Google and Nintendo’s VR patents should worry headset-makers (GOOGL, NTDOY)

Two recently revealed patents filed by Google and Nintendo show the intentions of the companies to move further into the virtual reality (VR) space.

Business Insider Intelligence

While patents don't always result in a finished product or indicate a potential time to market, they do provide useful hints as to what features companies are exploring. Here's what the two companies filed:

  • A patent from Google shows a wireless VR headset that could complement its upcoming Stadia cloud gaming service, according to MSPoweruser. The headset would feature two wireless handheld controllers and wirelessly connect to an external data source, likely to be Stadia. The headset patent comes as Google seemed to have been retreating from VR — the Pixel 3a smartphones that launched this year won't support its Daydream VR platform, and the company pulled the plug on its VR movie studio, called Spotlight Stories, in March 2019.
  • Nintendo's patent, reportedly filed in Japan in 2018, outlines a simple, strapless VR headset that works with the company's portable Switch gaming console, according to UploadVR. The headset would be a pair of goggles that clips onto the Switch, which serves as the headset's screen and technical hardware. This is a similar notion to the company's Labo VR kit which allows consumers to build various cardboard VR headsets that the Switch slots into for a range of VR experiences. For instance, one cardboard headset resembles an elephant trunk, enabling a user to pretend to be an elephant in a VR world.

Google and Nintendo are well-positioned to leverage gaming content and the success of gaming headsets in order to disrupt the VR market. Gaming is the most common activity for VR users — the majority (72%) of VR headset owners reported playing a VR game in the preceding three months, according to an IDC study cited by Variety in May 2019.

And gaming-oriented VR headsets have already proven successful with consumers. For instance, Sony's PlayStation VR (PS VR) gaming headset debuted over two years ago; 4.2 million PS VR headsets have been sold as of March 2019. However, over half (55%) of headset owners reported that VR content has stagnated, which is where companies like Google and Nintendo can step in to disrupt the market.

As a gaming company, Nintendo has the native advantage of being able to make its own VR content based on its iconic titles, such as "Super Mario" or "The Legend of Zelda." And Google can rely on its experience courting developers to secure exclusive VR games to its Stadia cloud gaming service.

If Google and Nintendo are preparing to make a stronger play in the VR space, traditional headset-makers will need to work toward building strong content partnerships with cloud gaming companies. Headset-makers should look to strike deals with companies working on cloud gaming that don't have their own VR hardware — Electronic Arts, for instance — to shore up their headsets with additional content.

An exclusive deal with a cloud gaming company would enable current device-makers to secure a consistent flow of content and differentiate themselves in the growing VR headset market — Business Insider Intelligence expects annual global VR headset shipments will near 22 million in 2024, up from approximately 13.7 million in 2019.

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