The concept of virtual reality headsets is hardly a new one; they've popped up in various forms over the years, but have always ultimately failed to gain traction. Over the last several years, the concept of VR has, once again, become quite popular. Whether virtual reality sticks this time or ultimately winds up being another fad is anyone's guess.
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However, for those interested in companies (and their stocks) that could benefit if this round of virtual reality hits it big, here are three that spring to mind.
A VR headset maker
Right now there are two major VR platforms that seem to have people's attention: Rift from Facebook-owned (FB +6.64%) Oculus and the Vive from struggling smartphone maker HTC (NASDAQOTH: HTCCY).
If Oculus were a stand-alone publicly traded company, it might be an interesting way to play a potential VR boom. However, it's owned by Facebook, already a large, successful company trading at a lofty valuation. Even if the Oculus Rift is successful (by some reasonable definition of success), it's not clear that this will mean much to Facebook's top and bottom lines.
HTC, on the other hand, seems to be a much more interesting way to play a potential boom in VR headset sales. In addition to what seem to be quite a few voices in the tech press claiming that the HTC Vive is a superior platform to the Oculus Rift (though there are some that say the opposite), HTC's business could be positively, and meaningfully, impacted if VR takes off since its market capitalization is roughly equivalent to $2.53 billion (remember that Facebook bought Oculus for $2 billion).
That said, it's important to keep in mind that betting on the proverbial little guy is inherently riskier; Oculus, backed by Facebook, is likely to be able to outspend HTC on hardware development, software ecosystem development, and marketing.
A graphics specialist
It's almost a common-sense notion that doing virtual reality properly is going to require immense amounts of graphics processing power. Graphics specialist NVIDIA (NVDA +5.56%) is the largest vendor of high-performance graphics processors for personal computers.
Since headsets like the HTC Vive and the Oculus Rift require very high performance graphics cards in order to play virtual reality games at acceptable performance levels, it would seem that this plays right into the graphics specialist's strengths.
The company seems to be taking virtual reality quite seriously, too. Its recently released Pascal graphics architecture implements specialized circuitry that helps to accelerate virtual reality workloads. Additionally, NVIDIA announced VR Works, which the company describes as a "comprehensive suite of APIs, libraries, and engines that enable application and headset developers to create amazing virtual reality experiences."
Should virtual reality ultimately take off, it could lead to both unit growth in the company's core graphics processor business as well as average selling price growth (as customers buy more powerful graphics processors in order to take advantage of virtual reality applications).
A console maker
Looking to get in on the action in virtual reality, console maker Sony (SNE +3.92%) is planning to launch its own VR headset, known as the PlayStation VR, later this year. Sony has the advantage of being able to market its new headset to a fairly large PlayStation 4 installed base. It also controls both the hardware and software ecosystem around PlayStation, which could allow the company, and developers for the PlayStation 4 platform, to deliver relatively good, polished experiences.
If PlayStation VR is well received, Sony could benefit in three ways. First, the appeal of PlayStation VR could draw gamers to its platform over competing game consoles, driving console unit sales.
Next, Sony could benefit from game developers potentially releasing "special" virtual reality-capable titles (either remixes of pre-existing titles or totally new titles), driving PlayStation game sales, ultimately resulting in increased royalty revenue to Sony from incremental game sales.
And, finally, assuming that Sony is selling its PlayStation VR headsets for a positive gross profit, it stands benefit directly from sales of the PlayStation VR headsets.
