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Virtual Reality: Disrupting The Way We See The World

Virtual Reality: Disrupting The Way We See The World
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Virtual Reality is one of the most exciting new technologies today. The idea of simulating a three dimensional environment never ceases to amaze. The hype may be new, but the concept about immersive technology is not. It dates back to the 1960s and has mostly been used by the military. Following World War II, the military has pumped millions of dollars into this technology.

However, it was not unto the 1980s that advances in software and hardware made it possible for the real potential of virtual reality and 3D to be even visualized. But even now, it was still in the hands of the military and for the most part, out of the public domain. It was not until Nintendo launched its VR headset, that the general public got first-hand experience of this technology, even if it was a very basic and buggy experience.

Industry Review

The market for virtual reality is not clearly defined. This can either suggest that the market is limited, or perhaps – and most people believe this to be the case – that the market and potential is limitless. While there are no consolidate figure, disintegrated statistics from different industries suggest the massive potential of virtual reality.

Healthcare Industry

The market for VR in the healthcare industry grew by a compound annual growth rate (CAGR) of 10% from 2006 to 2010. According to Kalorama Information the market for products that rely on virtual reality (VR), including robot-assisted surgery, medical data visualization, education and training, and rehabilitation and therapy, was worth $670 million in 2010.

Global Industry Analysts recently reported that demand for simulation-based medical training will drive the market for virtual reality in healthcare, and projects that the global market for healthcare simulator-based training will reach US$2.43 billion by the year 2018.

Military

Market research company ASD Reports conducted a research on “The Global Military Simulation and Virtual Training Market” and as per their report the global military simulation market, which valued $3.5 billion in 2011, is projected to grow at a CAGR of 6.75% to $6.7 billion by 2021.

Entertainment Industry (Video-gaming)

As per the latest research report by Research and Markets, the global market was valued at $466.6 million in 2012 and is expected to grow at a CAGR of 39.2% to 2019.

Key Players

The industry for VR is in an emergent phase and highly unstructured; most of the companies are privately owned or supported by crowd funding and venture capitalists. Bidness Etc takes a look at some key players.

Oculus Rift

A lot of the prominent roadblocks in the path of virtual reality were removed by Oculus Rift. It has been able to change the global landscape of virtual reality. Started by 21-year-old Palmer Luckey, today this company is at the forefront of VR innovation. Oculus Rift is a success story, when it comes to a perfect virtual reality headset. The device provides a three dimensional simulated experience of a VR world. The mobile, immersive viewpoint of Rift sets it apart from the typically stationary viewpoint of most VR headsets.

After the massive success of the first development kit (DK1) of Oculus Rift; Facebook Inc. (FB) acquired it for amount of $2 billion in March 2014. The potential of using Oculus VR in entertainment, healthcare, military and education industry is tremendous. According to Facebook CEO Mark Zuckerberg, the primary focus of Oculus would remain video gaming; however he intends to experiment with in simulated communication too.

Apart from Oculus Rift, there are other leading companies as well, that have realized the future potential of VR, particularly in entertainment industry. For instance Google Inc. (GOOG) has already started developing a card-board VR headset and Sony Corp (ADR) (SNE) has already demonstrated project Morpheus at the E3 conference this year and intends to launch its developer kits soon. Apple Inc. (AAPL), Samsung Electronics Co. Ltd. (SSNLF) and Valve have also started developing their own virtual reality based devices.

VirTra Systems Inc. [VTSI: OTC US]

Founded in 1993, VirTra Systems is a publicly traded company with current market cap of $7.88 million and it is one of most established companies in VR development. It manufactures and markets training simulators, often used in by the military and law enforcement. The stable financial position of VirTra Systems is driven by the extensive demand for training simulatorsbased on increasing security threats, cost effectiveness by these simulators and the sectors often tight budgets.

Being the oldest company in its target sector, VirTra Systems Inc. has been operating profitably over a period of time. There has been significant growth in sales of its products in the last four years. Its sales increased from $6.59 million in 2010, to $9.82 million in 2013. However, sales-growth has tapered off from 43% to 11% over this period.

VirTra Systems actually stands to gain from the reduction in defense spending because training VR simulators is relatively cost-effective.

Conclusion

At this point in time, VR industry is self-exploring its true potential; innovators are coming up with new variants and applications of VR hardware.

Prospect of Virtual Reality looks very tempting when one imagines its application in future but for investment, at the moment only handful for firms are publicly owned, which leaves a very limited space for individual investors. They can either wait for proper time or hope to catch the eye of a venture capitalist, or hop on to the crowd funding bandwagon.

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