Momentum Poses Risks for Network Operators who Aren’t Prepared to Support Demand
Cutting through the fog surrounding the role virtual reality might play in network services, immersive multiplayer gaming and virtual socialization are shaping up as sure bets with major implications for network capacity and functionality.
Network technology frameworks, including 5G and cable’s 10-gigabit capable DOCSIS 4.0, are at hand to accommodate capacity and latency requirements for VR. But service providers generally have not prioritized the 5G enhancements and the attributes that distinguish DOCSIS 4.0 from 3.1 that are essential to mounting VR-caliber services.
This leaves a window of opportunity for those who believe it’s worth investing in these capabilities sooner than later. The multiplayer gaming appeal of VR could be the application that rewards their gamble by giving them a mass market for a service their competitors won’t be prepared to deliver.
The reluctance of most network operators to make that bet is understandable. So far, the most widely pursued applications for VR in network services, live sports and music events, have had marginal impacts with lackluster market responses to what’s been on offer so far. Two years on after plans were unveiled for VR coverage of major sporting events worldwide, the anticipated acceleration hasn’t materialized.
Lately, of course, the coronavirus has brought just about everything in sports to a screeching halt. But prior to the virus, some leagues like MLB and the NFL had backed off VR altogether and others were leveling off or reducing frequency.
Brighter Prospects
In any event, totally apart from any network-related uses of VR, the technology has failed to generate the uptake backers like Facebook’s Mark Zuckerberg were hoping for, notwithstanding the billions invested so far in content, headgear, and production systems worldwide. But, as previously reported, a new generation of affordable head-mounted untethered devices (HMDs) and demonstrations of much better, eyewear-dimensioned gear entering the pipeline together with higher resolution displays and other advances signal some of the early obstacles to adoption are disappearing.
Qualcomm recently took a leading role in fostering the development of eyewear and XR functionalities (encompassing mixed and augmented reality as well as VR) with the launch of an XR Optimized Certification Program based on an XR viewer template using its Snapdragon 855 and 865 mobile phone chipsets. The program, which tests interoperability between OEM devices and 5G networks, has drawn participation from 15 mobile carriers, most of which are based in Asia or Europe, with just one, Verizon, from the U.S.
The initiative represents a major step beyond the failed mobile phone-based VR efforts of years past. It promises a new generation of lightweight headgear that will serve to track user movements and render images while relying on the 5G phones to perform all the computing tasks.
Chine-based OEM 3Glasses, for example, says it will launch a new 5G model of its ultrathin VR eyewear form factor this year. “We are actively working with the three major Chinese operators and multiple smartphone OEMs in order to launch the upcoming 3Glasses XIS in Q3 2020,” says 3Glasses founder and CEO Wang Jie,
Most of the carriers involved in the program have not committed to specific dates and services, but some have made clear they are moving forward on a fast track. Deutsche Telekom, which has already experimented with VR coverage of music events, is one case in point.
“Deutsche Telekom will be contributing to the XR ecosystem with critical network enablers, from edge computing to 5G to best home connectivity, and combining it with great content such as music, concerts, sports events as well as gaming,” says Sean Seaton, senior vice president for group partnering and devices at the carrier. “We are working on an exciting integrated XR service – stay tuned.”
South Korea’s KT, too, having already launched a “Super VR TV” IPTV service, will likely be among the first to introduce VR on 5G networks. “KT wants to provide IPTV customers more immersive and vivid experience through 5G and VR technology,” says Hyeon-seuk Lee, executive vice president of KT’s device business unit.
But the question remains: what will ignite the shift to mainstream usage? Interestingly, despite all the setbacks, a bright outlook for VR remains a bedrock expectation in many recent research projections.
Fortune Business Insights predicts the amount spent globally for VR content, equipment, and services across all consumer and enterprise segments will top $120 billion by 2026, marking a 42% CAGR from the $7.3 billion estimated for 2008. A less buoyant but still optimistic outlook for VR can be found in a report from MarketsandMarkets, which predicts a six-year 33.5% CAGR with VR-related spending climbing from $7.9 billion in 2018 to $44.7 billion in 2024, which, at that CAGR, would grow to $80 billion in 2026. Combining VR and AR, IDC says the 2020 spending will hit $18.8 billion, up 78.5% from $10.5 billion in 2019, and, at a 77% CAGR, will reach $103 billion in 2023.
These projections clash with current perceptions about the status of VR on the consumer side but are in accord with broad recognition that the technology is taking off as a tool in design, training and other non-entertainment applications. Share of the pie going to consumer gaming and entertainment is projected to be in the 40% range by most studies. According to eMarketer, the number of U.S. consumers using VR jumped from 43.1 million in 2018 to 52.1 million a year later.
A Surging Online Gaming Culture
It’s not hard to envision VR-oriented gaming and social media services catching fire with young generations of consumers, who are spending ever more of their entertainment time with online video gaming. Subscriptions to online services enabling users to engage with cloud-hosted games, including twitch-action video games, have soared.
According to Deloitte’s latest Digital Media Trends Survey, 30% of all U.S. consumers were paying for a gaming service as of YE 2018, including 53% of people under 35. Deloitte noted this was the first time the percentage of game subscribers in its surveys topped pay TV subscribers in that age group.
Multiplayer gaming has been around the better part of two decades with online role-playing games like World of Warcraft that don’t require twitch-speed interactions. But now it’s the emergence of cloud-hosted fast-action multiplayer gaming that is firing up the youth culture, thanks in part to the impact of esports.
