Oculus Rift virtual reality headset launch set for 2016

Facebook's Oculus will launch the long-awaited consumer version of its Rift virtual reality headset early next year, missing the 2015 holiday sales season but allowing more time for developers to come up with the "killer app" that the device has so far lacked.

The release could mark the development of a new technology sector that analysts believe could be worth tens of billions of dollars in the next five years.

No pricing details were disclosed but Oculus said customers could start placing orders later this year before the device began shipping in the first quarter of 2016.

Oculus was the first company to rekindle the virtual reality market after the technology flopped in the 1990s. It initially raised $2.4m on Kickstarter, the crowdfunding site, and was acquired last year by Facebook for $2bn.

It has attracted competition including Valve, the PC gaming company that is working with mobile phone maker HTC to release the Vive headset later this year, beating Oculus to market by several months.

The market also includes Sony's Project Morpheus which is slated to launch next year, and Google with its low-cost "Cardboard" set-up that uses a smartphone as the viewing screen.

In the meantime, Oculus has worked with Samsung to expand its Gear VR headset which, like Google Cardboard, uses a smartphone for viewing, into a fully fledged consumer proposition by later this year.

"I think Facebook/Oculus has surrendered some of the initiative to HTC and Valve," said Piers Harding-Rolls, games analyst at consultancy IHS. "But as this is a long-term play with an adoption curve to match, I don't believe this is terminal."

Mr Harding-Rolls added that both Oculus and Valve needed better content to persuade regular consumers, rather than just early adopters and developers, to pay several hundred dollars for their devices.

"It is clear that there is one component of the offer that consumers have not seen enough off and that is games," he said. "Content will inevitably have a huge influence on purchase decision making and which headset consumers will buy."

VR technology must also overcome issues such as the nausea that many early headsets have caused in users, as well creating new kinds of controllers and input devices.

Nonetheless, with some of the world's biggest tech companies backing VR technology, the birth of a significant new industry could be on the horizon.

In a research note on the virtual reality market which was published earlier this week, analysts at UBS said VR "may emerge as the next major computing platform", with consumer spending of as much as $10bn on hardware and software predicted by 2020.

However, UBS forecast a slow start, estimating only 2m devices would be sold next year and 5m in 2017, before reaching 34m in 2020. It estimated that Oculus could add $800m in revenues to Facebook by 2018.

Others are more bullish. Tim Merel, managing director of Digi-Capital, last month predicted that VR spending could reach $30bn by 2020, although he believed the bigger opportunity was in "augmented reality" headsets such as Microsoft's Hololens and Google-backed Magic Leap, which could generate revenues of $120bn by the end of the decade.

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