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Who’s Going to Buy a Virtual Reality Headset?

Who’s Going to Buy a Virtual Reality Headset? Obviously this was a key question considered when we started to construct our market sizing analysis of the Consumer Virtual Reality market in late 2013.

Our market forecast covers the period 2014 to 2018 and takes into account the initial developer kits made available by headset manufacturers as well as the initial consumer markets that will embrace VR technology.

Three primary markets have been identified for consumer VR, as follows:

Enthusiasts, Hardcore Gamers and Innovators

The VR enthusiasts market purchased circa 60k units of the Oculus Rift DK1 and circa 30k units of the DK2 have already been pre-ordered. Who are these enthusiasts? Well, it’s the 9.5k people that backed Oculus VR on Kickstarter, supplemented (with overlap of course) with the 28k members of the highly active Oculus Reddit group. These people come from a mixture of IT, the game development industry, marketing/ad agencies and the like.

As more headset manufacturers release developer kits (we expect two more this year) we forecast total 2014 sales to exceed 200k. In 2015 we estimate this element of the market accounting for just over 1m unit sales as headsets such as the CV1 (from Oculus) along with the launch of the Morpheus headset from Sony and other start-ups bring their devices to market.  Unit sales from the Enthusiasts/Hardcore Gamer/Innovator segment are then predicted to rise to 2m in 2016 then up to 4m by 2018.

Perhaps the term ‘Hardcore Gamers’ is a little harsh or even slightly out of date. What is meant by this classification is consumers happy to spend significant amounts of their time and disposable income on gaming. And gaming in this sense is defined as MMORPG-type games along with virtual worlds such as Second Life. Importantly with this segment of the market the PC (as opposed to the console or tablet) is the access-point.

Before the other two primary consumer market drivers are explained, here’s a chart showing annual unit sales from all three segments. Continue reading →

The Face Race: Virtual, Augmented & Mixed Reality Competitor Matrix.

Get ready for the Face Race as the number of companies developing and launching Virtual Reality, Augmented Reality and even Augmented Virtuality devices starts to ramp-up.

Sure, companies like Oculus VR and Sony (for virtual reality) and Google (for augmented reality) are getting most of the headlines but there’s a whole lot of competition heading their way.

Using the rather useful Reality–virtuality continuum we’ve laid out the current market for companies in the sector and their relative stage of development. First-up, let’s start by explaining and defining the spectrum.

Reality–virtuality continuumStarting on the left we have the spatial real world – what we see and experience with our bodies without any technological enhancement.

Moving along the spectrum, the first technological enhancement is Augmented Reality. This is a live view of the real world with a small proportion (under circa 25%) of digital information added (i.e. augmented) into our field of view. The best example of an AR device is Google Glass.

Jumping to the far right, we have Virtual Reality. Virtual Reality is a 3D virtual environment accessed via a headset. VR is 100% immersive meaning the wearer of the headset does not see their real-world surroundings. In VR, users interact within a virtual world.

This leaves the middle ground, known as ‘Mixed Reality’ or ‘Augmented Virtuality (AV)’. AV is an interesting area because it covers from 25% digital enhancement right up to 99%. Wikipedia defines AV as ‘the merging of real and virtual worlds to produce new environments and visualisations where physical and digital objects co-exist and interact in real time’.

In later posts we’ll dive deeper into Mixed Reality applications but for now, here’s our competitor roadmap for companies operating in this range of segments.

kzero virtual reality headset map

Starting with Augmented Reality companies, there are two publicly available products, Google Glass and the Vuzix M100. However, there’s both tech titans and start-ups gearing up for market entry. These include Epson and Samsung in the former classification and i2i in start-up mode. We anticipate all three of these products being available within six months. Expanding the time range, Sony, LG and Microsoft are all rumoured to be working on their own versions of augmented reality. Continue reading →

The Evolution of Virtual Worlds, Part Three. User Generated Spaces

We’re already up to part three in our series exploring how virtual reality will drive the future direction of the virtual worlds sector. Part one laid out the foundations of the market and part two explored Social Virtual Reality. Also, here’s a Slideshare presentation. In this article we’re diving in (literally) to User Generated Spaces.

Starting with a definition:

User Generated Spaces are virtual environments created by individuals for their personal use and enjoyment, accessed and explored using virtual reality.

This is a sector that is already massive in the browser, driven greatly by UGC VWs such as Second Life, IMVU and Minecraft. Interestingly, UGC activities in virtual worlds is popular across all age ranges. Minecraft has a user sweetspot in the tween and early teen bracket, IMVU appeals to late teens and the average age of a Second Life resident is late thirties.

Platforms and applications that have UGC functionality as a core mechanic are very engaging places due to two key activities, namely Crafting and Sharing.

‘Creating stuff’ takes time. People take great pleasure in crafting objects and environments which leads to session lengths measured in hours as opposed to minutes. And the output (i.e. what they create) is limited only by imagination. A quick Google image search using ‘Second Life’ or ‘Minecraft’ demonstrates the breadth of creation in existing virtual worlds. This includes real-world buildings and places right through to re-creations of movie sets. Basically, UGC allows people to create things they’re already interested in, as well as imagineer. Continue reading →

The Evolution of Virtual Worlds, Part One.

