Monetization of virtual reality platforms is still years away, according to Julian Price, chief marketing officer at VR sociable network app vTime.
Speaking April 3 at MIPTV, Price insisted the industry would eventually hit mass market levels but cautioned that this may not happen until 2019 or 2020.
"The biggest challenge our company and the vast majority of companies I know in VR are facing is survival until any of us can actually make some money out of this," he told delegates during a panel discussion in Cannes, France.
To keep afloat until then, companies in VR will need a combination of external investment and commercial work, he said, adding that some companies would need to take on commercial work they would not normally take on to keep the lights on.
"One of the leading VCs in VR said, if you are 30 people today, you are going to be with 30 people in 2019," Price said, adding that companies with established models stand a far better chance at staying the course.
But ultimately, he is convinced that those companies that will survive the looming point of reckoning will be the "lean and agile" businesses with low burn rates.
When Facebook Inc. acquired Oculus in 2014 for $2 billion, the VR industry appeared set for lofty heights and several tech giants including Sony Corp. and Alphabet Inc. quickly followed suit. Three years later, however, the market is rife with fragmentation, with headset sales falling short of earlier projections.
SuperData Research's latest report with games engine Unity3D regarding the industry's $1.8 billion in revenue during 2016 is a far cry from the $5.1 billion in earnings the data company had projected earlier.
Despite this, VR and augmented reality-related investment and M&A deals hit new highs in 2016, with unperturbed investors contributing to a 140% year-on-year surge in the number of deals, according to data from CB Insights.
With much at stake for VR in the year ahead, Price said it is crucial not to paint a "glum picture" of the industry and insisted the future payoff will be "huge."