In one example of the cultural impact of esports, as related in a blog by Ciena’s CTO for the Americas Kevin Sheehan, the two-day ESL One competition at the Barclay Center in Brooklyn last fall drew 8,500 spectators and an online audience of six million. These closed-network competitions in professional esports venues are fueling competitive play everywhere.
The popularity of battle royale games like Fortnite Battle Royale, PlayerUnknown’s Battlegrounds and Apex Legends, which combine elements of shooter and survival games in multiplayer competition, is especially noteworthy. One researcher estimated battle royale game revenues hit $20 billion in 2019, a ten-fold increase over 2018.
Fortnite Battle Royale, the most popular game in this category with a user base around 200 million, generated an estimated $1.8 billion in 2018. Launched in 2017 by Epic Games, Fortnite is a free fast-action animated game utilizing remarkable amounts of processing intelligence at even more remarkable speeds to run action sequences involving millions of players at any one time. Users compete for survival in 100-avatar clusters that are assembled randomly from sign-in queues worldwide.
Seventy percent of Fortnite subscribers spend an average of $84.76 each per year to purchase weapons, avatar skin, dance moves and various other virtual accessories, according to industry estimates. Epic also sells sponsorships for brand placements on avatar skins and other gear, and it collects $24.99 monthly from subscribers paying for the opportunity to watch Fortnite “streamers” playing the game at high skill levels on the Twitch platform.
Streamers split the take with Epic. Some have become millionaires, according to USA Today, including one who’s said to have raked in $10 million in 2018.
Last July, the annual Fortnite “World Cup” drew 40 million players with 19,000 live spectators at the three-day event at New York’s Arthur Ashe Stadium and another 2.3 million watching online, according to Epic. First-place prizes ranged from $1 million to $3 million in multiple categories.
Multiplayer VR Gaming
The migration of multiplayer fast-action competition to the VR space is a natural next step that’s already well underway. Judging by reviews from online game commentators, several titles are drawing sizeable audience.
One of the most talked about is First Contact Entertainment’s Firewall: Zero Hour, which engages two four-person teams in first-person shooter (FPS) competition that involves much coordination among team members in realistic virtual settings without noticeable lag. Commented one reviewer, “When played with friends this game becomes the ultimate VR multiplayer experience that cannot be put down.”
Others are drawing strong reviews as well, with much commentary about how far the VR user experience has come to enable this level of dynamism without negative effects. The fast-action multiplayer engagement extends to a wide range of scenarios embedding users in race cars, jet cockpits, spaceships, team-constructed fortifications and much else. Others, like Sparc, create environments more akin to real-life competition, which in this case involves what one reviewer describes as “some kind of futuristic dodge ball.”
Veteran gamers attest to the power of the appeal over traditional 2D gaming. Said one reviewer, “The feeling of competing (or cooperating) with others in a VR environment is so much better when compared to classic, flat screens. And the level of immersion you get in VR is unmatched, with players being ‘physically present’ and completely submerged in games they’re playing.”
The same is true of more socially oriented multiplayer environments. Here the appeal extends to virtual socializing that allows players in avatar mode to interact with each other in settings like virtual sports bars where they can play darts, paintball, laser tag and other popular games.
For example, such a virtual hangout, SIEA’s The Playroom VR, is available as a free title to all users of Sony’s PlayStationVR headsets. Against Gravity’s Rec Room is another free app accessible through headsets linked to PCs, Android devices and the PS4 console, offering multiple game options such as dodgeball, laser tag and pinball and a wide array of clothing and other customization options for avatars.
Facebook, whose standalone (computer-free) Oculus Go headset sold out over the year-end 2019 holiday season, is taking another stab at socializing VR with Horizon, a cartoon-like virtual social world succeeding Facebook’s Spaces that’s now in the alpha phase of testing with rollout anticipated later this year. Valve, provider of the VR gaming distribution service Steam, has taken the social gaming experience into a new space with Tabletop Simulator, a virtual sandbox where players can participate in thousands of games and even create their own.
A growing force behind consumer exposure to multiplayer VR gaming is the emergence of Location-Based VR (LBVR). In the three years since we first reported on the phenomenon, thousands of venues have opened across the world bringing VR experiences to millions of consumers. As noted by Variety, Las Vegas has become a VR hub where arcades and LBVR entertainment centers have been popping up in casinos and shopping centers ever since the MGM Grand kicked it all off with a free-roam VR arena in 2017.
The enthusiasm generated by these venues is reflected in the success of Zero Latency, a four-year-old Australian startup that has several self-produced titles running in 25 arenas in 13 countries. A reporter for Wired playing the company’s laser tag game Sol Raiders described an all-consuming immersive experience that pitted two four-person teams against each other in tetherless combat across a big open space.
“I’m not a gamer,” wrote Katia Moskvitch. “I play Tetris once in a while. I’m not into VR either, as all headsets so far gave me motion sickness – whether they put me into virtual reality, augmented reality or mixed reality environments. This time, though, is different. I admit, I’m impressed and leave the arena a bit woozy, but mostly excited.”
Zero Latency CEO Tim Ruse told Moskvitch the firm has had to restrict playing ages to 14 and older unless children have adult supervision, in which case the minimum age is 10. “It just blows people’s minds,” Ruse said. “We’ve had some really extreme reactions, people running in terror, people sort of curling on the floor in balls. Such reactions make you realize you’ve got to dial it back a bit.” Clearly, gaming is about to become a whole different kind of experience. The message to network operators is equally clear: be ready.
