The challenges and opportunities facing virtual reality

The mere mention of virtual reality (VR) immediately conjures up images of headset-wearing gamers, but this somewhat cliched view is changing at lightning speed.

Today, the nascent technology is associated with a wide range of industries and although it’s already showing promise across specific sectors, it seems we are only just scratching the surface.

What is VR, where does its potential lie and does it have a killer app? We took a deep dive into the technology to answer this question, find out how mature the UK VR industry is and to decipher the opportunities and challenges for homegrown startups, scaleups and established tech businesses.

Defining VR

Jamie Denham, managing director at London-based animation studio Sliced Bread, has worked in the field of digital animation and application development for the past two decades and was quick to point out he defines VR as “a constructed space”.

“I see it as a virtual construct. You are building something that may or may not exist,” he explained.

Shen Ye, VR product manager and Europe e-commerce lead at HTC, agreed, going as far as saying the technology was a “breakthrough in being able to immerse people”.

“VR is a technology that can immerse users like no technology could do so before,” he said.

VR is not new. The technology has been around for decades, with one of the earliest forms invented in 1957 and patented five years later in 1962. However, there’s no denying that VR today is far better than what was available to consumers a couple of decades ago.

Bulky headsets are increasingly becoming a thing of the past. Latency has also vastly improved and so have the spaces being built – going from isolated random shapes or polygons flying around in a space, to sophisticated virtual environments.

Dave Haynes, an investor at early-stage fund Seedcamp, can attest to this. His first encounter with the technology took place at a computer trade show in London in the early 1990s, a period synonymous with the first widespread commercial releases for consumers – think Sega’s VR headset for arcade games (released in 1991) and the Mega Drive console.

Haynes, who endured a long queue to trial the technology and was left somewhat disappointed, said: “Back then, VR felt like a novelty, but now it feels like it has actually arrived.”

The applications

Aside from gaming, VR is showing promise across a variety of industries but much of its potential has not yet been realised.

The automobile industry – whose global sales are forecast to hit 77.7 million vehicles this year – and the property sector are just two of the latest advocates of VR technology. Car manufacturers such as Audi are using VR to help consumers fully experience vehicles before they decide to make a purchase. Real estate brokers are also using virtual reality to help prospective buyers tour properties.

Alongside this, virtual reality is gaining momentum across creative industries, with thespians also recently catching the VR bug. Film and theatre writer Jane Gauntlett, for example, has been innovatively using virtual reality to foster greater audience engagement. It’s also, she said, a great way to allow people to fully understand what it’s like to live with her condition.

It all started 10 years ago when she suffered a traumatic brain injury, which left her with epileptic seizures, short-term memory issues and communication problems.

“I lost the ability to communicate and decided to start using technology as a way to help me share experiences and help people understand what I had been through,” she added.

Beyond that, Gauntlett’s use of VR has also helped her regain control of her condition after she shared ‘Dancing with Myself’, a virtual re-telling of one of her epileptic seizures, with her physician.

“It changed my relationship. My treatment became a collaborative process,” Gauntlett said.

VR in marketing

VR is also making waves in the marketing industry, a sector inherently focused on improving brand loyalty and interaction through successful consumer engagement.

“It’s a buzzword, it’s a looming beast,” said Luke Courtenay Smith, client director at Immersive VR, adding that many of his contemporaries are becoming increasingly open to the fact that they need to be using the technology in some shape or form.

But this excitement around VR and willingness to use it amply is also perhaps dangerous for its long-term survival and potential.

“You want to move people away as quick as possible from using VR as a gimmick,” said Courtenay Smith, highlighting the need for the technology to be used in such a way that it adds value for end customers and brands alike.

It’s important, he said, for businesses to avoid using VR for the sake of doing so in the same way many production companies used 3D unnecessarily back in the day.

If it is to survive within the marketing industry, VR should not be an afterthought. Instead, it should be leveraged to improve customer experiences and help consumers interact with content in an engaging way.

“Brands, performers and companies are making stuff that has value and the medium just accentuates that value,” said the client director.


Great strides have been made over the past 60 years, and VR has undoubtedly made the jump from game arcades into the real world, but will it ever reach mainstream adoption?

“The challenge with VR is getting enough people through the experience,” Denham said.

The true nature of the technology means users are “transported” into virtual reality and often do so in isolation. People typically trial VR on their own and walk away from the experience without brands or companies knowing whether they have successfully wielded a relationship with the consumer.

As with many other nascent technologies, the key to VR’s success is making it available to as many people as possible so that these can then spread the message and, in turn, engage more users. Consumer’s reluctance to do so, however, is often perceived as a barrier as brands consider the budget spent on producing a VR experience and the potential ROI.

This view is considered short-sighted by Denham: “It’s not just about ROI, it’s about getting out there to the masses.”

“VR certainly has that lift, which is good to know. People not only think it’s cool, they also think about how they can use it,” Denham added.

The challenges

With research suggesting the global VR and augmented reality (AR) market will be worth $30bn and $90.8bn in 2020 respectively, it’s not surprising companies seeking to use the technologies are springing up left, right and centre. But, what can they do to set themselves apart?

“It’s actually very challenging if you are a startup and you are developing a new product,” Haynes, who is looking for investment opportunities in the space, claimed.

The issue lies in that companies are heavily reliant on user feedback, which inevitably informs their product decisions. When it comes to immersive technologies such as VR, Haynes argued user feedback is not always entirely objective.

“Is the ‘wow factor’ because it’s the user’s’ first time with VR or is it because the VR is actually good?” Haynes said.

As an early stage business, getting the wrong feedback can invariably result in failure, and Haynes believes this critical step in the process is posing a severe threat to early-stage businesses. The danger, he added, is that they’ll end up building something which doesn’t last.

Haynes is also keen to avoid the hype. “It’s important to support a company not because it’s a VR company, and it’s essentially operating within a space that’s become trendy, but because it’s actually seeking to solve a real problem,” he said.

For now, Haynes believes VR companies in the B2B space are much more attractive to investors than those delivering consumer-focused propositions.

“That’s where the initial value will come from until mainstream consumer adoption is realised,” he added.

With VR/AR investment reaching a record $2.3bn last year and Gartner’s Hyper Cycle listing the technologies as trends set to be of “the highest priority” for businesses in 2016, investor appetite is certainly there but it’s up to technology firms to build long-lasting propositions if they are to succeed long-term.

This article first appeared on edition 14 of Tech City News’ popular print magazine – The Virtual Reality Issue. Buy your copy here.