VR in 2016: HTC’s $799 Vive Brings Belief To VR Skeptics

by Jamie Feltham • December 29th, 2016

The HTC Vive should not exist. For a troubled company that’s spent much of the past few years making losses instead of profits, the niche and expensive VR market is the last place HTC is going to make a quick buck. And yet here we are, with the smartphone maker and Valve seemingly in it for the long haul.

This time last year the VR community was in an agony of impatience. When the Vive had been revealed that March, we were told it would be releasing before the end of the year. As 2015 progressed, it looked increasingly likely that fans would need a small miracle for that to happen, and no such miracle came. The Vive was delayed at the last minute and the wait for news continued.

Vive started the year with a lot of prove, but 12 months on and many of its owners will tell you it succeeded.

Pre-Release and Pre Release

HTC-Vive-Pre-1

HTC kept the crowds guessing over the holiday season with a tease that it was adding a ‘game changing’ feature to Vive that we would see at CES in the first week of January. What we got was the reveal of Vive Pre, a near-final version of the headset with a hugely refined form factor including updated controllers and a much sleeker design. We wouldn’t see the final device for a few months yet, but this was almost identical to it.

It wasn’t as much of a game changer as some had hoped for, but it was an encouraging sign that Vive was on the path to release, and not destined to spend another year on the sidelines. Key to HTC and Valve’s strategy was handing out Pre kits for free: I still remember the cheers when Valve told everyone at the Vision Summit a few months later that they would be getting a free Vive, and I still see people using the Pre today.

Ultimately Oculus stole headlines at CES — for both better and worse — with the launch of pre-orders for the Rift. The $599 price tag for Vive’s biggest rival kept people guessing about just how much the more fully featured room-scale headset would really cost. I can imagine a lot of HTC executives letting out a sigh of relief at the reveal, which they knew would go a long way to validating the extraordinary price of the Vive.

Expected Expense

vive pre order

And it seemed to work. The Vive’s price was revealed the next month and, despite being roughly $200 more than the Rift, there wasn’t anywhere near as much frustration from buyers. I’d imagine a lot of people at HTC are patting themselves on the back for avoiding any ball park figures over the past year. Oculus had already set everyone’s expectations.

Still, $799 is an incredible amount of money and this further cemented the reality that mainstream PC VR was still a long way off. These devices were essentially new games consoles this year, and you wouldn’t catch many people laying down that much cash for any new machine. Sony arguably lost its footing as the console king when it launched the PlayStation 3 at $599 in 2005, and now here was a system that wanted considerably more cash for an experience that would still be foreign to many and a big financial risk for people to support.

Some would like to see it as the final nail in the coffin of an industry that never began, but a good deal of faithful VR enthusiasts believed in what HTC was doing: Vive sold 15,000 units within the first 10 minutes of pre-orders opening. That’s far from Xbox or PlayStation numbers, but the message was clear that this is a generation of VR for the early adopters. It’s for hardcore PC players that can afford expensive rigs, which has obviously always been a much smaller audience than the console crowds, but always present and not going away any time soon.

The real question, of course, is how much longer Vive will be aimed at that audience, though that’s a topic for another article.

Surviving on Steam

steam

One of the biggest fears about Vive’s massive cost is the knock-on effect of a small install base diminishing support, but that hasn’t been a problem. In fact it’s quite the opposite.

While Oculus quickly came under fire for the perceived restrictions it put on its Home ecosystem released with the Rift, Vive was praised for its open-ended nature. Valve made it easy for just about anyone to release VR games on Steam, aided by initiatives like Early Access, which allows developers to sell unfinished products to boost funding. Within weeks, we started to see a frankly overwhelming supply of indie games.

To put it in perspective, there are currently 1,102 pieces of Vive compatible content on Steam, be they full games, demos or DLC. It’s been 38 weeks since Vive launched in early April. On average, that’s 29 new releases for Vive a week.

Most VR experiences are short, but that’s still far more than anyone could ever hope to play, and the harsh truth is the store has been flooded with a lot of shovelware. Developers are charging for simple VR rollercoasters built from the Unity asset store, or quickly hashing together ‘[Insert Sport/Activity Name Here] VR’ tech demos that lack industry-standard features such as multiplayer.

In an ideal world, every developer releases their game with ease. It’s great, it sells well, and people love it. The reality of the situation, though, is that content curation is good for the studios that put the effort in.

But there isn’t a lack of quality; good stuff is coming out on a regular basis, but Vive’s biggest challenge this year has been separating the wheat from the chaff. HTC’s Viveport has made some attempt to curate content, though it doesn’t feel like it’s cemented its place as the definitive Vive storefront. That doesn’t mean developers aren’t finding success on the headset. Studios like Survivos and Cloudhead Games confirmed to UploadVR earlier this year that they had already made over $1 million on their then-Vive only projects (Raw Data and The Gallery respectively).

Asia, Alliances, and Accelerators

Vive X Banner

While Oculus and the Rift have been very much focused on the West, perhaps the most interesting aspect of HTC’s business in 2016 has been its focus on Asia. The Vive still has a healthy presence in the US and EU, but increasingly as the year has gone on we’ve seen more and more announcements come out of the Eastern strand of the Taiwanese company’s business. Take the recent announcement that HTC helped establish a $1.5 billion VR investment fund in China, with new R&D labs being set up in Shenzhen, where the first Vive cafe launched earlier this year.

Logistically, it makes a lot of sense, as the market for China alone has the potential to be far bigger than in any other region of the world and where Vive could make most of its money, especially without as much competition from Oculus in the region right now (Rift still doesn’t even ship to China). It’s also allowed HTC to experiment with new concepts like its Viveport Arcades that act as the middle man in bringing experiences to headsets at sites like Viveland, its huge new arcade in Taiwan.

Alliances and accelerators have been another key part of its play. While Oculus has the spending power of Facebook behind it, HTC has drummed up headlines with even larger amounts of investment money by bringing together venture capitalist firms in the Virtual Reality Venture Capital Alliance (VRVCA). While that group reviews pitches from startups, HTC’s own Vive X accelerator nurtures them, splitting its focus across China and the US.

You could label these moves as acts of goodwill, though the benefits to HTC have become clear: one Vive X member, TPCAST, is working on solutions that make headsets wireless, and it is starting with HTC’s product, though there’s apparently no restriction on bringing them to Rift and others.

If you take a step back, you see a business that’s about far more than just selling headsets and software. HTC is dipping its toes into any water it feels might be profitable. Following the different parts of its business around the globe is becoming increasingly more complex, but watching which bear fruit will be one of 2017’s most interesting stories.

Vive seemingly steady-going means a less eventful year in review than for the Rift, but maybe that’s a good thing right now. It’s been a year of laying the foundations for what’s to come, getting an infrastructure in place that will support a one day mass marketable Vive, whatever it might look like. While we might not see Vive 2 at CES next week, the promise of Valve’s new SteamVR controllers and new content coming from the newly-formed Vive Studios will keep us guessing at what’s to come in 2017.

The HTC Vive has had a solid 2016. Our biggest question for 2017 is “What’s next?”

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