This is the first in a series of four posts exploring how virtual reality will drive the future evolution and direction of virtual worlds towards Social Virtual Reality – what we’re calling ‘Virtual Worlds 3.0′.

It’s important to lay-out in the first instance how we got to today, moving through VW1.0 and 2.0. Using the definition of ‘a real-time multi-user virtual environment that can not be altered by the user’, VW1.0 was heavily driven by the KT&T (Kids, Tweens and Teen) market, with registered account growth from this segment reaching 1bn in 2013 and an active user base in excess of 250m account globally. (Note that we’re focussing more on social VWs rather than game-based MMORPGs and the like).

The graphic below (the KZero Universe chart) visualises the tween and teen segment of the virtual worlds marketplace.

kzero universe q2 2014 seg2

Many of these virtual worlds have amassed multi-million registered account bases by creating immersive environments based around activities such as socialisation, avatar dress-up, multi-player experiences questing and exploration. And, in many ways these virtual worlds have proved popular because they offere ‘visual social networking’ (via avatars) before the concept of mainstream social networking as we know it today. They offer users the ability to be in the same ‘place’ at the same time as other people, albeit with in most cases a 2.5D perspective, viewed via web-browser.

Screen Shot 2014-05-12 at 14.18.45In addition to existing IP branded platforms such as Playstation Home, Build-a-Bearville, Barbie World and Fusion Fall being popular, brand-new IPs such as Moshi Monsters, Club Penguin and Poptropica demonstrated the appetite for younger users to explore in and engage with virtual worlds.

Importantly, a key differentiator between this stage of the market (VW1.0) and the next, was the fact that users had no or little control over the environment – the virtual world could not be modified by them. In other words, User Generated Content (UGC) was not possible, which leads us to VW2.0.

We classify the second evolutionary stage of the virtual worlds market as VW 2.0, defined as a ‘A VW that allows the user to create/modify their environment’. By this of course we mean UGC….

Interestingly, some UGC-based virtual worlds actually existed before some of the more popular VW 1.0 platforms, with Second Life being the most prominent one. But, it was not until Minecraft became a global phenomenon that the concept of creating ‘virtual stuff’ hit the headlines and continues to do so. The advent of UGC worlds such as Minecraft, Roblox and Stardoll pushed global registered accounts up to 1.3bn and active users to 350m. Continue reading →

Fairy Forest Oculus Rift Virtual Reality Walkthrough Videos

Last week in collaboration with Dubit we released Fairy Forest, our first demo experience for the Kids/Tween market using the Oculus Rift. Read the full article here.

The Oculus demo is available to download from the WeArVR gaming portal. For those of you without a Rift, here’s a couple of walkthrough videos. The first one shows Fairy Forest in full single screen mode and the other is the Rift-enabled version. Enjoy. And, feel free to contact us if you’re thinking of developing content in virtual reality.

Further information:


Fairy Forest, an Oculus Rift Virtual Reality Demo for Kids

The market for Oculus Rift games and experiences is ramping up at pace, with a wide variety of genres and applications being published. This first tranche of demos and games range from rollercoaster rides and scuba diving, through to first person space shooters and horror games.

These games are being developed by enthusiasts and indie developers right through to more established game studios such as Frontier Developments (creating Elite: Dangerous) and CCP (creating Eve Valkyrie).

From a user perspective, due to the fact that the Oculus Rift headset is still in ‘developer mode’ and Sony’s Morpheus device is scheduled for launch early 2015, the ‘players’ of these early games are adults. However, as our Consumer Virtual reality market sizing assessment illustrates, it will not be long before kids and tweens become a driving force in the market as headsets become consumer-ready.

[As a side note, from a strategic perspective Facebook would do well to consider the Oculus Rift as a key tool to appeal to the younger users they are struggling to attract. Tweens and early teens have flocked in their millions to browser-based virtual worlds. Now, with the advent of virtual reality, social virtual worlds and immersive experiences will become extremely engaging. This is also one of our key strengths – creating virtual worlds and experiences for the KT&T (kids, tweens and teens) marketplace.]

To that end, welcome to Fairy Forest.

fairy forest kzero dubit

Fairy Forest is a virtual reality experience designed for kids and tweens. Developed in collaboration with Dubit, this is a prototype created to demonstrate the immersive qualities of VR.

3D environments, coupled with strong narrative and engaging game mechanics will combine to present massive growth opportunities for the KT&T market and we’re positioning ourselves to be at the forefront of this virtual revolution building on our expertise from browser and tablet screen-based virtual worlds.

Fairy Forest is available to download from the WeArVR virtual reality gaming portal.

fairy forest kzero dubit3fairy forest kzero dubit2

fairy forest kzero dubit4

Looking to develop an Oculus Rift application? Contact us here.

