Virtual reality gaming has long been a holy grail for the industry. With every advancement in hardware power, the possibility exists to make video games more immersive and engaging. Popular films such as Tron have long established virtual reality displays as the inevitable zenith of gaming technology. On the other hand, real-world attempts such as the Nintendo (NASDAQOTH:NTDOY) Virtual Boy have typically failed to inspire confidence. That looks like it is about to change, with a series of upcoming devices bringing renewed interest in the promise of head-mounted displays. Could virtual reality headsets drive interest in the Microsoft (NASDAQ:MSFT) Xbox One and the Sony (NYSE:SNE) PlayStation 4?
Late to the punch
Much of the hype surrounding head-mounted displays has been generated by Oculus VR, a privately-owned company that debuted its first working prototype in 2012. The company's Oculus Rift may not be the most advanced VR headset available, but its marriage of high-end technology and affordable pricing has the potential to be revolutionary. A developer kit can be purchased for a mere $300, with rumors suggesting that the consumer version of the device will debut at an even cheaper price point.
The company has been receiving major cash injections, and recently announced that it had raised over $75 million in investment capital. Consider that early fundraising for the Rift generated $2.4 million from a Kickstarter campaign and it becomes apparent that Oculus has a product that has generated substantial interest.
Comments from Palmer Luckey, one of the creators of the Oculus Rift, suggest that the device will not be coming to the PlayStation 4 or the Xbox One. The stated reason is that the locked-in specifications of home consoles make them too limited to realize the long-term goals associated with the device. That doesn't mean that the new consoles will want for VR technology--reports suggest that both Sony and Microsoft are readying head-mounted displays for their new consoles.
Seeking the potential of a display revolution
Sony already manufactures a number of head-mounted displays, yet the prices attached to the devices make them unsuitable for mass-market adoption. Rumors and patents suggest that Sony is in the process of readying a VR headset for use with its PlayStation 4 console. Patents filed by the company indicate that such a device would feature some manner of hazard detection so that users did not bump into real world objects while immersed in a game world.
Vindication of Microsoft's Kinect vision?
Microsoft's Xbox One may be in an even better position to usher in VR console gaming. The company's decision to include its Kinect 2.0 camera with every Xbox One may have a number of drawbacks, but it has the potential to make VR technology more accessible. In order to make a head-mounted display truly immersive, a technique called head tracking is used to translate real world movements to in-game visual feedback. The Kinect camera should provide easy and efficient implementation and augment data provided by an HMD, while also lowering the cost of entry inherent to the new technology.
If Sony's VR headset will require the use of its PS4 camera to take full advantage of the device, the chances of it seeing broad adoption are diminished. Peripherals outside of controllers have traditionally been a tough sell, and the prospect of needing an add-on to properly utilize another add-on greatly diminishes chances of success. If Sony's PS4 head-mounted display is to work entirely independent of the PS Eye, build costs will rise considerably or functionality will be limited. So, in the event that VR gaming takes off during this console cycle, Microsoft looks to enjoy a significant competitive advantage.
A no-go for Nintendo
Of the big three console manufacturers, Nintendo is the least likely to pursue VR headsets in the near future. The company has shown an interest in display innovation with the likes of the DS, 3DS, and Wii U. However, it has already recorded a major failure in the VR domain with its ill-conceived Virtual Boy console. That said, the main reason that Nintendo will not chase the promise of HMDs is cost. In recent years, the global market has roundly rejected Nintendo systems with prices at or above $250 (see 3DS and Wii U), so the likelihood that the company will pursue still relatively expensive VR tech remains low.
Looking into the future
With tablet and smartphone gaming becoming increasingly ubiquitous and full-featured, dedicated consoles require additional points of differentiation to justify their existence. VR gaming represents one possible avenue of differentiation, but expensive, albeit captivating, peripherals face an uphill battle. Still, as the technology continues to be further streamlined and iterated upon, there is tremendous potential waiting to be mined.
Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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