I had my first Virtual Reality experience this year. It was electric. No video game I’ve played or movie I’ve watched, compared to the Oculus Quest 2 experience. With just a headset and two controllers in my hands, I could see and interact with this new world. Even basic experiences like tutorials and opening credits felt so novel in 3D. You can’t just translate these into a video you watch on TV. I was sold on VR and played more games on the Oculus. I really enjoyed Beat Saber: a game where you slice through incoming blocks synced with your chosen song using lightsabers (your controllers). This game was great at energizing me between draining zoom calls that we’re all too familiar with.
I had such a great time playing Beat Saber and other VR games, that I began to consider getting a VR headset. In this article, we will do a few things. Firstly, we will discuss the importance of buying the right first headset. Secondly, we will understand our measuring stick for success and apply it to the two VR market leaders. Finally, you will be left with more insight into who we should (or have to) buy our headsets from.
The first decision
The decision of the first headset you buy can determine more than you think. Since we want to save money, we should be wary that switching to a different VR headset later can be costly. If you switched from a Playstation to an Xbox, you would lose the games you bought. Even the data transfer from iPhone to Android is not lossless. I do not think VR will be different in this sense. Beyond games, we are likely to buy other accessories as well. The equivalent with iPhones is buying a phone case, AirPods, and adapters to a laptop. Therefore, I don’t know what auxiliary VR purchases I might make down the line that might lock me to one provider. This is why it is beneficial to anticipate the costs.
Understanding the Ecosystem
I will use an Ecosystem Analysis to compare the VR providers. There are other effective approaches but this one is apt for emerging technologies like Virtual Reality. Ecosystem Analysis considers the components and the complements. When considering a company, A, the component challenges are innovation challenges faced by A’s suppliers, while the complement challenges are faced by firms whose products (when owned by the customer) increase the ‘usefulness’ of A’s products. Two Professors, Ron Adner and Rahul Kapoor discovered a useful fact about this analysis. They find that higher component challenges increase the value added by a company, while higher complement challenges reduce it.
For instance, your smartphone may not look so smart without an internet/wireless connection or apps. No matter how much better you make the screen(component) or the processor(component), you cannot order an Uber, because you do not have the app(complement) or cannot connect (complement) to other devices. On the other hand, if there is a wireless connection and apps, then a better processor and screen will improve the user’s experience and can be hard to copy (iPhone). This is part of why the internet created so much value: it allowed products and businesses to add much more value to customers. This will be the north star of our analysis of success in VR: is your learning/value-added limited by complement challenges, or do you learn faster because you reduced complement challenges so that your component challenges are higher?
The main contender to Oculus, which was acquired by Facebook in 2014, is HTC Vive. Vive has a wider array of products including Vive Pro, Focus, Cosmos, and more recently Pro 2 and Focus 3. Oculus only offers the Quest 2 and Rift S. I have not been opportune to try any Vive headsets. This might have something to do with Vive’s $700 price tag for their cheapest headset. They target enterprise/business customers whereas Oculus targets gaming consumers. The Oculus Quest 2 costs a modest $300. Dell, HP, Acer, and Lenovo also offer VR headsets, but Oculus and Vive simply have superior products. Therefore, I will focus on just these two.
Virtual Reality Components
We will begin with components. Vive shines when it comes to excellent displays. Display factors like the field of view, pixel resolution, and refresh rate not only provide an immersive experience but prevent nausea and dizziness. Vive has a superior display, but at a much higher price point (up to 6 times as much, and you still need a gaming computer). I undoubtedly felt disoriented when playing the first few rounds of an Oculus game, Swarms. That is not to say that the display and audio on the Oculus were a problem. For Swarms, the disorientation was simply an added challenge to the game in the first couple of rounds.
There are two additional components: tracking (your movement) and controllers. For tracking the two approaches are inside-out and outside-in. Oculus employs inside-out. It involves tracking through sensors and cameras inside the headset. Conversely, Vive requires two external sensors set up in the playing area to track the headset and controllers. This is outside-in. Vive’s sensors are the main reason why the $700 price tag gets inflated to over $1000. After all, the headsets do not work without them.
As for the controllers, Oculus is superior. Not only does it have a better design, but Oculus has been developing hand tracking that detects finger movements. I speculate that Oculus is building for a future where all you need for an immersive VR experience is a headset. No added controllers or sensors. This frees up resources to be invested in a better display, yet at the same price.
Virtual Reality Complements
Next is the complements. The source of difference here is the graphics card(GPU) and VR developers. Firstly, Vive’s superior display requires that you use a high-end graphics card in addition to a computer with a quality CPU. Oculus does not require either and has a built-in GPU (which might qualify GPU as a component for them). This GPU aspect might be boosted by a company called Shadow. They provide you (wirelessly) with “the power of a high-end PC, on devices you already own” including a VR headset. With the development of 5G, questions about display quality (due to GPU challenges) may quickly fizzle out.
The second major complement is developers for VR, and Facebook has not held back in gobbling up VR game developers. They have bought developer after developer. They even bought the creator of the Beat Saber game I mentioned. On the other hand, Vive partners with Valve (owner of Steam) for its app development. Note that it is still developers (like the ones Facebook acquired) that actually develop games on Steam. Yes, Vive targets business customers who often build their custom software (surgery practice, car design, you name it). However, I am convinced Facebook will eventually stop their (acquired) developers from releasing on Steam despite Facebook’s director of VR/AR content saying that they will continue. I think the outrage will be similar to when Facebook accounts became required for Oculus logins after Palmer Luckey(Oculus co-founder) assured that this would not happen. Infuriating, but inevitable.
Verdict
Overall, Vive has a more immersive experience. They tout a superior display and audio, along with a slightly more accurate outside-in tracking. Because I am yet to try a Vive headset, I cannot say with certitude that Valve’s superior immersion is worth the price point. Serial gamers might have the necessary GPU and computer, but even that group has to buy sensors after a $700 headset.
Conversely, the Oculus is ‘affordable’. This goes beyond price. Oculus is building for consumers and Vive is building for enterprises. You might even say they are in different markets. Winning in an industry is not limited to who has the better tech. Though this has to be Vive. I am instead thinking about what headset I want to have when an impressive multiplayer game is released and I really want to play it with my friends. Oculus’ investment in developers and hand tracking technology tells me they plan on being ‘that’ platform. Moreover, Oculus eliminated the need for sensors and a gaming computer and can guarantee quality games. These are all complement advantages because all that is left is to improve the headset itself.
Oculus’ strategy, therefore, provides it with a faster learning rate. This is consistent with Adner and Kapoor’s findings: lower complement challenges make imitation harder for competitors (Vive) and promote faster learning. For instance, Apple prioritized building a thriving developer community which increased the appeal of the phone. Developers complement Apple’s products because having more apps makes the iPhone more useful. As a result, Apple learned faster about addressing customer and developer needs. While Vive toils at superior tech, Oculus is learning how to make home-run VR games. They are understanding consumer priorities and developing hand tracking technology. Only time will tell how valuable this learning will be.
I think that the faster a company can learn about an unknown space, the better it is positioned to succeed in exploring the said space. Maximizing this learning is one of the best things a company can do. Though I have more confidence in Oculus’ approach in VR, I also think both providers will coexist for a long time. For comparison, Neither Android nor ios have completely dominated the mobile/smartphone market. We will continue to hear about Vive and Oculus for the foreseeable future. But right now, Oculus offers a compelling deal. Two other major gaming platforms are Playstation and Xbox. They will charge you $500 for each of their latest products. Meanwhile, the Oculus Quest 2 can be yours for $300.