May 13, 2021
Good morning, and welcome to Protocol Next Up. This week: why almost every VR hardware maker is betting on the enterprise market, and how NBCUniversal wants to use AR to make TV commercials more immersive.
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The Big Story
The big business of big business VR
This was a huge week for VR, with three different companies introducing a total of five different headsets. But you didn't hear all that much cheering from VR fans. That's because most of the announcements were geared toward the enterprise, which is emerging as the one market segment where companies may still have a chance to compete with Facebook.
HTC made the biggest splash this week, announcing two new headsets at its ViveCon event Tuesday. The Vive Pro 2 is positioned as a prosumer device for both business customers and PC VR enthusiasts looking for better visual fidelity, but the Vive Focus 3 is purely a business device, complete with access to a separate app store optimized for corporate use cases and a dedicated telepresence platform.
- "It is by far the most advanced business VR headset," said Moor Insights senior analyst Anshel Sag. Features like extremely high-resolution displays and a hot-swappable battery that adds both hours of extra power and better weight distribution will make it possible to wear the devices for long stretches of time, he argued.
But there were plenty of other new products for the enterprise VR market too:
- Chinese VR hardware startup Pico announced an enterprise headset called the Pico Neo 3 Pro. The all-in-one headset features a single display with a combined 3664x1920 resolution for both eyes — the same as Facebook's Oculus Quest 2, but significantly below the HTC Focus 3. Pricing is somewhere between those two devices, at $699 per headset or $899 with eye-tracking. Both headsets will be available to enterprise customers in the third quarter.
- HP began selling its Reverb G2 Omnicept PC VR headset in the U.S. this week. The device features a resolution of 2160x2160 per eye, and packs a whole bunch of sensors to capture things like muscle movement, gaze, pupil size and pulse. The device sells for $1,249, and HP is positioning it as a device for enterprise customers and developers as well.
Worth noting: All these companies also do consumer VR. Pico even introduced a consumer version of the Neo 3 in China last month. But when it comes to the U.S. market, there seems to be very little appetite to compete with Facebook and its Oculus Quest head-on.
- "It really boils down to where the money is now, rather than where the money will be," Sag said.
- Headset sales are picking up in the U.S., but Facebook is still spending billions to prime the market by selling the Quest near cost -- a strategy that's not sustainable for smaller companies like HTC or even HP. "There are very few companies in the world that have these financial resources," Sag said.
Facebook, meanwhile, isn't ignoring the enterprise either. While primarily focusing on consumers, the company has started to pitch its headsets to the enterprise: For $799, business customers get a Quest 2 with 256GB of storage (normally priced $399) plus one year of free access to the Oculus for Business platform.
- Facebook execs have also hinted at plans to release a Quest Pro to suit what Mark Zuckerberg recently described as a "wider range of use cases." But don't expect a Quest Pro release any time soon.
- Sag, however, said that Facebook may not be in the best position to work with big enterprise companies. The enterprise has very different demands than consumers, and Facebook's image doesn't always help either. "They do have lots of learning to do," he said.
For now, Sag's money is on HTC as a winner in enterprise VR. "HTC has the best chance to be competitive in this market," he said. "They do understand business better than anyone else."
"We've seen a decade of change in the past year." Sonos CEO Patrick Spence, during the company's latest earnings call, talking about movies shifting from theaters to streaming, which benefits the company's home theater speaker business.
"Wow. House prices are insane." Tirias Research principal analyst Kevin Krewell responding to the news that Roku paid $97.8 million in cash for the "This Old House" franchise.
A MESSAGE FROM LINODE
DevOps and the Alternative Cloud provides insight into the capabilities and priorities developers expect from cloud infrastructure providers. In a market where hyperscalers dominate, a small band of alternative cloud providers — which includes DigitalOcean, Hetzner, Linode, and OVHcloud — is having an outsized impact.
AR is coming to TV ads
Get ready for products you see in TV ads to appear in your living room: NBCUniversal unveiled a new ad product called @Homeshopping on Thursday that allows marketers to use augmented reality to add interactivity to their ads.
The new ad format uses QR codes to combine TV with AR: Consumers are encouraged to scan a code with their phone, which then directs them to a website that loads 3D models of advertised products into a camera view of their living room.
- These ads can either be used to sign up consumers for further information (think high-ticket items like cars) or directly sell products to them.
- NBCUniversal commerce and innovation VP Collette Winn told me that the ads will also allow consumers to customize products and, for instance, preview a car with different exterior colors. "You scan the code with your phone, and you have this incredibly immersive experience," she said.
- The @Homeshopping ad format is going to be made available across all of the media company's platforms, including linear TV networks, online video on TV via Peacock and other services including mobile. Except you obviously won't need a QR code if you already have your phone in your hand.
Actually, NBCUniversal is leaning into QR codes. It started using them on TV a couple of months ago to redirect consumers to an ecommerce website without AR elements. NBCUniversal advertising and partnerships CMO Josh Feldman told me that this move was initially met with skepticism: Weren't QR codes complicated and gimmicky?
- "QR codes now are very different," Feldman retorted. Not too long ago, consumers needed dedicated apps to scan codes. Now, that functionality is built into standard camera apps.
- The pandemic has also helped to popularize QR codes, with consumers accessing them for anything from outdoor dining to registering for COVID-19 tests and vaccines. "QR codes have become even more viable," Feldman said. "Everybody recognizes [them] immediately."
But NBCUniversal isn't alone in making ads more interactive using AR. Roku debuted an AR ad during March Madness, but required consumers to use Snapchat to access additional content. @Homeshopping instead uses WebXR for a native AR integration that works without any third-party apps.
NBCUniversal execs weren't able to tell me when we may see the first AR ads in the wild, but hinted that a launch may not be too far off.
- Apple changed Hulu's in-app subscription terms because of a tweet. Hulu had found a workaround of sorts to make life easier for customers, until someone tweeted about it.
- On Protocol: Google struck back at Roku with its YouTube TV workaround. The two companies are still fighting about codecs and other issues.
- Mark Zuckerberg has thoughts on the Quest Pro and the future of VR. In this interesting interview, he said he's still "really excited" about the medium.
- Disney shut down a bunch of linear TV channels in Asia, and is now redirecting consumers to streaming. A sign of things to come?
- Also on Protocol: Sonos was granted an injunction against Google in Germany. The decision could force Google to stop selling smart speakers and other hardware in the country.
- PlayStation VR 2 will have 4K displays, according to UploadVR.
- Samsung's TV Plus service just got a PBS Kids channel. Next up: channels for other PBS programs?
- YouTube is investing $100 million into short-form content. The YouTube Shorts fund is supposed to get creators excited about YouTube's TikTok competitor.
- TiVo is buying the assets of MobiTV, the company behind T-Mobile's failed TVision service, for $18.5 million.
My colleague Biz Carson sent me a slide from Bird's investor presentation in which the scooter startup compares itself to Netflix because … well, both companies are supposed to be what Bird calls "category creators." Which is a bit like comparing yourself to Oprah because you also enjoy giving people gifts. Anyway, we probably all want to be like Bird: a company that burned through $600 million over the past two years, but projects that its 2022 revenue will be twice as much as all the money the company hasn't made this year yet. And if all fails, Netflix can still make a documentary about it, Fyre Festival-style.
Thanks for reading — see you next week!