23.01.19

As Silicon Valley investment plummets, what’s the future for VR?

man wearing virtual reality headset with hands outstretched

Enthusiasm for VR is waning in Silicon Valley with the Los Angeles Times reporting a crash in investment and suggesting a wider slump in take up of the emerging technology.

The technology hit its peak in 2016 when investors ploughed $253 million (approximately €223 million) into start-ups in LA and Orange counties, says the report.

Journalists at the Los Angeles Times surveyed seven AR and VR start-ups and discovered an 81% drop in investment last year compared to 2017.

In 2016 InAVate reported that Gartner had pinpointed AR and VR as technologies at the later end of its Hype Cycle, suggesting that both will reach mainstream adoption imminently. The surge in investment in 2016 could have been the tail end of the ‘Peak of Inflated Expectations’ before interest in both technologies waned. However, if the Hype Cycle can explain the changing fortunes of AR and VR, it appears they are travelling through it at a slower pace than expected but it’s likely the drop in investment is a sign of a maturing market.

The decrease in investment is also likely to be more linked to the technologies’ standing in consumer markets. Increasingly professional applications are turning to AR and VR help research and development, medical diagnosis and training for example. While Silicon Valley investors may have their eye on the large but shaky consumer markets, the professional ones are likely to keep growing quietly. 

Another consideration is that the rise of so called ‘holographic displays’ or light-fields could make VR dated before it’s had a change to make a big impact, causing investors to get cold feet.