Let's Take a Trip Down Memory Lane: A Recap of My Previous VR Insights & Recent News
Two months ago, I penned an essay in response to multiple reports that Sony was ceasing the manufacturing of new PlayStation VR2 devices in light of recent struggles shipping and selling them. However, during Sony's May State of Play, the company not only revealed that new titles were still coming to the device but also said that we should stay tuned to see what the future might hold for it. Sony later revealed what many thought was coming: that the PSVR 2 would be usable on a PC and would gain the ability to play previously PC-only VR titles. Most notably, in the marketing images of its new dongle, which we will discuss shortly, Half-Life: Alyx is prominently featured. However, this route requires you to use an attachment, and this adapter will demand you to shell out $59.99. Also, the PSVR 2 will operate in a highly reduced fashion when streaming on a PC instead of a PS5. What Sony has announced is better than nothing, but it reeks of a company with no idea what it's doing. More importantly, this is the final sign that console-based VR gaming is dead. At this point, Meta is running laps around Sony. If you want to continue to follow the consumer-grade VR scene, your best bet is, BY FAR, Meta.
And what about the claims by those following the evolution of the VR market, like myself, that Meta's dominance in the industry was approaching that of a "monopoly?" Well, we are not alone. The FTC has opened a probe about this topic and is exploring whether Meta meets its current threshold for violating antitrust laws. Nothing will likely come of this probe as the VR industry is such a minuscule fraction of any tech sector you group it in. All signs point to Meta sticking around primarily because it's the only major titan willing to take the financial brunt of researching new technology and putting goods into consumer-oriented stores, even though the market for such wares continues to be small. Meta being one of the few players in VR remaining is not due to them pushing people out; there's not enough money to be made in VR on the consumer end, which is why most people with skin in the VR game have pivoted to enterprise applications (i.e., HTC, Magic Leap, Microsoft, etc.). But hey, if Meta is a monopoly, they must make money on VR, right? Well, no. Shortly after my first piece on the shaky ground VR gaming finds itself, Meta announced it lost approximately 3.85 billion dollars on its Reality Labs division during the first fiscal quarter of 2024.
To summarize how bad things are for Meta, during Q4 2023, which saw Reality Labs generate an industry record of $1 billion, its VR investments still came to a net loss of $4.56 billion! That's now two quarters in a row in which Meta's VR division generated a loss of $3.5 billion or more! That's NOT GOOD! And it's no different for new names jumping into VR as well. There was hope that ByteDance's $3 billion investment in the VR firm PICO would lead to a new line of consumer VR headsets to challenge Meta's dominance. The PICO VR headsets are quality products, and the brand maintains a 59% market share in China, which amounts to just 700,000 units sold in 2022 and ~194,000 units in 2023. Think about that last sentence for a minute. ByteDance spent billions to fund their VR headset partner, and they have yet to surpass 1 million units sold in China in two years. IN CHINA! A country with a burgeoning middle class that traditionally has snapped up comparatively expensive consumer hardware to express one's growing social class and status. It should come as no surprise to any of you that Pico and ByteDance are scaling back their efforts, and for all of 2024, we have yet to see any new products or product revisions from the Pico brand. So, if Meta and the CCP-sanctioned VR headset company are not making money on VR, there's no way in HELL Sony is! This struggle signals that Sony is not necessarily incompetent about improving PSVR 2's fortunes and is more self-aware that there's no saving this sinking ship.
Examining Sony's Strategy: Is A Dongle/Tether The Best You Can Do?
