Games/Interactive

VR Expected to Have a Strong Presence at E3

Virtual reality (VR) is expected to be among the main stories on both the hardware and software fronts at the annual Electronic Entertainment Expo (E3) June 14-16 in Los Angeles, video game industry analysts said May 23. But interest in the technology still isn’t expected to translate into major sales for the industry in 2016, they added.

VR is expected to be a highlight at E3, Wedbush Securities analyst Michael Pachter said in a research note previewing GameStop’s May 26 earnings call. But VR is expected to have little or no contribution on the retailer’s results this fiscal year, he predicted.

For one thing, the VR software title lineup for this year is “pretty light,” Pachter said. Most of the games so far are nothing more than “tech demos, with the exception” of “Eve: Valkyrie” from CCP Games that “looks like a real game,” he said. A computer version of that title was released in March for the launch of the $599 Oculus Rift VR headset. But component shortages created a huge delay in deliveries of that device for many customers and it’s now estimated that the Facebook-owned Oculus VR won’t ship any additional units until August, according to the Oculus web site.

A version of CCP’s game will also ship for the PlayStation VR headset that Sony Interactive Entertainment said will ship in October for the PlayStation 4 (PS4) at $399, and as part of a PlayStation VR Launch Bundle at $499.99, including the device and the game “PlayStation VR Worlds.”

Pachter didn’t yet see any of the games developed for the HTC Vive VR headset created by HTC and Valve, but expected to see some of the titles at E3, he said. “There are at most a handful of titles” for VR now, so the technology is “not a big deal this year” for the game industry, he said. “Hardware sales will be robust, but software is going to lag,” he predicted.

Although VR will be highlighted at E3 again, the technology is hard to demonstrate, DFC Intelligence CEO David Cole said. “In the typical show you have people waiting in long lines to try VR products and I think that gets at the heart of short-term challenges with VR. Even at a trade show like E3 it can be hard to get a demo without being one of the privileged” few who can get access or by waiting in line for a long period of time, he said.

“The short term significance of VR for the game industry will be minimal,” Cole predicted. But, on a long-term basis, VR “could significantly expand the market not by replacing existing game types but creating new experiences that broaden the audience. There could be a bigger attraction for VR among other segments.” For example, it “has the potential to be a powerful social network tool,” he said. That is what Facebook was banking on when it bought Oculus VR for $2 billion in 2014. But, “under any scenario, it will take some time for VR to reach the mainstream,” Cole predicted.

“A high-level mass marketing effort is what we think VR will really need to get into the mainstream and it currently lacks anyone with that type of muscle,” he added. A “big concern,” meanwhile, has to be that “low end VR headsets can kill the experience really fast,” he said. “In many cases these headsets will likely be the ones to gain mass distribution. Consumers getting a new smartphone that works with a cheap VR headset could quickly say “‘Thank you very much but that is all the VR I ever need,’” he said.

There will hopefully be more specifics provided by Sony at E3 about the launch slate of games for PlayStation VR, Sterne Agee analyst Arvind Bhatia said in a research note. Other potential news that’s on his “wish list” for E3 include hints from Sony and Microsoft about new PlayStation and Xbox hardware; price cuts on the current PS4 and Xbox One; and more details from Nintendo about its next console (referred to so far as the Nintendo NX) including an official name, the price and launch date, he said.