Paying for the Future — Pro-consumer Business Models
By: Elijah Claude
Tags: VR, Future, Consumer, AR, Business Strategy

Paying for the Future — Pro-consumer Business Models

In this article, we are finally getting into the money stuff with XR!

You can find my prior two, more exciting articles below. 😉

TLDR;

Main barriers to XR mass adoption:

High price

Additional costs (buy a computer, buy expensive games)

Too technical (too much industry jargon to understand)

Questionable value (is it worth this price? Will I use it regularly?)

Upgrade cycle (is this the best one to buy? Should I wait for the next?)

Potential solution(s):

Make a subscription model

Pay in installments (like Affirm)

Automatically upgrade (like cellphone plans)

Open source the technology (like Redhat model)

Interoperability/Crossplatform access

Modularity (like Legos)

Build usecases that improve people’s quality of life directly

The Problem — VR/AR is Expensive

Cost is a major barrier to entry. Most people don’t like to make big purchases for things they are not 100% sure of the (perceived) value to their lives. Wether that value be social status, entertainment, utility, or something else… People have to believe the item (or experience) will provide some value to them.

But the problem of new technology is that it is very difficult to determine what that value might be. Unless you are technically savvy and have already been on the ‘early adopter’ wave, it’s unlikely that you will know why this or that new device is ‘worth’ the inevitably high price.

On top of that, people always worry if they bought the right device. We see this with smartphones that are all very much similar. But the problem is exacerbated when you risk buying a device that literally becomes irrelevant when a new version gets suddenly announced a month after your purchase.

Can’t even find a picture of this year’s best devices because the landscape changes so fast.

High tech devices have always had an assumption of high cost. This has created a technological divide where many people don’t have access to cutting edge (or even modern-day) technology.

If we want to create a better future and decrease the digital divide, we cant keep depending on the ‘trickle down effect’ to divvy out technology. Sure that works … eventually… somewhat… but it’s not done with purpose. And it creates privilege through inequity rather than equal opportunity.

Today, it often seems like we are designing devices for rich, abled-bodied, young people (or corporations) and their problems, then leaving it up to ‘the market’ to figure it out for everyone else…

If we really want to build accessible, inclusive tech, we have to design for people that may not have hundreds of dollars to spare on a leisure item; and for people who might not be able to hold two controllers with a bunch of buttons; and for people who don’t have or know how to use a computer.

We have to solve more important problems than just a more immersive medium for escapism.

We need to increase quality of life.

High-stakes training, medical, and education solutions are a good example of the utility XR technology can have. But we can be doing so much more for the consumer market!

And just like with those enterprise solutions, consumers should have multiple price points and ways to afford using these devices.

Why we need more diverse pay structures

Oculus has a relatively affordable $300 price point because Facebook can eat the costs (and monopolize the industry while they suck up a crap tonne of data). However, I believe other organizations can have an affordable price by allowing customers to pay monthly, just like you would a cell phone plan!

Having a metaverse/OASIS type of experience will help justify the subscription model. (The next article will focus on that exclusively, but keep this in mind.)

A subscription model is more approachable. Especially for expensive technology that gives people access to features previously only available on the most premium of devices costing thousands of dollars. People would be more willing to take risks; to try something new, if they only had to spend a few tens of dollars rather than hundreds.

Furthermore, you can simply trade the device in for a new one without hassle. No need to fear if you purchased too late or too early!

What if using VR/AR was as easy as Dollar Shave Club??

Sure, there is a worry of subscription fatigue, but I’m willing to bet that’s more for software services where people are dubious about the content they are receiving in the first place.

Being able to subscribe to a service where you get to use the most cutting-edge technology on a monthly basis may be much more of a value-add than some streaming service that may or may not have content you like.

At least with the physical device, you get to try an experience that you never thought you’d have access to. This way, more consumers can actually experience everything from the latest haptic gloves to human-eye resolution headsets, to omnidirectional treadmills and more.

Of course, this comes with its own business risks: theft, damage of rented devices, liquidity, profit margins, and so on. But these risks create opportunities in and of itself! What if there were businesses that mediated the renting, shipping, and retrieval of XR devices to the masses? This service would be like Flexdrive/drivesy or CuriosityBox or TrunkClub but for cutting edge technology.

