Unity CEO: Virtual reality hinges on your PC’s specs, not the headset

Virtual reality and augmented reality headsets are not the reason multibillion-dollar companies are putting their collective eggs in the immersive basket, according to Unity CEO John Riccitiello.

Riccitiello’s analysis of why companies such as Google, Microsoft, Facebook, Sony, Samsung, HTC, and others are putting so much into the VR/AR space is in a new whitepaper that FC Business Intelligence wrote.

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“The reason PC sales have slowed down is because there’s been no reason to upgrade for a very long time, other than maybe a cool form factor,” Riccitiello said. “But the cycle that we saw with PC sales in, say, the mid-1990s to early 2000s was driven by the fact that there was always something you wanted and needed more powerful PCs with bigger GPUs and more memory – and that usually was a game.”

PCs and consoles have, according to Riccitiello, now reached a point where a hardware upgrade is no longer necessary, and he believes that the move by the big players in this space is driven not by the headset sales themselves but by the requirement to ensure the hardware is up to spec.

“VR and AR are going to be powerful drivers in PC growth because suddenly we’re going to want an even more powerful device than we’ve had before to drive a better VR or AR experience,” Riccitiello said. “The reason these hundred billion dollar-plus marketing cap companies are interested in the space is not only because it’s going to drive giant sales of head-mounted displays at some point, but it’s also going to push an entire ecosystem of PCs, CPUs, GPUs, and new sound systems. It’s going to be a transformation of the entire technology landscape.”

Riccitiello also believes that the VR/AR proposition is a “long play” and will take some time to achieve a decent market share. This growth will largely come from the need to acquire better hardware.

“Console game pricing and smartphones are subsidized by carriers or hardware makers, so we never really have to worry about a cost curve,” Riccitiello said. “With VR I don’t see an easy way for that type of cross-curve subsidization that’s going to be big enough to make it cheap to get it to the consumer. It’s going to take a while, which is another challenge for developers to invest their dollars in VR because the volume of consumers may not be there initially.”

Riccitiello is right about the cost curve, if initial estimates are on track. At the recent Code Conference, Oculus CEO Brendan Iribe said that consumers will be able to get everything they need to use Rift for under $1,500. Given that his statement likely means a price of $1,500 and not $400, it still represents a premium purchase. Iribe explained that existing PC owners would still need to make a $1,000 investment. Sony, with its Morpheus product, potentially has a march on the likes of Oculus in that it will be an add-on for existing PS4 console owners, and smartphone-based solutions are potentially even more cost-effective.

In my own report on VR and AR, I discussed these issues with Oscar Clark, a consultant and “everyplay evangelist” at Unity Technologies. His assessment of the VR/AR opportunity concurs with Riccitiello’s.

“If VR and AR are to succeed they have to gain enough market momentum to sustain an ecosystem,” Clark said. “That’s probably going to have to mean millions of units sold and getting to that level is going to depend on content, convenience and cost. We are a long way from a mass-market VR world but I am convinced VR/AR is more than just a flash in the pan.”

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The full white paper, which includes thoughts and commentary from Jesse Schell, the CEO of Schell Games, and Hilmar Petursson, CEO at CCPGames, in addition to the thoughts of Riccitiello, is available today.