Crossing the Chasm – Virtual Reality Launch Strategies for Mass Adoption
This is an article about the First Time User Experience (FTUE) for virtual reality headset users, managing the expectation levels of these users and ultimately how companies developing virtual reality headsets and platforms need to carefully plan for mass consumer adoption in order to get it right first time.
The State of the Market
The Virtual Reality market is at a critical stage in its evolution. 2014 has been a very big year for VR with several companies (large and small) announcing upcoming VR headsets. Coupled to this, the number of games being developed for VR is now well over 100 with developers ranging from AAA studios right down to enthusiasts creating content at home. Closing the loop, we’re now also seeing the ecosystem include companies developing input systems for hand gestures and full body VR control.
But just because this sector is seeing multi-million dollar investments flowing in to it doesn’t necessarily mean this market will be successful. This is because there’s one person yet to be invited to this party – the consumer.
Adoption Curves and Hype Cycles
Let’s start by determining ‘where we’re at’ in terms of market development. Shown below is the Technology Adoption Curve and the Gartner Hype Cycle – two visualisation tools used to demonstrate the various stages of consumer take-up of new technologies. We have indicated (the red circle) where we believe the Consumer Virtual Reality market currently sits on both curves.
Looking at the Gartner Hype Cycle first, here are the five lifecycle phases (sourced from Wikipedia):
- Technology Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.
- Peak of Inflated Expectation: Early publicity produces a number of success stories—often accompanied by scores of failures. Some companies take action; many do not.
- Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.
- Slope of Enlightenment: More instances of how the technology can benefit the consumer (or enterprise) start to crystallise and become more widely understood. Second- and third-generation products appear from technology providers.
- Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.
We believe that the consumer VR market is just about to reach the top of the ‘Peak of Inflated Expectation’. Media coverage of VR is high not only within the ‘tech’ community but also across mainstream outlets and 99% of this media coverage is positively glowing.
Augmenting this, brands are also starting to experiment with VR and play their role in boosting the awareness of both the products (primarily the Oculus Rift at present) and the overall market. If the Gartner Hype Cycle is going to apply to the consumer VR sector then we’re just about to enter the ‘Trough of Disillusionment’. More on this later.
Switching over to the Technology Adoption Curve (the bottom graph), we’ve aligned this from a time perspective to the Hype Curve. The five type of Technology adopter are as follows:
- Innovators: Representing 2.5% of the overall population, Innovators are eager to try new ideas and willing to take risks associated with new technology. They’re the youngest age group of all adopters and the highest social class. They’re also ‘cosmopolites’ meaning their social groups are very widely dispersed. Innovators are the gate-keepers of promoting new ideas.
- Early Adopters: Representing 13.5% of the population, Early Adopters have a closer social structure than Innovators, meaning they’re ‘Localites’. And although Innovators are the gate-keepers and catalysts for new ideas, it’s the Early Adopters than have the highest ability to act as opinion formers across all other adoption types. This opinion giving role is to decrease uncertainty about a new idea by adopting it.
- Early Majority: Accounting for 34% of consumers and an above average social class, the Early Majority adopts new ideas just before the average person. They interact frequently with their peers (locally and globally) as the important link in the diffusion process and deliberate for some time before completely adopting g new idea, often seeking third-party advice.
- Late Majority: Also representing 34% of the population, the Late Majority approaches new technology with doubt and scepticism and in some cases adoption is forced on them from network pressure. Their social networks are usually local and social class below average.
- Laggards: These consumers are traditionalists accounting for 16% of the population. Their social class is the lowest of all groups as is their financial power. Unsurprisingly this group is the oldest of the five and has the smallest social network size.
Aligning the Technology Adoption Curve with the Hype Cycle shows that the Trough of Disillusionment correlates with a shift from the VR being sector being driven by Innovators to the Early Majority. But wait! There might be trouble ahead….
Here comes ‘The Chasm’
We’re about six to nine months away from the first consumer virtual reality headsets reaching the market and about three months from new hardware companies releasing developer versions of their headsets over and above Oculus and Sony. Also during this period Oculus will release their second iteration product, the DK2 .