What did Sony announce with the PSVR 2 during its May State of Play? During the event, it first gave ample room for Skydance's Behemoth, which has been under radio silence since it was delayed until late 2024, eight months ago. Notably, Behemoth is NOT exclusive to the PSVR 2 and will come to Steam VR and Meta's Quest devices. In hindsight, I find it HILARIOUS that Sony even gave the game a presence at their event, considering Skydance just outbid them to buy Paramount Pictures. The other VR title of note during Sony's conference was Alien: Rogue Incursion, which, much like Behemoth, is NOT exclusive to the PSVR 2. Furthermore, Alien: Rogue Incursion has been a substantial advertising point for Meta as it is one of the more significant upcoming VR titles for the Quest Pro and Meta Quest 3, but not the more budget-friendly Quest 2. Overall, as impressive as these titles might have looked, they are not exclusive to Sony's VR ecosystem. With the shuttering of London Studio earlier this year, it's unlikely that there will ever be any AAA PSVR 2 exclusives at any point.
However, maybe allowing PSVR 2 to access previously PC-oriented online marketplaces like Steam may make more sense to Sony diehards or VR-curious consumers who want to avoid giving Mark Zuckerberg money. Let's discuss the PlayStation VR2 PC adapter if that statement describes you! For the price of $59.99 / €59.99 / £49.99, starting on August 7th, you can buy and play VR games from Steam's library! Here's the deal: this adapter is effectively a tether, even if Sony claims it isn't a tether. While Sony's dongle doesn't look immediately intrusive, the fact you need to plug something into your headset to access something as basic as Steam's marketplace is absurd. Likewise, while Sony has been forthright about announcing that this adapter will allow you to peruse Steam, there's no news about Google, Epic, or Meta's VR titles having seamless compatibility using this attachment. Finally, this point is the real kicker: PSVR 2 on PC will be a compromised experience. As Sony has since clarified on their website, "HDR, headset feedback, eye tracking, adaptive triggers, and haptic feedback (other than rumble), are not available when playing [PSVR 2] on PC." For reference, the PSVR 2 is $549.99 and if you want to use Steam on it, you have to fork over the price of a new video game. In contrast, the Meta Quest 3 is $499.99, but has all of those features that Sony has decided to block when using their headset on a PC!
I'm one of many who say this, but this is a non-starter for most in the PC VR gaming arena. Meta's portfolio of VR headsets offers far more bang for your buck, and its devices are far more feature-rich than PSVR 2 on PC. With so many prominent players providing better and cheaper products with fewer limitations, I have no idea why Sony would think this adapter strategy is their way of expanding the audience for the PSVR 2. This new pivot might benefit a handful of people who already own a PSVR 2. Nonetheless, even they don't deserve to be railroaded into interacting with technologically hampered and inferior versions of Steam's top-heavy library. I made this point in my previous blog, but while VR gaming enthusiasts love pointing to Steam's VR catalog as this large or impressive "get" for Sony, its best sellers overwhelmingly date back to the peak of the Pandemic, AND Steam's sorting tools are THE WORST. The amount of dreck you must wade through to find one or two gems is a nightmare! I genuinely take no joy in saying anything nice about Meta, but I have to give them credit. Not only do they have exclusive software, but getting recommendations and using their marketplace isn't an immediately terrible experience.
And I cannot stop bringing up the price tag with this week's news. The PSVR 2 still costs $549.99 / €599.99 / £529.99. Now, you need to shell out an additional $60 to get the thing to steam stuff through a PC, and poorly, at that. Even if Sony hadn't curtailed the PSVR 2's feature set, at $550, that puts it up against the Meta Quest 3 which retails for $499.99 / £479.99 / AU$799.99! The Quest 3 is an utterly tetherless device with a smaller and more comfortable profile, way better wire management, and controllers that don't die on you after three to four hours of use! And I'm sorry, the PS5 homepage is shitty on a VR headset. The Quest 3's UI highlights all your preferred apps on the home screen AND has a far more in-depth marketplace! But here's the real kicker: do you want to know what the Quest 3 has that the PSVR 2 desperately needs? The Quest 3 is backward compatible. If you bought anything from the original Oculus Rift or Quest 2, it is there and ready to go! Every major limitation associated with the PSVR 2 could be forgiven when it was an exclusive console accessory. Now that it is trying to hang with the PC VR field, it's just embarrassing.
