Huge Profits are Coming in Virtual Reality

Facebook’s virtual reality headset, the Oculus Rift, is running late. The Rift was supposed to be out on March 28, but parts shortages are slowing down early shipments. There’s a lot of unhappiness, grumbling, and foul language out in the “geekosphere” right now.

Facebook has offered free shipping to unhappy customers. It has even offered refunds to really disgruntled customers. You don’t want to mess with alpha geeks in need of their new tech fix.

But fear not, the Rift will ship and the profits in the nascent virtual reality marketplace will be huge. The Oculus Rift, and other VR headsets, will be the biggest new consumer products of the year. Like many new technologies, it’s going to be the early adopters who use them first. That’s the earlier phase of growth for most fresh tech. Then it matures.

This idea is what’s known as “Roger’s Bell Curve.”

Roger's Bell Curve

Source: Wikipedia

When it comes to investing in new tech, it pays to be right about what innovation will succeed. However, it is also important to get the timing right. Had you invested in VR tech a decade ago, you’d have waited a long time for a big payoff.

Right now, virtual reality tech is at the tail end of the early adopter phase after a really long sojourn in the innovator phase. Before too long, it will go mainstream. This is generally where the really major profits start to roll in.

Facebook’s CEO Mark Zuckerberg saw that the time was ripe in 2014 when he acquired Oculus VR for a cool $2 billion. Now, after multiple development models, it’s about to release along with 30 game titles. By 2020, virtual reality could contribute up to $6.6 billion to Facebook’s revenues, analysts say.

Another thing to keep in mind is that new technology is disruptive. It can destroy or displace older technologies. Already there are rumbles about what effect VR might have on the smartphone space in the years to come. It could one day make the touchscreen, and perhaps even the smartphone itself, a thing of the past. The Apple’s of the world will have to take notice and innovate.

One use that caught my attention this week was Ikea’s “VR Kitchen Experience” launched on the Steam gaming platform. There’s some things you have to go to a brick-and-mortar store to buy, but with Ikea’s VR app, you can do it virtually. You can see what furniture and decorations will look like in your room, making online buying easier.

We’ll start seeing more and more applications like this during the next few months. In fact, it seems like every day there’s more VR uses in the news. From new tools surgeons can use, to engineering breakthroughs and next-generation entertainment, VR’s here to stay. Even more exciting, the fortunes VR tech creates will touch every industry, every household, and every life as this mega-trend of the next decade gains more and more steam.

To see my full investigation into how you can grab your piece of these early VR wealth waves, click here.

To a bright future,

Ray Blanco
For, The Daily Reckoning

The Daily Reckoning