This means a lot more people will be experiencing virtual reality for the first time – a lot more of the Early Majority. This means ‘The Chasm’ has to be crossed. Developed by Geoffrey Moore, the Chasm refers to a critical stage in the adoption phase of new technology that has to be addressed into order for further adoption to occur. Its also a stage that needs to be overcome in order to limit or ideally avoid the Trough of Disillusionment.
Being more specific and referencing this back to the virtual reality market, specific strategies need to be developed by the headset manufacturers to delight and excite the initial purchasers of the headsets. For anyone that has tried on a headset (probably the Oculus) then you know that it’s a product you want to show others. It has a massive opportunity for virality but can not afford to be damaged by cognitive dissonance. Whereas the Innovators currently using the development kits are happy to put up with a few tech niggles and play games that are clearly demos and early prototypes, the Early Majority have lower tolerance levels. Their initial actual experience has to live up what they believed it would be. If this can be achieved then they will tell others about VR in a positive manner.
Moore identified several key areas that need to be addressed in order for new technology to cross the Chasm, as follows:
- Target Market. Is virtual reality just for gamers? Of course, the gaming community is a prime market for VR and the vast majority of Innovators who purchased the Oculus DK1 and are tracking the progress of the sector reside in the gaming community. Also, with the Project Morpheus VR product from Sony tied to the PS4, this also supports the gamer market. But VR has applications way beyond just gaming. This presents vertical market opportunities in areas such as education, training, tourism and the enterprise to name just a few. Can one headset fit all markets? This is probably true but would require dedicated specialist units addressing each vertical – a costly exercise that doesn’t happen overnight.
- Product Positioning: The positioning of VR headset products is closely associated with the target market. It is assumed that Sony will position their headset squarely at the gaming (PS4) market. Samsung on the other hand might opt for a more social outlook, drawing on the concept of Social Virtual Reality. This is also an area Oculus VR may focus on with the support of Facebook.
- Marketing Strategy: With the might of Facebook, Sony and Samsung behind three of the headsets coming down the pipeline, having a marketing budget sizeable enough to generate mass awareness will not be a problem. Smaller headset manufacturers (basically the start-ups) have a more difficult challenge from this respect. Branding also plays an important role here.
- Distribution Channels: Expect a range of channels made available for consumers to purchase headsets. The larger companies operating in this sector (Sony and Samsung) already have a range of distribution channels at their disposal, including retail (direct and third-party). For the smaller companies fulfilment will take place via e-commerce.
- Pricing: In the short-term period following product launch, VR headsets will probably be in the $300 – $500 range – not an insignificant investment. However, there is already talk of Oculus subsiding the cost into schools. Moving more towards the medium-term, it is even possible for the headsets to be given away for free, offset by fees coming from other areas. This is in essence the business model currently used by mobile devices.
There is a sixth element needed to be addressed in order to overcome the Chasm, namely the Holistic Product Concept and this aspect is (in our opinion) the one most critical to the success of consumer virtual reality.
The Holistic Product Concept
The other areas of ‘Chasm-crossing’ consideration (listed out in the section above) will largely take care of themselves for the reasons stated but it’s the overall product proposition which is the most critical piece of the puzzle when the objective is mass consumer adoption of virtual reality headsets and crossing the Chasm. And ironically the headset (from a technical perspective) is arguably the least important part. Or looking at it another way the headset is the point of least differentiation.
Technical aspects of headset design (FPS, latency, tracking, screendoor, resolution etc etc) will most likely converge across the different headset manufacturers in a relatively short space of time, along with a minimum acceptable quality threshold, benchmarked from competitor to competitor.
This highlights the importance in related product features. These include:
- Input systems: Having ‘sight’ and being to see within a virtual reality environment is powerful. But what’s even more powerful for building presence is the ability to interact with this environment as naturally as possible. Input systems – controllers for fingers, hands, feet and the body as a whole will quickly become prerequisite peripherals for VR. And then taking this interaction to the next logical step, these input systems need to give the user haptic feedback with their interactions. Audio is also an important input particularly in multiplayer games and social virtual reality allowing users (via microphones) to speak with other players and people in the same virtual environment. This couples with headphones (an output device) so users can hear.
- Content: VR headsets and accessories are useless without content. Manufacturers have to place content front and centre (and are doing s0), ensuring hardware launches are accompanied by games and experiences. Some of these will be created in-house and some by third-party developers. In this context, open-sourced and open garden approaches will ultimately yield the best outcome to the consumer in the medium to long term.
