The Oculus Rift will make a splash in the market: Here’s why.

Rift is unlike anything you’ve ever experienced, and it is going to be big but only if Facebook follows the right approach in bringing it to market. Even if Oculus Rift seems to be a simple device, it’s actually pretty amazing, a real cutting-edge technology. That redefines digital entertainment. Whether you’re stepping into a video game, watching a movie or even visiting an overseas country you will feel like you are really there. When you’ll be immersed in a 3-D world, you’ll understand why it took so long to create such an amazing new product. And not only was the technology well done, but also the product design has been carefully thought through.

 

Where does it come from? Even though virtual reality headsets popped into the headlines fairly recently with the Occulus Rift, the idea of virtual reality dates back to the 60’s. In 1965, the film producer Morton Heilig had already created the very first device used to watch a movie in 3D. The “Sensorama” was to entirely immerse the spectator into the film. Nowadays, the technology has evolved considerably.

If you think this technology sprung up overnight, your thinking is far from the reality. But now that it is here, it’s going to be all over the rage.

To understand where Rift is going, it’s important to first understand how it went to the point where it is today.

2012

Oculus VR launched a Kickstarter campaign to raise resources in order to develop their very first version of virtual reality headset named the Rift. They successfully raised 2.5 billion dollars through the operation. This first version was also sold on the company’s website for $300. The first day of its launching, a Developer’s Kit 1 (DK1) was sold on the website every 4 to 5 minutes. Every backer who gave more than $300 during the Kickstarter campaign had been given a DK1 as a reward.

The first version of the Rift was founded thanks to the Kickstarter.

2013

In October 2013, the Developer’s Kit 2, an improved version of the Rift was announced, featuring higher-resolution, positional tracking, low-persistence OLED display. This new version was sold for $350.

2014

Since march 2014, the Oculus Rift has a design patent, which makes it hard to imitate.

2015 – 2016

In May 2015 the company stated that the commercial version was to be launched in the first quarter of 2016. People could pre-order their Oculus Rift as of January the 6th.

Even though the market isn’t developed yet, the Oculus Rift is expected to be the leader in this industry (see chart below). Due to the high innovation speed in that field, a new version of the Oculus rift is to be launched in 2 or 3 years.  But outsiders exist too and they could be serious competition: Samsung, Sony (with the PlayStation) and Google for example. So the main competitors are only big multinational firms, that’s because to copy the product, companies need time, money and expertise in the field.

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The image of the well-known Facebook, associated to the Oculus Rift gives to the latter a strong and positive brand image. It lends credibility to the product.

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Launch of the Oculus Rift, by Mark Zuckerberg himself

 

How does the Oculus Rift work? The Oculus Rift is a virtual reality headset; with advanced display technology, which combined with its precise, low latency constellation tracking system, enables the sensation of presence. The Rift enables you to be transported into space or underwater using a pair of screens with two pictures displayed side-by-side, one for each eye. A 3-D image is then projected on both screens. In addition, a positional-tracking sensor helps to capture head movements accurately.

In practice, a simple helmet will throw you inside a virtual world that seems completely real; you’ll have the sensation of looking around a 3 dimensional world.

Regarding the Rift’s shape, there is a dominant design for this virtual reality headset. Consumers are expecting the product to have a headset shape. Besides the dominant design is optimal and inconspicuous for this kind of new technology. In fact, for the virtual reality headset most of the products look alike. Each virtual reality headset represents a mask with a high resolution LCD screen. Each headset has head sensor devices in order to compute with the 3D viewing.

While the smartphone extensions and the virtually headset are not part of the same product category, they do follow the same dominant design. Designs are similar because they are both shaped as goggles. The only difference between those two models is the devices connected to the headset. For the Oculus Rift, the device is connected to computers whereas the other model is connected to smartphones.

 

Why is it going to be so successful?

