufacturers and
application
developers?
For the panel:

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Why don’t they try…?
Sometimes proposed solutions from outside an industry community
can be laughably naïve, ill-informed or just downright stupid
Very occasionally, it takes an outsider to point out the obvious

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Both Wearables and Virtual
Reality are seeing sales stall...
or even decline in some
cases. What to do?
Solution 1—Haptics: Borrow From Wearables
The tools VR provides for interacting with the virtual
environment are improving, but are not yet best of
breed—and Wearables could actually be part of the
solution to one of Virtual Reality's problems.
$
The Fitness Wearables that have gotten so much media attention are just one class of
Wearable Technology. There are also jewelry and accessories that are 'Smart.' There is Smart
fashionable clothing out there. There are also some very effective industrial uses of
wearable technology
Wearables could be configured to interact with Virtual Reality,
showing grip, direction, movement—masks under VR
headgear could show emotion and track speech. This stuff is
not new.

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Solution 2: Different Apps For Different Audiences
Perhaps it’s time to target niche audiences—captive audiences, as it were
VR is as much about
what it excludes as what
it shows. It excludes the
outside world. There are
large audiences who are
happy to shut the world
out…
Students, patients, gym rats and even those
incarcerated may need and want the
cocooned environment found in VR
These applications can be developed at a far
lower cost than Triple A game titles, and
marketing to specific audiences (that often
have one purchasing agent in front of them)
is a lot easier than stacking titles in Walmart
Education’s (limited) success
with VR shows that institutional
buyers can drive both hardware
sales and application
development

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Solution 3: Different Stages Can Set The… umm… Stage
Consumers may not be willing to buy a lot of VR right now… but there’s every indication
that they’re happy to rent it. Kinda unfair to talk about this as a ‘potential’ solution as so
much is being done with it now.
Location-based applications
can be VR’s foot in the door
Proof of concept can be
found in a variety of places
Habituating consumers to a
technology has worked
before
You can walk through hotel rooms, your next
home or apartment, a cruise ship or car
Laser tag, movies and roller coasters are
providing location-based entertainment
around the world
Telling the story of a museum or
other location doesn’t have to
be a plaque on a wall

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What is the optimal path for growth for VR?
1.
How important is
location based VR
as the consumer
market develops
– and where are
the main
opportunities in
this area now?
2.
The general thinking
is that the
enterprise market
for VR and
immersive tech is
already showing
good signs of
growth. Do you
agree?
3.
What level of
support is available
for haptics builders
from the major
hardware
manufacturers and
application
developers?
For the panel:

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The Never-Ending Story… Ended. But it didn’t have to. Because people
are willing to engage in a narrative more or less forever.
Solution 4: Attention Surplus, Not Deficit
Games regularly
update, add levels and
new versions
Movies have increased
in average length by 5
minutes every decade
since 1940
The average length of
popular books has grown
from 320 pages to 407 over
the past 20 years. Every
book in the Game of
Thrones series was longer
than 650 pages.
Binge watching is
already a cliché

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Life-Long Stories With Limited Interaction For Segmented Audiences
Narratives with forked
alternative story paths
and automatic
bookmarking for session
end—slow developing,
never-ending—pace like
Downton Abbey for
some, Game of Thrones
for others
Developed for niche
audiences in
prisons, schools,
hospitals and
retirement homes
Audience actions
adapted to existing
haptic interfaces—Bot
Avatars can control the
narrative and the pace
Watch for the winners
and develop them into
your next Triple A title

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Solutions from inside the sector?
1.
What parts of the
Virtual Reality
experience is your
organization
trying to improve?
2.
Who do you work
with to make sure
potential
solutions play well
with others?
3.
Will Apple or
other major tech
players enter or
bypass the VR
market and what
effect will they
have?
4.
What are the
questions you
think we should
have asked while
we had a panel of
industry experts
available?
For the panel:

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Thank you!
Tom Fuller, tom.fuller@yougov.com

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