Last week at Google’s I/O 2017 developer conference the company made a number of new announcements which are very exciting for VR consumers. Within the industry though, the announcements represent somewhat of a repositioning of industry players, one that puts Oculus’ mobile strategy in a rough spot.

Oculus was first to market in the ‘high-end’ mobile VR space when they launched Gear VR in conjunction with Samsung in 2014. Though the companies worked together across hardware and software, ultimately Oculus would be responsible for the software platform (Oculus Home) and Samsung would be responsible for the hardware (Gear VR).

The collaboration proved fruitful. Back in 2014, and for several years thereafter, Gear VR was far away the class-leading mobile VR experience. And between a combination of sales and pre-order giveaway bundles, the install base for the headset has grown beyond 5 million units and more than 1 million monthly active users.

Impressive numbers—far more than any of the high-end VR headsets—but it wasn’t until the November 2016 launch of Google’s Daydream VR platform, just six months ago, that Gear VR had any serious competition.

This is Awkward

image courtesy Google

Google’s jump into high-end mobile VR with Daydream has brought an unfortunate wrinkle into the Oculus + Samsung relationship… although the two have been strong partners, as a leading manufacturer of Android devices Samsung is an even bigger and stronger partner with Google, and has been for much longer; when you compare the scale of Samsung’s Android business to their Gear VR business… well, there’s really no comparison.

Last week at Google’s annual I/O developer conference, the company announced that Samsung would be offering an update to its Galaxy S8 and S8+ smartphones that would make them compatible with Daydream. As the S8 and S8+ are also both compatible with Gear VR, they will be the first phones to support Daydream and Gear VR. And our expectation is that future Gear VR phones from Samsung will continue to be Daydream ready. That means Oculus’ formerly exclusive partner for mobile VR is no longer exclusive

For consumers (in the near-term) that’s a good thing. It means that whether a game is on Daydream or on Gear VR, consumers will be able to play it (whereas other phones can only do one or the other).

For Oculus however, this is the beginning of an awkward Google-Samsung-Oculus love triangle and a major new threat for Oculus’ mobile VR platform on Gear VR.

It All Comes Down to the Numbers

image courtesy Google

The 5 million unit install base for Gear VR is an impressive figure if you’re comparing to other VR headsets out there, but because Google’s Daydream platform is not restricted to specific smartphone vendors (whereas Gear VR is Samsung only), its addressable market and growth potential is vastly larger. In fact, Google said last week that with new Daydream ready phones coming to market (including Samsung’s update to the S8 and S8+) that the company expects “tens of millions” of Daydream ready phones in the wild by the end of 2017. If things go according to Google’s projection, that figure will only continue to grow as (we expect) a larger share of Samsung’s future phones launch with Daydream support. Granted, Google still needs to convince people with Daydream ready phones to actually buy a Daydream headset.

As we know, hardware is worthless without content. Oculus has certainly curated the largest and arguably best high-end mobile content library on Gear VR so far, but they also had the largest install base to entice developers with. But that seems unlikely to be the case for long since any Android phone can potentially be a Daydream phone, whereas Gear VR is fundamentally constrained only to (select) Samsung phones.

New developers interested in building mobile VR experiences need to decide first which platform they’ll target. Now with both platforms having controllers and being capable of running on the same hardware, Daydream and Gear VR are largely identical from a game design standpoint. So any developer thinking about building for mobile VR will likely choose the platform with the largest addressable, if not simply release for both platforms.

SEE ALSO
Gear VR Controller Review

Over time that may leave Oculus’ mobile platform with little content differentiation to draw users, and a comparatively much smaller pool of potential users to convert to VR users in the first place.

Continued on Page 2: It Gets Worse »

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Ben Lang
Ben is the world's most senior professional analyst solely dedicated to the XR industry, having founded Road to VR in 2011—a year before the Oculus Kickstarter sparked a resurgence that led to the modern XR landscape. He has authored more than 3,000 articles chronicling the evolution of the XR industry over more than a decade. With that unique perspective, Ben has been consistently recognized as one of the most influential voices in XR, giving keynotes and joining panel and podcast discussions at key industry events. He is a self-described "journalist and analyst, not evangelist."
  • Andrew Jakobs

    I don’t think Oculus will be a real player anymore once more and more daydream devices are available. The advantage google has is that it already ships Playstore with every daydream device so no need to first install a separate store (which ofcourse could also be a problem if Oculus is knocking on EU’s door about it as it IS a monopoly by now).
    But I guess Oculus will not be a major player anymore, not the way they seem to go (no new headset for about 2 years)..

    • Get Schwifty!

      I am really amazed at how many people thought a release of a new headset in two years from introduction was the plan (or even necessary)… Oculus was always pretty up front with a cadence that was going to be slower than phones but faster than consoles… three years seems to make perfect sense between releases.