 

  1. Is the Oculus Rift a disruptive technology? Yes. Before the development of the Oculus Rift, virtual reality screens didn’t exist, and the development of the Oculus Rift is made possible with a new technology: a small screen right in front of your eyes, and sensors. This technology will take over the markets of screens, used to watch television, to play videogames, flight simulators…  It also actually creates a new market, because people who were interested in virtual reality couldn’t enjoy it before, and the Oculus Rift is pretty affordable, it will soon be cheaper than a TV set. Like the IPhone in the past, Rift takes over an existing market while creating a new one.
  2. How is this technology going to revolutionize different industries? Even though the Oculus Rift is mainly used in the gaming industry, its potential spreads way beyond video games.

Gaming

This is the most obvious and wide spread use of the Rift. The Rift is primarily a gaming device and it is the main focus of the brand. Numerous games are already available. Oculus offers the widest range of compatible games.  Many video games can be used with the Oculus Rift, however the best virtual reality games are those designed for the Rift from the start such as Insomniac’s Edge of Nowhere.

Virtual Tourism

Oculus Rift provides a virtual recreation of the entire World. It is one step ahead of Google Street View that amazed people back in 2007. Discovering the world has never been so easy. Visiting a hotel room before leaving on holiday, discovering the amusement park where you intend to go or even better, visiting virtually overseas places where people might not be able to go, are all possible now. Owning an Oculus Rift might be an investment, but it allows people to virtually travel around the round, which means saving costs.

Education

There is a lot of discussion about the possibility of using the Oculus Rift in education. Online courses are well developed but many improvements remain to be done before this methods match live classrooms. The Oculus Rift could provide a brand new environment for online classes.

Training

Another obvious non-gaming utilisation of the Oculus Rift would be training. Non-virtual reality simulation already exists. In medicine, the Oculus Rift could for example be used as a tool for showing student surgeons the perspective of a surgery-in-progress.

Cinema

Consider for example the movie “Interstellar” whose team promoted the movie thanks to Oculus Rift technology. People can be totally immersed in the scenery and action of the movie by watching it in 360°. What’s more, virtual reality headsets can place the user in the same perspective as the main character.

Sport

The Oculus Rift could ultimately be used to transcript event in a better environment than TV. Instead of watching TV people could feel like they’re taking part in the event (for examples football or basketball games). It also motivates people to practice sport activities.

Pornography

Rift could put you in the position of the main character in the movie. The porn market has always been a good market to “penetrate” for new technologies. The porn industry is the perfect place to market fantasy-enhancing devises, and there is a lot of money involved in the industry.

Military & Healthcare

New technologies are widely spread and quite sophisticated especially in fields like medicine. Military is also another industry in which the use of the Oculus Rift could be relevant. It could be used as a device to help soldiers dealing with post-traumatic stress disorder (PTSD). Virtual reality could recreate the traumatic events in a controlled environment to help the patient cope with his demons and overcome his difficulties. The Oculus Rift can also be used in therapy sessions to fight phobias.

Real Estate Architecture

The Oculus Rift enables people to visualize buildings that aren’t yet built. It allows architect to verify details about a design; and it allow prospective buyers to visit apartments that aren’t yet built, or that are inconvenient to get to.

 

Why is the Oculus Rift spreading so fast?

 

Why different technologies get adopted by the market at different paces? Everett Rogers came up with a model based on five factors determining the speed of diffusion of technology.

The Relative Advantage

The relative advantage of the virtual reality headset is a complete immersive experience. Compared to 3D glasses, the Oculus Rift operates autonomously. Furthermore, it enables the consumer to look at 360 degrees. Thanks to a movement tracker, people will feel like they are really there.

Compatibility

This cutting-edge technology is a revolution that doesn’t dramatically change the habits of users. Because it is used as a screen, it takes very little time for people to get used to it. For these reasons, users won’t consider the Rift incompatible with their current way of doing things.

Complexity

It’s a user-friendly technology. The Oculus is very intuitive in its functioning, so complexity won’t be a barrier for buyers. Indeed, in the phrase “virtual reality” there is the word “reality” and it means that you just need to act like in the reality, nothing new. It is a very tech-savvy tool.

