×
You will be redirected back to your article in seconds

Winter Is Coming: Virtual Reality Investors See Consolidation Ahead in 2017

2017 will be a year of consolidation for virtual reality, and startups are wise to dig in and make their money last as long as possible: That was one of the key points of advice from some of the industry’s premier investors at the Virtual Reality Intelligence conference in San Francisco Wednesday.

A coming cash crunch for VR isn’t completely unexpected, said GV / Google Ventures General Partner Joe Kraus, who argued that it took three years for the iPhone to become a popular and profitable platform for developers. With VR, it could take even longer. “Going through this valley of despair is important, and is a necessary thing,” he said.

His remarks were echoed by Comcast Ventures Managing Director Michael Yang. “There is massive consolidation that is going to occur,” Yang argued. Startups that don’t want to be swept up in this wave of consolidation should spend their money wisely, and be prepared to survive until virtual reality has become a mass market.

This includes keeping company teams small. “If you are 20 people now, you are still going to be 20 people until 2020,” Yang said. And The Venture Reality Fund Co-founder & General Partner Tipatat Chennavasin warned against raising too much money at this point: “You end up hanging this noose around your neck.”

Investors on stage at the event agreed that early estimates on headset shipments may have been overhyped, but they were more concerned about the repeat usage they see among early adopters, including themselves. “I wouldn’t put my headset on every day,” if it wasn’t for the reason that he had to for his work, said Kraus.

Presence Capital Founding Partner Amitt Mahajan agreed: “There is not that daily use VR app yet.” And Signia Ventures Partner Sunny Dhillon admitted that his PlayStation VR headset is in danger of collecting dust. “I’m not using it as much as I hoped I would,” he said.

Despite all those cautionary tones, all of the investors on stage at the conference agreed that there is a lot of potential for VR. Chennavasin said that he has seen a handful of startups generate a million dollar or more with VR titles, and also cited VR arcades as a good way to generate real revenue in the near term.

Kraus summed up the sentiment among investors: “Faith remains that VR is a thing.”

More Digital

  • Amazon

    Amazon Music’s Free Tier Is More Advertising Play Than Spotify Killer, Analysts Say

    When news began to spread last week that Amazon Music’s long-anticipated free streaming tier was imminent, headlines emerged about its threat to Spotify and Apple Music, with some stories saying that Spotify’s stock price dropped in response to the news. But not only was today’s launch of the free tier basically a soft one — [...]

  • Gay Chorus Deep South

    Why Airbnb Produced Documentary 'Gay Chorus Deep South,' Its First-Ever Film (EXCLUSIVE)

    The latest player to hit the film-festival circuit may be a bit unexpected: Airbnb, the travel-accommodations booking marketplace, developed, financed and produced documentary film “Gay Chorus Deep South,” set to premiere at the 2019 Tribeca Film Festival on April 29. It’s the company’s very first feature film. Directed by David Charles Rodrigues, “Gay Chorus Deep [...]

  • Amazon

    Amazon Music Launches Free Streaming Tier, Through Alexa Only (for Now)

    Amazon Music today basically soft-launched its free streaming tier, in which U.S. customers of its Alexa voice assistant will have access to top Amazon Music playlists and thousands of stations, at no cost. The limited access that the new free service provides — it’s only available through Alexa, and when the listener requests a song, [...]

  • Ben Silbermann, Evan Sharp. Pinterest co-founder

    Pinterest Shares Up Close to 29% on IPO Day

    Shares of the social pinning service Pinterest closed at $24.45 — 28.6% above their IPO price — on the company’s first day at the New York Stock Exchange Thursday as investors were looking to get in on the latest tech listing. Pinterest’s shares opened at $23.75, 25% above the IPO pricing of $19 per share, [...]

  • Netflix Logo

    Netflix to Open Production Hub in New York City Encompassing 100,000 Square Feet

    Netflix plans to open a new production and office facility in Manhattan — which will provide up to $100 million in investments to New York City and result in hundreds of new jobs, according to New York State Gov. Andrew M. Cuomo. Netflix’s new corporate offices in the Big Apple will take up 100,000 square [...]

  • MoviePass card

    MoviePass Has Lost Over 90% of Its Subscribers in Less Than a Year (Report)

    MoviePass users apparently hit the exits en masse after it scaled back the number of movies users could see each month: The flailing cinema-subscription provider has seen its subscriber rolls plunge from a peak of more than 3 million to just 225,000 in under a year, according to a new report. The numbers were reported [...]

  • The Nashville, Tenn. downtown area and

    Nashville City Council Sides With Songwriters Against Streamers’ CRB Appeal

    Nashville city leaders have sided against the streaming services Amazon, Spotify, Google and SiriusXM/Pandora in the appeal of the Copyright Royalty Board’s decision that would give songwriters a pay raise. The Nashville Metro Council adopted the resolution as part of its consent agenda earlier this week, although the move is “purely symbolic” and the streamers [...]

More From Our Brands

Access exclusive content