HTC on why 2016 is a 'critical' year for virtual reality

As it starts to show off its Vive virtual reality system, HTC believes making a good first impression is key.

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CNET's Roger Cheng adorned with the Vive headset and wireless controllers. Nigel Manuel/CNET

NEW YORK -- When HTC parked a truck at San Diego Comic-Con to show off its new virtual reality system, it quickly drew long lines that took curious folks the better part of an afternoon to get through.

When Jeff Gattis, head of marketing for HTC's emerging devices business, asked a user about the experience, the response was simple: "It was worth it."

That's been a common reaction for anyone who has tried the Vive , the virtual reality setup built by partners HTC and Valve, according to Gattis, who shared the anecdote in an interview on Thursday.

HTC will be counting on that wow factor as it pushes an entirely new product from its core business of making smartphones. It isn't alone. While HTC and Valve, best known for its Steam online gaming platform, have promised to launch the Vive later this year, Facebook's Oculus and Sony are expected to launch their own virtual reality headsets in 2016. Next year is shaping up to be when the public will get its first real look at this technology.

"The industry needs a successful first year," Gattis said. "Next year is critical."

Gattis isn't necessarily talking about sales, although he said an industry target of 2 to 3 million units would be a good start. More importantly, virtual reality needs to make a strong first impression with the early target market of video game enthusiasts and early adopters.

The Vive has impressed users in early trials. CNET Editor Scott Stein tried out the headset and called it While other virtual reality setups let you move your head to view things around you, the Vive allows you to freely walk around within a (limited) space, further adding to the illusion that you're somewhere else.

Early challenges

At least early on, the high-end virtual reality experiences such as the Vive and Oculus Rift will be a pricey proposition. Not only will you have to buy the headset, but a high-end PC powerful enough to handle the visuals as well. Gattis declined to comment on the price of the headset, but said the company would share more details, along with the final product and minimum PC requirements, in October.

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Jeff Gattis, head of marketing for HTC's emerging devices group, talks virtual reality. Nigel Manuel/CNET

There are other practical considerations. The Vive's setup requires two sensors that are mounted on opposite sides of the room in order to detect the headset's position. It also requires a lot of space for you to freely move about without hitting any obstructions.

While hardcore gamers are used to buying a large, high-end PC, will consumers will foot the bill for one?

Over time, companies could come out with more compact machines that will be able to power virtual reality systems, Gattis said. HTC, known for the aesthetic appeal of its smartphones, is always conscious of the setup's looks, he added.

A really expensive video game console

All of the companies, from Oculus to Valve to Sony (whose Project Morpheus headset connects to a PlayStation 4), boast roots in gaming. At least early on, much of the content will be with virtual reality games. As such, Avi Greengart, an analyst at Current Analysis, takes a more simplified view of the virtual reality systems.

"Next year will be the debut of extremely expensive new game consoles," he said.

Viewed through that lens, he said, the most important aspect for these companies is not just getting the hardware right, but ensuring there's enough content -- games, in this case -- to justify the investment.

Greengart has played around with some interesting demos, but he said he has yet to play a game that convinces him of the long-term appeal of the system. For a normal console launch, there are typically a dozen or so titles available, he said. For virtual reality? There isn't really an official list yet. And it's unclear if the VR versions of games that have been shown off offer something drastically different from the typical console game experience.

There's also the chicken-and-egg problem of user base vs. return on investment. Studios may not want to pour too much money into a virtual reality game or video without a large user base. But users aren't likely to invest in virtual reality without a lot of content.

Still, Greengart acknowledges that it's early, and praised the various companies for taking their time, rather than rushing out a product with an inferior experience. And while there are no full games out yet, he too was left awed by the demonstrations.

"Virtual reality has the biggest wow factor of anything I've seen since the first iPhone," he said. "That doesn't mean it's going to be a commercial success."

Entertainment key to mainstream success

HTC has been keen to get media companies such as HBO and Lion's Gate involved with Vive. The company is aware that it needs to broaden the portfolio of entertainment options if virtual reality is going to go mainstream.

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A closer look at the Vive controllers. The large sensor dish on top of each controller likely won't appear in the final version. Nigel Manuel/CNET

"It has to go beyond gaming," Gattis said. "Entertainment will be key."

HTC uses a mantra, "Take me some place I couldn't normally go," as a guiding principle for what it wants to do when it comes to entertainment. That could mean virtual reality cameras capturing sporting events or concerts, and letting users with the headset experience them as if they were there.

Samsung's Gear VR, which pairs a headset jointly developed with Oculus and a Samsung smartphone like the Galaxy S6, already offers some virtual experiences, including a performance by Cirque de Soleil and a flyby over New York. It already subsidizes a regular flow of videos to Gear VR users.

It won't be just up to Samsung. The industry will have promote the idea of creating virtual reality videos as a legitimate medium for consumers.

"That's when it becomes less niche and goes mainstream," Gattis said.

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