Trialability

There are many brands, which are using the Oculus Rift to help the consumer to live an experience as if it was real. Besides, thanks to the Google Cardboard consumers can have a first step into virtual reality. Google Cardboard are largely cheaper than the Oculus Rift and it represents the perfect low cost tool to introduce people to virtual reality. However the experience isn’t the same, as the technology of the Google Cardboard is less complex and less immersive than the Oculus Rift.

Observability

Thanks to the advertising made on the product, even non-users have an idea of what it looks like and how does it work. The outcome of our innovation is visible to others; due to Facebook’s marketing campaign there are more and more reviews available.

 

So based on Rogers’ Model analysis, we can objectively say that the product will be quickly adopted by potential buyers.

 

How far will it go? The development of the technology started in 2012 with a Kickstarter campaign, the money from the campaign helped to develop the product. The market of Virtual reality headset is only at his beginning, and as said before, a lot of multinational competitors are now entering the market.

In the S Curve, curve describing the diffusion of the technology, innovators have had access to it recently, and now early adopters will be able to buy it. Currently, a lot of people know the Oculus Rift, however they are not willing to buy it just yet. The majority of people are waiting for the technology to be improved.

 

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The diffusion of innovation according to Everett Rogers, Diffusion of innovations (1962)

 

This graph shows us where the Oculus Rift is: less than 15% of the Market Share sales were made.  This is just the beginning of the product. The future is uncertain, the curve might not go the predicted way, and the Oculus Rift might not meet the success expected. It’s impossible to know for sure if the product will meet the expectations of early adopters. The market and the technology are linked, and the graph shows that we are at the beginning of the product; there is a lot of improvement left to do. We can then expect a huge increase in terms of features to come.

As we are on a reliable product, early adopters will by themselves use and experiment it, allowing the company to launch the most accomplished version.

 

But the company should also use different ways to democratize the Oculus Rift and shift from early adopters to early majority. First of all, communication and especially via Facebook is important, but not sufficient. Being present among the potential buyers is necessary, such as exhibition & shows (like the Consumer Electronics Show), using ambassadors and even stealth marketing (paying consumers to use the product in public places, singing the praises of the product, and making it try to whomever wants to). Facebook has the means, not only financially but also in terms of influence, to implement all these tools, to make of the Oculus Rift a real success story.

 

BIBLIOGRAPHY

 

https://www.oculus.com/en-us/rift/

http://www.journaldunet.com/ebusiness/le-net/1159287-a-quoi-va-servir-l-oculus-rift-10-exemples-d-utilisation/

http://www.adweek.com/news/technology/how-oculus-rift-about-reshape-marketing-creativity-162124

http://www.vanityfair.com/news/2015/09/oculus-rift-mark-zuckerberg-cover-story-palmer-luckey

http://www.wareable.com/oculus-rift/how-oculus-rift-works

http://www.tomsguide.com/us/what-is-oculus-rift,news-18026.html

http://www.nytimes.com/2016/03/31/technology/personaltech/oculus-rift-virtual-reality-review.html?_r=0

https://www.technologyreview.com/s/526531/oculus-rift/

https://www.theguardian.com/technology/2016/mar/29/oculus-rift-review-roundup-virtual-reality-price

http://www.theguardian.com/sustainable-business/oculus-rift-facebook-acquisition-sustainability-effect

http://www.lemonde.fr/pixels/article/2016/01/08/pourquoi-l-oculus-rift-le-casque-de-realite-virtuelle-risque-d-echouer-commercialement_4843953_4408996.html

http://www.roadtovr.com/the-first-oculus-rift-has-rolled-off-the-production-line/

http://www.makeuseof.com/tag/5-amazing-non-gaming-ways-people-using-oculus-rift/

http://gamerant.com/oculus-rift-production-stops-sales-suspended/

https://prezi.com/p8o3epfjwzts/copy-of-oculus-rift/

http://fr.slideshare.net/funk97/virtual-reality-oculus-rift-business-model

http://www.polygon.com/2014/5/5/5683012/oculus-rift-patent-headset-design

 

Karen Agbanrin, Lauriane Giuranna, Antoine Lance, Antoine Le Quinquis, Marie-Alix Salomé

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