This year will be an important one for virtual reality. Facebook's (NASDAQ:FB) Oculus will release its first headset in a few months, as will Sony and HTC. Interest in virtually reality (VR) is growing in the tech industry, with Google's Cardboard and Samsung's (NASDAQOTH:SSNLF) Gear VR already available, and other major players rumored to be working on VR as well.
But there are a couple of hurdles standing in the way of VR's mass adoption, and they won't likely be resolved in 2016, or even in the next couple of years. The first problem is that while mobile devices like Samsung's Gear VR and Google Cardboard provide a mobile version of VR, the graphics aren't all that great compared to true 3D virtual reality. Mobile systems simply don't have the processing power to create the worlds that VR is capable of -- and neither do the majority of PCs.
According to NVIDIA (NASDAQ:NVDA), less than 1% of PCs on the market this year will be able to handle high-end VR systems like Oculus Rift. That means that right now just 13 million PCs are capable of running Oculus' product (which will officially starts shipping in March), according to the BBC. In order for PCs to catch up to VR's potential, NVIDIA says they need to be about 7 times more powerful than they currently are. Dell, Asus, and Alienware are making Oculus-ready computers, each for under $1,000, with all the graphics-processing necessary to run the system. But, of course, that price tag doesn't include the VR headset. Which leads us to VR's next problem: the cost.
Facebook will help subsidize the cost of the VR headset, but the cost of both the headset and a powerful computer to run it will total around $1,500, according to Oculus founder Palmer Luckey.
That price tag will likely be too high for many consumers. According to Touchstone Research, 54% of U.S. Internet users said they'll only spend $400 or less for a virtual reality headset system. Even more damaging to VR is that nearly a quarter of U.S. Internet users would only spend up to $200 on a virtual reality headset.
That may be good news for Samsung and Google, which use existing smartphones to make mobile VR a reality, but it means a slow start for Facebook and others investing heavily in true virtual reality.
Facebook sees things clearly
The good news for Facebook is that the company appears to have a very realistic view on VR's adoption rates. Back in November, Facebook CEO Mark Zuckerberg said on an investor call, "It's important also to recognize that this is going to grow slowly, like computers and mobile phones when they first arrived. So we're committed to Oculus and virtual reality for the long term."
And Luckey recently told Financial Times that mass adoption is likely a long way off, "It could be five years -- it's more likely to be 10 years," he said.
Even with its slow adoption, Facebook and others are looking ahead to VR's vast potential, not just as a gaming and communications tool, but in revenues. According to TrendForce, the virtual reality market is expected to grow to $70 billion by 2020, up from just an estimated $6.7 billion this year. And for Facebook and others, that potential is well worth the wait.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool recommends Nvidia. 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.