- Content discovery: Think App Store. The ability for users to search for and find VR content is critical. This is an interesting area and one that could create a lot of activity. Already for the Oculus Rift there are several ‘download’ sites such as Oculus Share (directly on the Oculus website), WeArVR, Enter the Rift, RiftEnabled and others. Steam also has a VR section. These are all digital download mechanics but once Sony ships their VR headset then retail will also kick-in. The great unknown here is what action Oculus will take with respect to content delivery. Will they continue to allow third-party sites to distribute content or move to take it in-house and a closed ecosystem?
- Platform: By platform we mean the user interface or ‘home place’ that users access when they wear their headsets – the environment they’re placed into or using another term, their ‘virtual reality desktop’. Having this type of ‘desktop’ opens up a whole host of applications and uses of VR over and above just playing a game on a standalone basis. It also enables the enterprise side of the market as well.
So clearly it’s not as straightforward as just developing a headset. Nor is it as simple as having a massive marketing budget and media buzz. And it’s not just about having great games. Sure, the gaming element of the VR market is well positioned to be both large and profitable, but in order for VR to appeal to the masses (the Early and Late majority) it needs to be more than just games. Unfortunately, whether manufacturers like it or not, for non-gamers the success of VR and the propensity for mass adoption led by viral activity (the ‘you’ve gotta try this’ factor) will largely come down to the experience they have the first time they put on a headset….
The First Time User Experience
In the context of virtual reality, the First Time User Experience (the FTUE) relates to the environment a new user in placed into the first time they put on a VR headset. It also relates to the orientation a new user has to go through in order to become comfortable within the environment. Being trained to use controls (hand, body etc), interacting with objects, navigating around the environment – all key aspects on orientation.
Orientation (sometimes called ‘On-Boarding) is vital in order to teach new users to basic features of virtual spaces. There’s nothing worse than going straight into a game or virtual space and feeling helpless because controls and navigation are not known – it’s a bit like being paralysed.
So, understanding the FTUE is vital. When thinking about ‘where’ this orientation takes place, companies developing VR headsets and companies creating the ‘virtual desktops’ to accompany headsets should take insight and learnings from existing virtual worlds, Second Life being a great example.
Are Mirror Worlds the Answer?
Let’s remember that the mass market we’re referring to throughout this article are not gamers by trade. They are not immediately comfortable with ‘new places’ or environments. Also, they don’t want to be ‘lost’ inside a virtual world or space.
This is why the user of Mirror Worlds (real places re-created virtually) could be a massively important concept to integrate into the FTUE. By this we specifically mean that the first virtual space a new user is placed into should be one that’s familiar to them. Somewhere that they ‘know what is around the corner’. This approach has been observed many time in Second Life. New users frequently migrated to re-creations of landmarks and places based on real locations from the country they’re from in the real world. This gave a sense of perspective and (ironically) realism to their virtual experience. This also created a sense of community with other users also being drawn to their ‘virtual hometowns’ or countries.
The inverse approach would be to place users into fantastical environments created with no reference to the real world. This, in our opinion would be a bad idea leading to confusion, a lack of context and in the worst instance a disengagement with the reason they’re actually there.
Mirror worlds could be a great way to induct and orientate new users into virtual reality with the outcome being ‘familiarity breeds content’ – content meaning happy users. These familiar places could be city centres, places they’ve seen and know about from TV (or movies) or even their own houses (scanned and re-created virtually) – that’s coming!
This could actually lead to a resurgence in the Mirror World category. Mirror Worlds were a hopeful vertical a few years ago in the pre-VR virtual world market. Several companies raised a lot of money creating virtual versions of real-world places. This includes Twinity, Near Global and other companies attempting to leverage Mirror Worlds for uses such as tourism. From a User Generated Content (UGC) perspective, worlds including Second Life and Minecraft have countless examples of mirror world locations.
Now, with the emergence of virtual reality, we are already seeing companies and products positioning towards the Mirror World category, with Nurulize and Project Tango both worth keeping a close eye on.
Stay tuned and don’t get lost!
For the reddit users reading this, the TL:DR to this story is: Put new VR users into virtual spaces they’re familiar with as opposed to fantastical environments. However, if you’ve got this far then it’s probably too late for that.