Virtual reality has been a hot topic in the tech industry ever since Facebook (NASDAQ: FB) paid $3 billion for Oculus in 2014, but the sector has yet to reach any kind of critical mass. The user base is still small, and many big companies are leery of investing.
In 2019, however, we could see some shifts in the VR landscape as new hardware and software are introduced. Here are the five companies I'll be watching to see where VR is headed.
It may be a small part of Facebook's business, but Oculus is a giant in the world of virtual reality. It's one of the two main high-end VR devices -- along with HTC Vive -- and Oculus is quickly expanding its VR platform. In 2018 it launched the Oculus Go, a low-end device that's great for 360 videos and comes at an accessible price point of $200.
In 2019 Oculus expects to launch the Quest headset, which will be the first high-end stand-alone VR headset, at a price point of $400. The product could make VR much more accessible to consumers, and help increase the install base beyond the few million units in the market today.
Facebook is trying to become the platform of choice for VR consumers and developers. If the Oculus Quest goes well, 2019 could be the year it takes a big step in that direction.
It may sound surprising, but Sony (NYSE: SNE) is actually the leader in virtual reality headsets worldwide. In August the company passed 3 million PSVR headsets sold, far exceeding around 1 million for Oculus Rift and HTC Vive. Sony has the benefit of having sold over 73 million PS4 units, which power the PS4 headset, but users seem to like the device's value proposition over competitors.
The challenge for Sony will be staying ahead of devices like the HTC Vive Pro, which brings better graphics and performance for high-end users, and Oculus Quest, which will be great for the masses. PS4's computing power will ultimately be a limiting factor for PSVR unless the company decides to upgrade in 2019.
Rumor has it that Sony will upgrade PSVR when it releases PS5, which should be out in 2020 or 2021. That's a long time to wait for another headset upgrade, but for the leading VR headset on the market today it's the best that enthusiasts are going to get.
Video games' power trio
Conspicuously absent from the VR industry thus far have been Activision Blizzard (NASDAQ: ATVI), Electronic Arts (NASDAQ: EA), and Take-Two Interactive (NASDAQ: TTWO). They look at the relatively small install base of VR headsets compared to PC, console, and mobile, which combined have billions of potential customers, and just don't see an opportunity worth investing in... yet.
I think 2019 could be the year at least one of these companies dips its toes into the VR waters. Quest's introduction should help expand the market and improve the accessibility of the technology. If the install base of that device reaches a million or more in the first few months, it could make the industry more enticing for large developers.
They also don't want to risk losing the industry to upstart competitors. Population: One, a Fortnite-like VR game, is expected to be introduced by BigBox VR in spring 2019, and games like Beat Saber are growing in popularity. These could be the equivalent of Candy Crush or Clash of Clans, which took over mobile, building a brand and user base lead that big game makers can only acquire, not build organically themselves. Someone needs to be an early mover, but who will it be?
VR will have a big year, one way or another
Given all of the developments coming to the VR industry, 2019 is going to be a big year. Either the billions of dollars of development money will start to pay off, or they won't. I tend to believe the technology is good enough and content is coming out fast enough for adoption to grow, and Facebook, Sony, and video game companies could be big winners. But the industry has had high hopes before, only to be dashed by weak adoption rates -- and ultimately the user base size will decide if 2019 is a good year for VR.
10 stocks we like better than Electronic ArtsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Electronic Arts wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of November 14, 2018
Travis Hoium has no position in any of the stocks mentioned and owns a virtual reality start-up. The Motley Fool owns shares of and recommends Activision Blizzard, Facebook, and Take-Two Interactive. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.