Virtual reality is taking over the video game industry

An annual event in San Francisco has often been where game developers come together to discuss design. Now it's one of the biggest showcases of the latest VR tech.

Sony's Project Morpheus VR headset is slated to shine again at this year's Game Developers Conference. The company is planning to hold a nearly four-hour press conference dedicated to the technology on Tuesday. Josh Miller/CNET

Just one year ago, the idea of virtual reality -- or simulated 3D worlds we view through special goggles strapped to our face -- seemed like an outlandish concept. Today, it's starting to come into its own.

At the annual Game Developers Conference in San Francisco this week, game makers, developers and some of the tech industry's largest companies will be in attendance to discuss their latest hardware and software designed to transport players to virtual environments.

What makes this year different? Hollywood has used the idea in its movies for decades. Even the technology industry has created prototypes to show from time to time. Now, we're finally expecting to see high-profile VR devices move closer to consumer products. GDC marks the one of the biggest meetups when we will likely get a glimpse of the devices that will eventually land in people's living rooms.

At last year's show, Sony unveiled its first virtual reality device for video games. Until then, virtual reality looked like a niche, a sideshow to the $77 billion dollar industry. With Sony's device, code-named Morpheus, virtual reality became a star of the show.

Shortly after, Facebook bought industry posterchild Oculus VR for $2.3 billion. That acquisition signaled to tech companies everywhere that VR wasn't going to lose its sheen after sucking up millions of dollars in investment, as it did in the early '90s before fading back into science fiction.

"Because Facebook is behind it, I think people will keep plugging away unit they get it right," said Michael Pachter, an analyst at Wedbush Securities.

A whirlwind of activity has followed. Mobile giant Samsung has introduced $250 VR goggles that cradle its Galaxy-brand of smartphones, and Google has parlayed a strange cardboard DIY headset project into VR partnerships with LG and toymaker Mattel. Even Microsoft has some skin in the game, albeit with a so-called augmented reality headset called the HoloLens, which was unveiled in January and can overlay 3D images onto everyday scenes.

The applications for VR, too, have expanded beyond games and into film, sports, education and health care. "It's naive to think this will be games only," Pachter said.

Oculus' latest Rift prototype, dubbed Crescent Bay, may be the final headset design before the Facebook-owned company brings its product to market. Nick Statt/CNET

Not only will GDC feature the usual players, namely Facebook's Oculus with its prototype Rift headset, but we'll also see the game industry's lesser known names entering the fray for the first time. Valve, known best for its Half-Life sci-fi games and Steam online store, is set to show off a headset of its own, called SteamVR. PC maker Razer will also have something to show, a device called the OSVR headset, designed to let any developer put together 3D programs and use them freely.

Scores of other, smaller startups are in the mix as well, offering different approaches to virtual-world making or piggybacking off others' tech to create new applications.

As with last year, however, all eyes will be on Sony. The company is planning to hold a press conference to discuss the the future of its Morpheus headsets.

"They're probably going to show us something that's final," Pachter said, but added that the device may still not be released until next year.

VR's arrival as a mainstream market is not full-steam ahead. There are still issues to overcome before consumers will buy into the notion of strapping monitors against our eyeballs -- and some skeptics, like IDC analyst Lewis Ward, feel that VR could go the way of 3D television if it can't address rising concerns.

For instance, there aren't very many games out there able to showcase the power of VR as worth our money. What we have instead are often impressive, yet short and sweet, demos and proof-of-concepts.

"Nobody buys a piece of gaming hardware because they think it looks cool," Ward said. "Until there's a great experience to go along with it, the hardware simply opens the door." For Ward, cost is secondary to what gets us pulling out our wallets in the first place. "That's the chicken or the egg problem."

There's also concerns about how VR will affect our brains and our bodies. While there has not been a considerable amount of scientific study on the neurological and physical effects of long-term use, current systems in development have notably caused feelings of nausea and dizziness.

The US Army refuses to use gadgets like the Oculus Rift for those reasons in its combat simulation training, opting instead for high-end systems to prevent sickness. Even Electronic Arts, one of the world's biggest game developers, isn't sold yet on the idea.

"When you look at the expansiveness of our games or the speed of our sports games, the likelihood of motion sickness goes up dramatically," Blake Jorgensen, EA's chief financial officer, said in January. Of course, he noted, members of the VR community want EA to get involved, but because it's still early the company is keeping its eyes on the space and biding its time before making any commitments.

But that won't stop consumers from eyeing the space with suspicion, at least until we can all try one out for ourselves. It's that intrigue rooted in science fiction, Ward says, that is driving the VR market forward, not just business deals and potential product announcements.

"The idea of virtual realities have been around for a long, long time," Ward said. "You can call it something fundamental to the human condition that we like the idea of exploring alternate realities."

Featured Video