Also, why are the PSVR 2's PC system requirements two steps above those in the Meta Quest Link family?
The minimum requirements for both are reasonable. However, the PSVR 2 requiring a DisplayPort 1.4 output is a massive annoyance. Don't get me wrong, I prefer DisplayPort on PC monitors over HDMI or USB-C, but Sony's going to require you to use one without providing a cable, which is complete bullshit. We are slowly losing this war against tech companies' corner-cutting where some smartphone manufacturers don't even include phone charges because they tell you to use whatever USB-C plug you already have. Nonetheless, with Sony already having a credibility deficit in the VR community, passing the buck on consumers in any regard leaves a sour taste in my mouth. I'm happy that a non-zero number of people can now play Half-Life: Alyx, which previously couldn't. But that's the thing. This new adapter and PC linking system are likely not moving the needle and shipping new units because other VR headsets are downright better and doing that out of the box! Maybe some PS5 owners who didn't already have a PSVR 2 will pick one up now, but are there enough of those people to turn things around for Sony's entire VR division when Meta has more than triple that number of owners and still isn't making money?
Wait, What Happened To Xbox VR Devices?
So, Sony's PSVR 2 seems doomed, but not immediately. If Sony abandons VR gaming, it will be a slow and drawn-out failure. Nonetheless, at least they got off the runway at some point! The same cannot be said about Microsoft, which of the three console manufacturers has brought the least amount of VR support to its console ecosystem. At least Nintendo had its Labo variety kits! Xbox has been teasing a partnership with Meta for DECADES, as they were rumored to be a partner with Oculus back during the Xbox One days before Facebook bought Oculus. Some may recall when the Xbox Series X was called "Project Scorpio," Phil Spencer went around the press circuit affirming that their next console could support VR. And then, like many things Xbox and Phil Spencer promised back in the day, nothing happened. Curiously enough, the Oculus Rift did ship with Xbox One controllers instead of custom-made ones. But hey, things are different now! Past failures aside, a Meta Quest device will finally have Xbox branding!
Sure, it's not much, but at least Microsoft will finally have something to show for the billions they spent on VR! Back in April, Meta listed Xbox along with Lenovo, Asus, and Qualcomm as new partners in their plans to promote the metaverse and help its VR division turn a profit. Regarding Xbox, Meta stated, "Xbox and Meta teamed up last year to bring Xbox Cloud Gaming (Beta) to Meta Quest, letting people play Xbox games on a large 2D virtual screen in mixed reality. Now, we're working together again to create a limited-edition Meta Quest inspired by Xbox." Mark Zuckerberg clarified what advantages such a partnership would have by posting on Instagram, "[it] comes out of the box with Xbox controllers and Game Pass, so you can immediately just start playing on a big screen anywhere you go." Admittedly, a VR headset that runs Game Pass out of the box sounds good, even though you can fairly easily get Game Pass running on a Quest headset. If anything, this device might be the first hint that there's some credence to rumors that Microsoft's current approach to its hardware is licensing the Xbox name to others and having them create SKUs that address specific and niche audiences as long as the third-party hardware can still run Game Pass. Ultimately, Xbox is doing something clever: it relies on a third-party partner, Meta, to make the VR hardware, which allows them to avoid losses when the headsets don't sell, which Sony can't do because their device is entirely in-house.
