The VR Race Is Heating Up Again

Photo illustration: Christopher T. Fong/Protocol

Janko RoettgersandSource Code TeamOctober 13, 2021

Good morning! This Wednesday, HTC struggles to catch up in the VR space, the chip shortage comes for Apple, Coinbase gets into NFTs and another former Facebook employee wants to talk to Congress.


Can anyone beat Facebook in VR?

HTC is going to unveil its newest VR device tomorrow: The Vive Flow is designed as a lightweight consumer headset optimized for media consumption that will ship without controllers, as we were able to report this week. (Here’s an early peek at what it looks like.)

The Flow is HTC’s latest attempt to compete with Facebook in the consumer VR space. It’s something the company used to be quite good at: The original Vive was at one point considered the gold standard in PC VR, thanks in part to tracking hardware engineered by Valve that made it possible to operate a much larger playspace than what was supported by Facebook’s Oculus Rift.

Still, HTC is playing catch-up. Facebook has poured billions of dollars into both a content ecosystem and standalone VR tech, which eventually resulted in the launch of the Quest in 2019.

  • HTC’s own standalone headsets were too bulky and expensive to go head-to-head with Facebook’s Quest, so the company is instead selling them to enterprise customers.
  • HTC is still selling Vive headsets to PC VR enthusiasts, but that’s a smaller market with much less growth potential.
  • Plus, the Vive isn’t even the obvious choice for PC VR gamers anymore: Former partner Valve is now selling its own Index headset, and Quest users can play PC VR games simply by plugging their headset into a compatible gaming PC — which has turned Facebook’s device into the most popular PC VR headset as well.

Now, HTC aims to reenter the consumer market with a unique proposition. Pre-announcement marketing material hints at plans to bill the new device as a headset for people looking to meditate, relax and lean back. Casual VR that won’t require you to break a sweat.

  • There could be a market for this, as video viewing regularly was one of the most popular experiences on lower-powered VR headsets like Facebook’s Oculus Go.
  • The Go didn’t have the type of tracking necessary for 6 degrees-of-freedom VR; Vive’s latest headset is expected to offer this functionality, which should make its experiences a lot more immersive.

Competing with Facebook won’t be easy. HTC doesn’t have nearly the same resources available to lure developers onto its platform as Facebook, which has been busy buying game studios and doling out money to third-party developers. And without developers creating unique experiences optimized for the device, the Flow may not look all that different from the Oculus Go.

  • The biggest hurdle will be price. Facebook can afford to sell hardware at cost while HTC needs to actually make money with its devices.
  • And with the Quest 2 selling for $300, it will be challenging to convince consumers to spend more for a headset that can ultimately do less.

But Facebook hasn’t won yet. VR is still young, and there are plenty of companies still vying to unseat the market leader.

  • Sony has plans to announce a new PlayStation VR headset next year, and has a built-in customer base: PlayStation 5 sales surpassed 10 million units this summer.
  • China’s Pico was acquired by TikTok owner ByteDance in August.
  • Enterprise-focused VR startup Varjo is rumored to launch a consumer version of its high-end PC VR headset next week.
  • And then there’s Apple, with a still-unannounced mixed reality headset that’s been just around the corner for some time now.

What unites most of these companies is that they have deep pockets, allowing them to spend billions of dollars to seed their own VR ecosystems. And that’s something that HTC simply can’t afford.

— Janko Roettgers (email | twitter)