Brands in Virtual Reality

Brands and IP’s have always been interested in the virtual world sector, creating their own experiences (branded virtual worlds) or entering third party games and worlds via branded virtual goods.

Now, with the growing emergence of virtual reality, led by the Oculus Rift, we’re starting to see the same trend. This is happening in two ways. Firstly, brands are creating their own experiences on an ‘official basis’. Secondly, just as we’ve seen in the virtual worlds sector, particularly in properties such as Minecraft and Second Life (i.e UGC) fans of brands are creating ‘unofficial’ virtual reality experiences.

We’ve been tracking these official and unofficial virtual world initiatives since 2006, so it’s about time we tracked the virtual reality sector. Our Slideshare presentation below presents the first tranche of Brands in Virtual Reality.

We’ll be updating this each time a new VR experience is published, including our own. These games and experiences can be downloaded from the WeArVR virtual reality portal. A high-res version of this presentation can be ordered here.

Looking to develop an Oculus Rift application? Contact us here.


12 Key Sectors for Virtual Reality Applications. Q2 2014 KZero VR Radar.

Back in January we released our first ever Virtual Reality Radar Chart showing 12 key sectors for consumer VR. Three months on, there’s been a lot of activity in the space with both independent developers, Kickstarter-backed and more established studios releasing and announcing content for (mainly) Oculus Rift users. Here’s a segment of the updated Virtual Reality Radar for Q2 2014 showing Role Playing Games (RPG), Simulation/Exploration and First Person Shooters (FPS).

virtual reality radar q2 2014 seg4The RPG segment has seen the most activity in Q1 2014, particularly within the Horror genre.  Immersive and atmospheric experiences with scary storylines are highly suitable for virtual reality and we expect even more developers to enter this segment of the market.

Other games of note within the RPG segment include Asunder: Earthbound (a cinematic adventure game set in a fictional 1930’s universe aboard a passenger airplane) and Wander (a non-combat, non-competitive, collaborative multiplayer game for PS4 and PC with Oculus Rift support).

The Simulation and Exploration category is also seeing new entrants and ongoing activity. This category includes games based around underwater experiences, with Ocean Rift and World of Diving being great examples  along with upcoming releases such as Into the Deep Blue.

Two other experiences to mention in the Simulation and Exploration group are K&L Station (‘A Cinematic Hugo meets the 5th element’) and Riverside Residence from Arch Virtual, demonstrating how virtual reality can be used in the architectural market.

The last category in this segment is First Person Shooters (FPS). As shown above, this group has the lowest number of games in it at present, but is expected to be a key focus for Sony’s Project Morpheus. One of the demos shown by Sony at GDC, The Castle is an early prototype of this genre.

The high-res full version of the Virtual Reality Radar Chart can be ordered here. We’ve also put this presentation into Slideshare.

Within our Radar analysis we’ve also assessed growth areas across the 12 categories. Shown below is the segment for Social Worlds, User Generated Content (UGC) and Mirror Worlds.

virtual reality markets q2 2014 seg2Social Worlds are virtual reality applications allowing person to person interaction in real-time – a virtual world in virtual reality. This will be a key area of focus for Facebook following their $2bn acquisition of Oculus VR as well as other companies seeking to exploit the opportunities presented by Social Worlds. One prime contender in this space is High Fidelity, the start-up headed by Philip Rosedale (founder of Second Life). During 2015 we anticipate commercial launches targeting  adults, with KT&T (Kids, Tweens and Teens) having to wait until 2016.

User Generated Content VR applications is another exciting segment – imagine being able to build (and share) brand-new objects, buildings and worlds in a virtual reality environment. We expect 2015 to be a great year for UGC in VR and with Minecraft pulling out of a planned VR version (although you can still play Minecraft using Minecrift) there is a major opportunity for companies to enter this vertical.

The high-res full version of the Virtual Reality Radar Chart can be ordered here. We’ve also put this presentation into Slideshare.

Looking to develop an Oculus Rift application? Contact us here.

Further information:





KZero on Bloomberg: Will Facebook Trigger an Acquisition Spree in the Virtual Reality Sector?

Big deals always get attention and that’s certainly true following the $2bn acquistion of Oculus VR by Facebook. Bloomberg writers Serena Saitto and Olga Kharif have assessed the ‘other’ companies in the VR space along with potential suitors for purchase. KZero CEO Nic Mitham was a contributer to the Bloomberg article, titled ‘Oculus Boosts Funding Appeal of Virtual-Reality Startups‘. Here’s an extract…

In the hours after Facebook Inc. announced plans to buy Oculus VR Inc., messages came pouring in at Virtuix Omni.

“My inbox has been flooded by investors who want to touch base,” said Jan Goetgeluk, 30, founder and chief executive officer at the startup, which makes a treadmill-like device that lets users move their feet to navigate within computer games. Goetgeluk is in talks to raise $2 million of venture funding from private and institutional investors.

Looking to develop an Oculus Rift application? Contact us here.

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