Even so, when you review much of what was promised regarding VR and AR during the early phases of the post-Mattrick era of the Xbox One, you realize what Microsoft failed to deliver this generation. For one thing, you aren't getting consumer-grade HoloLens. HoloLens 3 was canceled as early as 2022, andthe recent news surrounding Microsoft's Mixed Reality division doesn't build confidence. Microsoft is not making internal investments to further VR for the benefit of Xbox. Not only has Microsoft discontinued Windows Mixed Reality, but massive cuts have hit the HoloLens team, while Microsoft continues to affirm that it will continue to sell HoloLens 2 to businesses. The weird addendum to HoloLens is that it is turning its financial fortunes around because it makes gobs of money selling AR devices to the United States Department of Defense. What started as a consumer device with possible gaming applications has narrowed into a low-cost way for military training and improving battlefield awareness in combat soldiers. That shift in priorities is possibly why HoloLens is laying off staff. Not only do they require fewer people, but the people they need must fit a particular niche. So, unless Nintendo magically revives its Labo line, no one other than Sony seems primed to do anything significant related to console-based VR gaming.
Apple's Entry: A Catalyst for New R&D in the VR Industry? Not When It Costs $3,499!
Is there any hope of someone shaking Meta from its vice grip on the VR industry? If change isn't coming from Sony, Microsoft, or China, who else could be willing to throw billions of dollars into VR to develop better internals than Meta and have a chance at making a dent in market penetration? Well, why not Apple? The Vision Pro is an incredibly futuristic device that mixes AR and VR with one of the best VR OLED screens ever. You also have Apple's diverse marketplace, which blows Sony's current VR marketplace out of the water. Likewise, Apple can get third-party multimedia companies to play nice with their closed ecosystem excluding Epic and Google. That must mean the Vision Pro was met with the universal praise from the tech press that we all typically expect of an overpriced product from Apple, right? Well, no, again. The Vision Pro certainly got heaps of compliments for its intricate hardware. Still, at $3,500, few reviewers openly recommended it, and many more criticized it for its buggy software and clunky feel.
And how much of a deal breaker was that $3,500 price tag even to Apple's most ravenous fanbase? TF International Securities Group analyst Ming-Chi Kuo, whose specialty is following Asian tech supply chains, disclosed in February of 2024 that Apple had revised its year-one sales target for the Vision Pro from 800,000 to "a number between 400,000 and 450,000." Kuo's report also indicates that Apple has cancelled a hardware update planned for 2025 which throws a wrench into anyone hoping for Apple's regular commitment schedules to its hardware. Likewise, as reported by Fast Company's Michael Grothaus, mainstream interest in the Vision Pro peaked like a bottle rocket. Market research on enthusiasm and interest in the Vision Pro only lasted 72 hours after its release. And as they also point out, this news is not something Zuckerberg is jumping for joy about. While Apple might be a competitor, the fact that they are struggling to excite even their most diehard defenders to strap a device to their face to watch Netflix or listen to music means the novelty of VR is dead for most people. It does not matter if it is Sony, Meta, or Apple. People are not running out to buy plastic boxes to strap to their faces.
To Apple's defense, there are already early signs that the Vision Pro was never aimed at staking a claim in the consumer realm. Citing the device's novel mix of AR and VR displays, Lowe's Home Improvement put in a massive order on the Vision Pro as it attempts to use them to provide interested customers with the opportunity to explore kitchen redesign options. The Vision Pro is also making inroads in the healthcare sector after Microsoft abandoned it with the retirement of its enterprise line of Kinect devices and HoloLens pricing them out. Obviously, this is only in a trial run phase. Still, it's an early indicator that Apple always knew that their pricey VR headset had limited appeal with everyday people and that enterprise applications were the real money maker. Likewise, don't entirely count out the Vision Pro's consumer-oriented future. Not only is Apple signing some big names to its closed OS and VR ecosystem, but we have been around this block with the tech giant before. As they did with the MacBook, iPod, iPad, iPhone, and Apple Watch, Apple has this habit of introducing new product lines at astronomically high price ranges that slowly, with later revisions, become more palatable to mainstream consumers. They have always done this, and they will continue to do this. Nonetheless, Apple's focus has NEVER been on gaming. Furthermore, while their technology seems solid and is rapidly improving, they will never budge on their closed ecosystem to make way for a console-based partner.