      • Andrew Jakobs

        Problem is, competition isn’t standing still, and people seem to bitch about the ‘low’ quality of the screens (personally I think it’s all bullocks as it pretty good (at least the PSVR has low screendoor)). Most people would have thought of at least a 2 year cycle not 3 years. The first batch of Oculus Rifts and HTC vive are nothing more than ‘early bird’ devices, excellent for the enthousiast, but not really suitable for regular consumers (especially pricewise).
        I own a DK2 but I don’t think the CV1 is much more advanced (yes it is better, I know) for me to buy it (unless I really get back into developing again). I’ll wait for the next batch, which might even be the coming mobile versions, who knows..

        • CazCore

          i had the same opinion about dk2 versus cv1, based on the resolution not being much better.

          but man…. once i got my CV1, it was a HUGE difference. in a LOT of ways, but even just the visuals are way better. there’s more factors than res

          • Andrew Jakobs

            As I said, I’ll only buy it when I’m back into developing for it, but at the moment I’ll wait until that happens or if another better headset arrives. I think it’s not worth the money (still have a GTX760, so I would need a new GPU AND the whole headset, which would set me back about $1000 which I’m not keen to do on the CV1 nor the HTC Vive).

  • flamaest

    It’s a race to the bottom. Many of these new headsets are lower priced, and it shows.

  • Graham J ⭐️

    I think Facebook wants to do two main things: Be the key place for social VR, and to be a big software distribution player. The former is probably a good bet as their early demos have gone over well and, well, they’re Facebook. The latter is more difficult as there are already larger distribution players on all platforms they’re part of. This they may have to concede.

  • Lucidfeuer

    Google barely sold a few thousands Daydream Headsets (aka Pyjama VR), but they have the platforms and technologies. Oculus is going nowhere: they don’t have much proprietary tech, a limited platform and tons of dependancies.

    They vaporwared their tech buy-out assets, closed their studios and completely abandoned their mid-term ambitions (that declarations about there being no new headsets before 2 years down the road means death), their only potential future is in licensing proprietary tech parts/softwares and maybe content. In other terms…they’ve been Facebooked.

    • Get Schwifty!

      “they’ve been Facebooked.” I bet you spent a lot of time thinking that one up ;)

      Of course that analysis totally leaves out the enormous resources FB can push behind Oculus if they choose to, which easily includes re-architecting, etc. if necessary. The two year announcement is about right, they have always stated the cadence would be “slower than phones but faster than consoles”, so a three year turnaround makes perfect sense. I’d be _very_ careful about announcing any key players demise this early in the game. Not everything Google touches turns to gold… despite being wed to Samsung.

      • Lucidfeuer

        Nope, it’s just popped to mind, imagine how deeply I must think it.

        Oh yes, we’ve seen how those “enormous resources”, in fact several millions of budgets turns out for most corporations and the products they sell, mainly VR headsets.

        Money, fortunately or unfortunately, didn’t prevent the demise of 90s VR headset, 3D TVs or Palms. Also it’s not even faster than consoles: except for the Wii U (which is dead and was a failure), both the Xbox One and PS4 have already been iterated after a 2.5 years cycle despite being conceive and geared for a 6/7 year lifetime cycle.

        I absolutely agree that not everything Samsung or Google touches turns to gold, in fact very little does, but I certainly know that pretty much everything Facebook touches turns to crap. There is no business or marketing rational argument to ever justify for Oculus waiting 2 years before releasing a new iteration especially given the VR context. Of course they have their own rationalisation that somehow, the conception, research and development will magically happen and pop-up for them to simply pick-it up and implement it in a future headset because as all bad marketers do, they are projecting and transferring smartphones technological development matrices to VR, the sorts of projection which are almost always assured to fail from the Wii U, to 3D TVs or smartwatches.

        Now “death” might be an overstatement, as I argued, they might have proprietary technology to license in the future, but given the context, yes Oculus as VR Headsets manufacturer is dead if they follow suit in their declaration.

  • I’m surprised this 3 page article missed out one of the big (potential) reasons Oculus will come out tops – They’re owned by who? Facebook. What is facebook know for? That’s right – building community and a sticky platform. Community and people interacting with each other, supersedes ‘content’

    Oculus allows you to ‘pull in’ your friends, family and acquaintances from your FB friends list, into a VR experience – game, movie, or just ‘hanging out’
    That – is what Google will have to contend with. (compare Google+ to FB?)

    • Ian Shook

      I’m okay with VR not being social. I prefer non social games anyway so maybe that’s why.

