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How Sony Could Benefit From Virtual Reality

By Adrian Campos – Mar 23, 2014 at 2:00PM

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Learn about Sony's project to develop a virtual reality headset for its flagship console.

Challenging times await console manufacturers. Gamers are increasingly shifting money and time from traditional consoles such as Microsoft's (MSFT 1.92%) Xbox and Sony's (SONY 2.39%) PlayStation to mobile devices. As evidenced by the poor sales performance of the recently released Xbox One and Nintendo's cut on Wii U sales projections, the console market as a whole is not shipping the number of devices it once was. At the same time, mobile game usage among smartphone and tablet owners -- up 66% in 2013, according to mobile analytics provider Flurry -- is expected to continue increasing.

In this difficult environment, console manufacturers need to be in constant search of additional features, in order to achieve product differentiation and have a chance to survive the mobile challenge. In this regard, Sony has recently unveiled a prototype virtual reality headset for its PlayStation 4, codenamed "Project Morpheus." Is this new device a game changer?

Source: Sony

Project Morpheus
Sony's virtual reality headset for the PlayStation 4 is said to be the culmination of more than three years of work by the company's top engineers. By using accelerometers, the device will project an image to the user that would shift by tracking the movement of his head, allowing players to immerse themselves deeper into their games. The device is also expected to contain stereoscopic sound, which reproduces sound by creating an illusion of directionality and audible perspective.

Together with the PlayStation Camera -- an optional motion-sensing accessory for the PlayStation 4 that includes a dual camera that can be used for depth-sensing of objects -- and the company's motion-sensing game controller, Project Morpheus should allow PlayStation lovers to experience virtual reality at its maximum expression.

Sony's Project Morpheus is probably the first serious attempt by a major console manufacturer to develop virtual reality headsets. However, competition should quickly appear.

Note that Valve, the company behind the production of popular action games such as Half-Life, showed off a virtual reality headset in January. However, Valve's focus may be on researching the possibilities of virtual reality, rather than manufacturing a handset targeted to consumers on its own. By 2015, Valve expects headsets to achieve millimeter-accurate tracking.

According to The Wall Street Journal, Microsoft could be developing its own 3D virtual reality headset for use with its Xbox One console. The company, which filed a range of patents related to virtual reality technology a couple of years ago, could also benefit enormously from immersive gaming through augmented virtual reality, as most Xbox games like Halo and Gears of Wars are science-fiction titles.

From now on
No release date has been set for Sony's Project Morpheus. That being said, the company did confirm to The Verge that the device will not be made into a consumer product this year. Due to the highly ambitious nature of the project, the current prototype will probably be tested extensively in cooperation with the company's development partners. In this regard, a first kit for developers could be on its way.

Because the project is currently at a very early stage, any impact on PlayStation sales is expected to be minimal. However, in the long run, the project could help to not only increase PlayStation sales, but also improve the top line of other accessory devices, such as PlayStation Camera and PlayStation Move, via cross-selling. Moreover, if Sony succeeds in releasing its virtual reality headset to consumers before Microsoft, it could enjoy big first-mover advantages.

Final Foolish takeaway
As gamers continue shifting resources to mobile devices, console manufacturers will need to constantly add innovative features in order to remain competitive. Aware of this, Sony is working to develop the first virtual reality handsets oriented to consumers. Because the project is quite ambitious, no release date has been set. However, in the long run, this move should help Sony to increase PlayStation sales.

Adrian Campos has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. 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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