If at least some of this technology was open source, you could have a RedHat type of company that gave out designs such as Project North Star for free, but charges to provide custom support or installations. People could perhaps just buy specific pieces such as lenses or chips from the manufacturer, and build or buy off-the-shelf components for the rest of the hardware.

You can even have sponsor-based devices, where certain esports leagues, content creators, or other innovative businesses purchase the high-end devices on behalf of their clients.

Down with the walled gardens

Alternatively (or additionally), XR devices should not be constrained to some ‘walled garden’ approach. If we really want to make this the next computing device, we have to treat it as such,.. rather than just another gadget for gaming. Don’t get me wrong, I love VR gaming, but we need to be thinking bigger!

XR devices will need to not just provide access to the internet, but also change how we use the internet, just like smartphones did. And just like the mobile app market created an entirely new ecosystem of computing on top of internet, the same needs to happen with XR.

We need to think about what the new ‘app’ experience should be for XR. Many companies are already working on something like this (Viveport, Oculus Store, even Magic Leap), but they are very much biased towards gaming or entertainment.

We need more apps like Spatial, SculptVR, BigScreenVR, Google Earth, and so much more. We need to use this as an opportunity to empower social, work, learning, fitness, and every aspect of our lives.

But here’s the kicker… These should not strictly be for VR/AR. They need to be cross platform with non VR devices like mobile and desktop. It’s the same reason why VRChat and Rec Room exploded in growth… because typically the easier it is to access a technology, the faster it grows.

Let me say that again for the tweets:

The easier it is to access a technology, the faster it grows. Virtual and Augmented reality experiences need to be cross-platform with mobile and desktop devices.

Again, XR devices are just too niche to be mainstream. They will remain so as long as the technology is too difficult to understand or setup. Therefore, the best way to grow adoption and investment is by making almost every XR experience, also be accessible through regular devices.

What this really means is that we need to be thinking about spatial and 3D interfaces, not just fully immersive ones. (A-Frame is a great resource for building cross-platform WebVR experiences)

Yes, this may be more difficult in some aspects, but it’s also much easier in the long run to grow past the infant stage of the metaverse.

Imagine if smartphones only ever had apps that were exclusively for mobile devices. I don’t mean having the occasional Instagram or Snapchat app out there… I mean what if every single app (or the vast majority) could only be experienced on a mobile device? The industry may have never grown so far so fast!

We probably would still be trying to prove that mobile apps were worthy of investment without cross-platform apps.

Most developers won’t waste time and money developing for a platform most people don’t use… Consumers won’t be able to see any value in buying a device with no content… And investors would not risk putting money behind new companies in an industry that’s not growing.

The entire ecosystem of any new technology depends on adoption rates.. on growth. No technology can grow if it is too niche for most people to care much about it.

Interoperability and Modularity

Another factor that may supercharge XR adoption is the ability to pair AR and VR hardware with current ones. We can make cheaper, lighter devices if we run them off of the ones already in our pockets or on our desks.

We can make more interesting technology if we ensure they are modular. Prefer refresh rate over stupid-high resolution? Go ahead! Want more battery and don’t care about raycasting? Sure! A new facial interface came out that allows face tracking? Get it!

The Valve Index is the only headset to allow for easy modding. Imagine if this was more standardized!

We can establish more innovation, customization, and adoption by making it easier to mod these devices. We need to consider creating services where people can mix and match what they want like they are building their dream car or shoes.

We need to make devices for specific, practical use cases.

We see this happening in the enterprise market for high-stakes training (oil rigs, military operations, nuclear factories, medical surgery, etc). Each of these require specific hardware needs such as high resolution vs high refresh rate vs haptics and so on.

What problems are we solving with XR devices? For smartphones, it was the ability to compute, communicate, and do just about anything else away from a desk.

What problems does extended reality solve?

I think there are many potential problems, but it will all come down to contextualization. I think XR creates the ability to compute, communicate, and do just about anything in a completely customized, contextual environment.

Meaning that instead of just responding to the world as it is, we can make worlds that respond to us. Instead of guessing at what’s going on in our world, we can get timely and accurate data about the world right when and where we need it.

I will finally go over the finer details of this idea next week! The next generation of virtual and augmented reality will really begin to come into its own once we start to develop more of these impactful experiences.

Let’s make dat money!

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As always, thanks for reading!

Please feel free to clap if this made sense, comment if you have some more ideas, and follow me for more content! :D

What do you think about these business models for XR?