      • Mike

        Everything is social these days though. Instagram, Twitter, Youtube, Snapchat, Steam, Twitch. The top games played and viewed on Twitch are social: League of Legends, Dota 2, Friday the 13th, Battlegrounds, Overwatch, Hearthstone, H1Z1, Destiny, CS:GO, SC2, GTA V, Heroes of the Storm, etc.

        Having a huge social platform seems like a plus.

    • Jamie Reed

      I’m sure that Facebook is on android too?

    • The point here is, Oculus is a property of Facebook – they can implement it on any platform and hardware if they choose. What gives them a lead is being able to leverage the FB platform to build community – and drive social interaction – into VR.

  • Firestorm185

    If Oculus goes vendor-agnostic and allows other phone types to play on Home, I would laugh my head off, but probably enjoy it at the same time.

  • John Collins

    It’s nice with all these hardware announcements but it just seems like at this moment Oculus is the one actually bringing content to the table. PC side Vive is starting to pick up on content and backing developers but it seems so many companies are concentrating too much on hardware and developers are still just in a wait and see.

  • Buddydudeguy

    Mobile VR sucks and this won’t effect (real) VR at all.

    • Albert Hartman

      i largely agree on mobile. terrible tracking and terrible framerates. someday it will get fixed.

      • Eh? Gear VR has excellent rotational headtracking with 12-18ms latency and the framerate is 60fps, which could be higher but is still smooth.

        • polysix

          and no positional tracking and wall to wall cartoon/gimmick software.

          That.
          Is.
          Not.
          V.R.

  • Doctor Bambi

    Oculus is going to be fine, just like they have been, despite the constant speculation mills time and again touting the end of days for the fledgling company. But I guess that’s part of the burden you bare when you’re leading an entire industry.

    It doesn’t matter that Daydream is compatible with more phones. It doesn’t matter that Samsung will support both storefronts. It doesn’t even matter if Daydream becomes the more popular storefront overall.

    Oculus have cemented themselves as the bar setters when it comes to high quality consumer VR. Their technology runs smoother than their competitors, and their curated apps are less prone to errors. Their interface is clean and easy to understand. They are the Apple of VR and there are millions of people out there who appreciate the Apple approach to product design.

  • Darshan

    Google urgently need to expand portfolio of DayDream Ready phones with more companies with Less expensive devices to support DayDream. Targeting most expensive ones is still looking for small market, on that path they cant see TENS OF MILLIONS OF DEVICES BY 2017 END. its not possible this way….

    • They said “tens of millions of daydream ready phones”. Samsung alone is planning on selling 60 millions S8 so the target seems on point.

      The devices need high end hardware components like a high frequency IMU and powerful SoC to provide a good VR experience so they can’t simply target arbitrary phones. But with time these components should end up in most models.

      • Darshan

        I did not meant arbitrary devices but potent ones like XIAOMI MI6, ONE PLUS 3T which are not so expensive yet very powerful and can be re purposed for day dream if manufacturer bothered to include right IMU

  • Only 2 weeks ago Daydream was declared a “fealure” with only a small install base, only a handful compatible phones and basicly none of the current flagships are supporting it, like HTC U Ultra, Galaxy S8, S8+, Xperia XZ Premium, HTC U11, LG G6, Huawei P10, ect.

    So the S8/S8+ upcoming compatibility might have pushed some life back into Daydream and the Standalone Alone VR headsets which will be quite a bit more expensive than current mobiie VR headsets, are nice, great even but that doesnt mean that the mass market will buy into daydream and stay there.
    Current mobile VR might only be the stepping stone to AR or VR/AR hybrid devices, especially if Apple will release an iphone compatible AR device, the masses might not care about Daydream anymore until VR/AR devices have a much better form factor like glasses or contact lenses.

  • Eh, in fact some days ago I myself had written an article about the fact that I’m skeptical about the future of Gear VR… https://skarredghost.com/2017/05/15/uncertain-future-gear-vr-headset/ . I think that in the long term they’ll have to make their platform to evolve or it’ll just die

  • polysix

    They are both crap so who cares?

    Bring on real GEN 2 VR (PC – Wireless – Foveated) then VR may continue to be hyped again.
    (ex DK2, Vive, PSVR guy here)

  • ConceptVBS

    At the end of the day, Samsung is still the winner no matter which way the market swings.

  • Joan Villora Jofré

    2 billion android active users…

  • Aragon

    I tried both Google Daydream and Gear VR on a Galaxy Note 8. The result was astonishing.

    Google Daydream had a lot of issues with headtracking, it stutters all the time. And it was quite unstable, often Apps just end in a black screen, it seems like overheating was an issue. In between it could happen that the Headset looses connection to the Phone.

    A much better experience was Gear VR. Headtracking was perfectly smooth all the time, no crashes, could play for hours without an issue.

    My Advice is, stay away from Googledream on the Samsung Galaxy Phones.