VR gets reality check with significant decline in investment
[Phil Lelyveld comment: This reporter does a good job of describing the current business climate for VR from the near-term returns investor perspective. What she misses is that the Hype Cycle is called a HYPE cycle for a reason. R&D, especially for emerging fields, doesn't follow a predictable path to product success just because it is being hyped.]
A few years ago, virtual reality was all the rage in Hollywood, helping to fuel the rise of Silicon Beach with the promise of reinventing the entertainment business.
At its peak, investors pumped $253 million into two dozen deals involving virtual and augmented reality start-ups in L.A. and Orange counties in 2016, hoping that pricey headsets projecting virtual worlds would become as popular as smartphones. But investment in the technology has slowed dramatically in recent years, and what seemed like a promising boom has largely fizzled.
Investment in seven augmented and virtual reality start-ups in L.A. and Orange counties plummeted 81% last year to $24.7 million compared to 2017. That’s just 10% of what venture capitalists poured into the local sector in 2016, according to the PwC/CB Insights MoneyTree Report, which tracks investment in virtual and augmented reality. Nationally, funding for augmented and virtual start-ups fell 46% to $809.9 million last year compared to 2017, according to the report.