Sony Is Taking Yet Another Step Into Virtual Reality

By Markets

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Recently,Sony (NYSE: SNE) took another step forward with virtual reality when it announced that Sony Pictures has partnered with Reality One to develop and publish virtual reality (VR) contentthat will be an expansion of Sony's films, as well as original stand-alone content.

This adds to Sony's current virtual reality focus coming from its new VR headset that will go on sale next month, as well as its newly announced, higher-spec PlayStation 4 Pro, which handles VR content even better than the original PS4.

Content is still king

The new partnership with Reality One isn't all that surprising of a move for the company. Sony is, of course, known for its hardware, but the rise of virtual reality also depends on quality content becoming widely available. By teaming up with Reality One (which co-produced and co-published the VR film Gnomes and Goblins, directed byJon Favreau), Sony will be able to tackle this challenge head on.

This isn't the first time Sony has recognized that it needs to help develop VR content if its forays into this market are to succeed. The company has partnered withmore than 230 developers to create 50 VR titles for its PS4 console and its upcoming VR headset by the end of the year.

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That's particularly notable, because Sony has already sold more than 40 million PS4 consoles (and will likely sell more with its new PS4 Pro release). Those consoles are compatible with Sony's mid-priced $399 VR headset. And pairing a relatively inexpensive VR headset with millions of compatible consoles and hundreds of content developers is a recipe for success.

All of this means that by the end of this year, Sony will have two versions of its console that are compatible with VR titles; it will have launched its own headset; and it will have built out a substantial library of games and films. In short, Sony is quickly becoming aformidable player in this space.

Why Sony is smart to pursue virtual reality

The virtual reality market is poised for substantial growth over the next few years -- there will be an estimated 171 million active VR users in 2018, according to Touchstone Research, and the overall virtual reality market will be worth $70 billion by 2020, according to TrendForce. Sony's early pursuits in both hardware and content right now could bring big gains over the coming years.

In the company's corporate strategy meeting over the summer, Sony said that VR is an industry where the company "believes it can leverage its technological strengths in areas such as digital imaging, content acquisition and production, as well as its entertainment assets." Sony went on to say it plans to engage in VR across its entire Sony Group business and is "considering the possibility of cultivating it as a new business domain."

That focus is becoming clear in the company's gaming segment already, and now in Sony Pictures as well. If the future VR market ends up coming close to current projections, then Sony will have timed its VR moves very well.

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Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.