Meta Is Already Slowly Retiring The King Of Consumer VR, The Quest 2
We end this addendum on virtually the same note I did last time. If you are interested in getting into the world of VR, whether for work productivity or gaming, you likely should buy a Meta headset. They are the only company still making a family of SKUs that each address different consumer-oriented markets. They are the only company still standing that works with third parties to bring a plethora of software and apps into a multitude of operating systems. Despite their MANY faults, they never release an adapter that kneecaps the usability of their devices. Likewise, early signs point to Meta taking notes from Microsoft and Xbox. There are rumblings they may even license the Meta name to Asus to make a line of entirely gaming-based VR headsets that meet some Meta-mandated minimum requirements. The problem facing the general acceptance of VR in both households and workplaces demands that someone, anyone, get the install base up an order of magnitude, and that's going to cost billions of dollars. Either Zuckerberg knows something the rest of us don't, or he's wallowing in the dregs of the sunk cost fallacy because Meta continues to be completely happy to spearhead that effort.
Nonetheless, Meta is making progress. They have at least one SKU, the Meta Quest 2, that is affordable, which means that they have done a decent job of driving the price down of its competition. At one point earlier this month, the Meta Quest 2 was on sale for $100, and those devices didn't wallow away; they sold out within days of the sale being announced. Meta is also doing other things to keep the entirety of VR alive. In May of 2024, Meta announced that it would make its Meta Horizon OS available to any third-party headsets that pay their asking price. If Meta can get others to play ball, it will be easier for software creators to get their apps across multiple devices without redesigning things for multiple VR OSs. It also announced a VR/AR roadmap, laying out its plans to invest in AR and a new line of affordable and enterprise hardware. Meta's visible commitment provides some peace of mind to those making software for their headsets and those who have bought one. That level of stability does not exist with any of your console-based VR devices. Sony knew it had to give people its best shot, but it did not deliver. Likewise, Microsoft is floundering, and Nintendo practically wants you to forget they ever sold the Labo box sets.
However, we have a problem. Meta and every other major VR company is butting up against a looming technological cliff. This cliff has taken down some of the biggest names in technology. It's time to convince people who invested in older VR headsets to switch to more up-to-date ones as applications and software get more complex than when the first VR boom happened. Everyone who bought a VR headset when the Pandemic first happened? That's ancient news, and most third-party partners, like Netflix and Epic, loathe keeping these older devices up to date. Just this week, Netflix announced it is retiring support for multiple older generations of the Apple TV. Streaming companies are cutting bait, and there's no doubt they are looking at some of these older generations of VR hardware if they are already dropping support for multi-million unit-selling streaming boxes, which is part of the reason why it should come as no surprise that VR developers are unofficially dropping support of the Quest 2. New software is already drawing a line in the sand that you need at least a Meta Quest 3 or above to run the latest generation of VR games or applications. In the gaming community, we are accustomed to upgrading to a new generation of hardware. The problem facing Meta and the VR development community is that the Meta Quest 2 is estimated to be over forty percent of the entire VR market. Worse, all of these people who were curious about VR have loudly told the industry about their financial limits with consumer headsets, and everyone, whether it be Sony, Meta, Valve, or Google, continues to ignore them.
If Meta does retire the Quest 2, there's growing doubt they will introduce an alternative at a similar price point. This next point might be a shocker, but people want VR headsets to be at most $400. This unofficial preference is why Sony's decision to add an additional cost to something that already commands a $549.99 price tag is all the more ridiculous. If Sony cared about their VR fortunes, they would have introduced a new SKU at a lower price. However, they likely know what everyone else knows about the VR market. People aren't as interested in the novelty anymore, and there's growing pushback with the technology as it begins to crop up more in workplaces due to new meeting mandates. And with the model in the VR realm involving constant hardware revision, until you strike gold, Sony's hope that a dongle will open things up for their long-ailing VR device seems all but doomed.
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