Wall Street analysts say virtual reality can't go mainstream until these issues are fixed

Palmer luckey demos oculusMatt Weinberger Business InsiderOculus founder Palmer Luckey demonstrates the final version

Virtual reality is closer than ever to going mainstream — but the industry still has some major hurdles in its way.

On Thursday, analysts at Oppenheimer published a report on the state of virtual reality, in which they outlined the most significant obstacles companies will face in the next couple of years.

The analysts said that although the VR experience has improved over the decades, it’s not where most people want it to be.

Here’s their overall outlook for the industry:

“We expect gaming VR headset shipments to reach 5.6M units and $US1.4B in sales by 2018. Our conservative outlook reflects our concerns over early generation products, which may disappoint consumers in the gaming experience and title support.”

As companies like Google and Facebook lead the push into virtual, they will face both “the easy problems” and “the hard problems,” according to Oppenheimer.

Just on Wednesday, Facebook’s CTO Mike Schroepfer acknowledged that “everyone is going to have to be a little patient” as they navigate the “long roadmap” ahead.

‘The easy problems’

Among the easy problems to address are the need for better graphics and display resolution. While head-mounted displays currently use the same resolution as retina smartphone displays, these devices require even higher resolutions because they are much closer to the eye.

However, Oppenheimer sees this as an issue that companies will soon resolve.

“Competition for higher resolution among smartphone panels markers will push resolution higher, with or without the demand from VR industry,” the report said.

“We expect commercial volume 8K smartphone LCD display to be available by around 2020,” they said.

Another “easy issue” to fix is the lack of apps, games, and content available for VR devices.

“To reach mass adoption, VR needs to prove that it is more than an expensive gaming accessory,” Oppenheimer said. “Right now, we believe the ‘killer app’ has not emerged to compensate for the cumbersome and expensive headsets.”

But companies like Sony, HTC, and Facebook are already starting to invest in virtual reality content and apps.

‘The hard problems’

Oppenheimer believes that the more difficult problems early entrants will have to address are those that relate to the user’s experience: human interface, ergonomics, and the social experience.

Project Morpheus, Sony's VR headsetBen Gilbert/Business InsiderSony’s Project Morpheus.

The human interface component hasn’t been developed as much as it should have. Its weaknesses make the experience for the user more “virtual” and less “reality” and could therefore deter potential buyers.

“The near-term solution is using traditional gaming controllers for console games, which can seriously reduce immersion and presence, as users are constantly reminded by the controller that they are playing a game,” the report said. “While HMD and 3D sounds can create immersive VR experience, the lack of compelling touch and motion control feedback will break the sense of presence when users try to interact physically with the virtual world.”

In terms of ergonomics, they say the major virtual reality systems set to be released next year will require the user to do the following:

  • Wear a device that completely blocks their view of what’s around them
  • Be tethered to an external device, such as a computer or gaming console
  • Stay within a certain space for position monitoring

“We are unsure if gamers and general consumers alike are willing to spend long periods of time alone, in a confined space, with a headset, and completely shut off from surrounding environment,” they wrote of the limiting characteristics.

This brings us to the social issue: virtual reality has so far only been a single person experience.

“The better the VR experience, the more isolated users are from the outside world, such is the dilemma most VR developers and headset makers,” Oppenheimer wrote. “We believe that VR, comparing to [augmented reality], is lacking a critical social aspect to the overall experience.”

And of course, there’s the ever-present issue of motion sickness.

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