Education Watch: Is VR Headed for a Pricing Failure?

The evening weather was hot and unforgiving, the humidity beyond palpable. Not a great time to be wearing a suit in Puerto Vallarta, I thought, nevertheless enjoying the enchanting gourmet meal set out with certain elegance before me. I found myself here at the well-appointed Hacienda San Angel hotel, on a hilltop above the beautiful Guadalupe Church, not very far from the connected casitas that hosted Richard Burton and Liz Taylor in 1964.

The occasion for my visit was a destination wedding, a joyous gathering for the daughter of long-time friends and frequent co-travellers. Next to me sat a world-renowned New York City surgeon, “the” specialist in his field. He had invented and perfected successful medical procedures that were adopted all across the world. Yet, he was such a kind and unassuming man. He softly nodded and asked me: “What is it that you do?” I responded: “I work in the field of education, with a particular emphasis on 3D visualization and virtual reality.” A pleasant conversation ensued, but also a whirlwind of discovery.

The conversation led to the use of 3D surgery in his field. He saw 3D surgery as a laudable development, but one that remained impractical. “Why?” I asked. He explained carefully and methodically that current medical surgical procedures were quite effective. He added that 3D surgery did, in fact, offer a number of incremental advantages and improvements. But the price offered to hospitals made the decision an easy one: it wasn’t worth the money to gain some benefits on the margin. The price for 3D surgical equipment was just too high. It just made no sense to switch to this nascent and ‘smart’ technology. So everyone in his field, for the most part, he explained, has stayed with traditional surgical methods. In fact, his manner changed slightly, as a bit of near-anger oozed out, oddly contrasting with his normally calm demeanor. “They can’t expect us to pay those prices,” he charged.

That, dear readers, is what we call a “pricing failure.” The opposite of “pricing success”, a “pricing failure” bursts on the scene when there isn’t a clear correlation between an item’s cost and its value/quality. Which reminds me of another pricing failure, one I witnessed in the educational marketplace. Yes, I remember it distinctly, during the years of the initial stereo 3D explosion in film, displays, and projectors. A top-level manager from the DLP group at Texas Instruments whispered to me the hard truth, how the pricing set forth by just one or two educational 3D software producers was so rapacious, that those companies almost brought down the entire 3D industry/market in education–by steeply overpricing their content. I was there. I saw the gut-wrenching reaction of educational buyers. The pricing was, well, ridiculous. And to some extent, this is still true about 3D technologies in education.

Now fast-forward to the current virtual reality movement, so attractive these days in educational circles. Will we see the same pricing failures, as greedy companies race to the highest price point for educational customers? In general, I see the same problem raising its ugly head. And, frankly, schools simply cannot afford it. On the other hand, the ‘freemium’ pricing model is increasingly popular these days, where some resources are free, but the best, the premium resources, have a price tag. And when we brush away the ‘free’ part of freemium, my oh my, that price is a hefty one. Sticker shock immediately sets in like concrete, preventing “the buy” or the reasonable scaling of virtual reality in the classroom.

Will a few greedy companies destroy this industry for the rest of us, before it has a chance to get legs? Just to make a killing? Strike gold? Since content is king, will content price failures undermine our hoped-for trajectory for hardware sales? Or will the freemium strategy, now increasing in frequency, pay off? One thing is for sure: if pricing failures get in the way of technologies reaching the educational market, then sic transit gloria mundi—“thus passes the glory of the world.” Or VR. –Len Scrogan