The first VR winter

The first VR winter was the long period of low commercial and public interest in virtual reality that followed the collapse of the early-1990s VR boom. During the collapse the virtual reality industry contracted sharply. A number of companies went out of business or reorganized, including VPL and Virtuality. Consumer headsets from Sega, Atari and Hasbro were cancelled before release, and Nintendo's Virtual Boy, launched in 1995, was discontinued in 1996.

It ended the consumer interest in VR for a while, but not the professional market. Research continued in corporate, academic and military laboratories, where head-mounted displays and tracking systems still cost tens of thousands of dollars. Eventually, the second wave of VR kicked off with the Oculus Rift, whose 2012 crowdfunding campaign and 2014 acquisition by Facebook brought consumer VR back into the mainstream.

Reviewed 27 September 2026. Checked every cited claim against the heise, Kill Screen, Wired 1998, Next Generation no. 38 (OCR of the Arcadia column), Mergen et al. 2023/2024, Hartogsohn 2023, Basu 2019 and Facebook 2014 sources, plus links and categories. About review dates.

Terminology

Sources date the winter differently. In a 2024 scoping review of VR in medical education, Mergen, Graf and Meyerheim wrote that "the first ten years of the 21st century can be referred to as the 'VR winter'", a period "characterised by a lack of public interest in this emerging technology"; they attribute the label to Jason Jerald's The VR Book (2015). Ido Hartogsohn, in a 2023 article in Frontiers in Psychology, likewise refers to "the VR winter of the 2000s" and lists it among the factors behind the fading of 1990s "cyberdelic" culture. Journalistic accounts place the decline earlier: Kill Screen dates the crash of arcade VR to 1994, and heise online describes VR as having "disappeared from living rooms for many years" after the failed console headsets of the mid-1990s.

The early-1990s boom

The commercial VR industry grew out of research in the 1980s. Jaron Lanier founded VPL Research in 1984, and NASA's Virtual Interface Environment Workstation (VIEW) lab contracted the company to work on the DataGlove and the EyePhone head-mounted display. In 1989 VPL announced RB-2, a complete virtual reality system, and Mattel released the Power Glove for the Nintendo home console. Prices fell over the following years. Basu's chronology records that the VR-2 Flight Helmet from Virtual Research brought the price of a head-mounted display below US$10,000 in 1991, and that Virtual I/O broke the US$1,000 price barrier for an HMD in 1995.

Public attention grew at the same time. According to Kill Screen, it was only in the late 1980s and early 1990s that "public interest and popular culture took hold of the VR narrative", with films such as Tron and The Lawnmower Man suggesting that interactive digital worlds were not far away. The British company Virtuality, founded by Jonathan Waldern, began placing its 1000 series of sit-down and stand-up VR pods in arcades in 1991. In the United States, Sega began developing a home headset for its Mega Drive console from 1991.

Collapse

VPL Research

VPL lost its founder and its patents early in the decade. According to a 1998 report in Wired, the French electronics conglomerate Thomson-CSF and Greenleaf Medical "took control of VPL Research's patents and wrested control of the company from Lanier in 1992". In February 1998 Wired reported that Sun Microsystems was buying the worldwide rights to more than a dozen of the former VPL patents from those two companies, covering datagloves, networked 3D graphics, image rendering and programming standards for virtual environments. Lanier told the magazine that he had left VPL six years earlier and had no part in the deal.

Arcade VR

Virtuality's pods were expensive to operate and to play. Kill Screen reported that games such as Dactyl Nightmare and Legend Quest typically cost three to five dollars and lasted about three minutes, which suited arcade owners paying for the machines and their attendants but quickly put players off. The article also cites complex controls, unfamiliar 3D worlds, and "stuttering, choppy animations" as reasons for the decline, and says that by 1994 Virtuality and the popularity of VR pods in general were crashing. Sega's arcade VR fared better: the Mega Visor Display used in its VR-1 amusement park attraction was created in collaboration with Virtuality, and heise describes Sega's theme park VR as more successful than its home VR work but expensive and limited to theme parks in Japan and the United States.

In its February 1998 issue, Next Generation reported that Virtuality had filed for bankruptcy in Britain and in the United States (under Chapter 11), and that a Berlin-based firm, Cybermind Interactive Europe, had hired a core management team from Virtuality and acquired its former business rights in Britain. Through a new company, Cybermind UK, it owned more than 1,200 installed VR systems worldwide.

Home console headsets

Four large entertainment companies tried to bring VR headsets to home consoles in the mid-1990s. According to heise online, only Nintendo's product reached the market, and all four efforts failed because of "inadequate technology, health concerns, a lack of content and high costs".

Product	Company	Timeline	Outcome
Virtual Boy	Nintendo	Development began in 1991; launched in 1995	Discontinued in 1996 after 770,000 units were sold worldwide; 22 games were released. The display tired the eyes and often caused headaches.
Sega VR	Sega	Development from 1991 for the Mega Drive	Development stopped in 1994. Sega's official reason was that the system was "too realistic"; heise reports complaints of dizziness and nausea and a Stanford Research Institute report that classed the headset as a health risk.
Jaguar VR	Atari, with Virtuality	Presented at CES in 1995	Never released. Low computing power caused jerky images and tracking errors that led to severe motion sickness, and Atari dropped all console investment after its merger with JT Storage.
Home VR system (codenamed "Sliced Bread", "Toaster", "Rush" and "Xscape VR")	Hasbro	Press campaigns from 1994	Discontinued in 1996 without a finished product. The target price rose from US$200 to as much as US$499 during development, and Hasbro is said to have invested between US$40 and 60 million.

Causes

Retrospective accounts point to the gap between expectations and what the hardware could deliver. Kill Screen described the decline of arcade VR as "a case of the technology being unable to keep pace with creative vision", noting that popular culture presented VR as "a glorious vision of the future" that the rudimentary technology could not realize. Heise online concluded that the technology "was not mature enough to survive on the mass market" and that "the euphoria quickly gave way to disillusionment". Heise also ties the console headsets' health problems to weak hardware. It reports that the low computing power of Sega's consoles limited Sega VR to 320 x 240 pixels and a maximum frame rate of 30 Hz, that the Jaguar VR's jerky images and tracking errors caused severe motion sickness, and that the Virtual Boy's display tired the eyes and often caused headaches.

Cost remained a barrier into the 2000s. Mergen, Graf and Meyerheim note that during the winter an HMD cost more than US$35,000 and tracking equipment more than US$30,000, and that the fragile infrastructure further limited use.

Professional and research VR during the winter

Work on VR did not stop. Basu's chronology lists the CAVE projection system presented at SIGGRAPH '92, the first academic VR conferences in 1993 (VRAIS '93 in Seattle and the IEEE Research Frontiers in Virtual Reality workshop in San Jose, which later merged into IEEE VR), and SensAble's first PHANTOM force-feedback device in 1993. Later entries include Ascension's MotionStar wireless magnetic tracker (1996), Disney's DisneyQuest family arcade centres with HMD-based and projection-based VR (1998), the first six-sided CAVE-style display at the Swedish Royal Institute of Technology (1998), the open-source ARToolKit tracking library (1999) and the first six-sided CAVE in North America at Iowa State University (2000).

Commercial interest also continued at the high end. Wired reported in 1998 that both Sun and Silicon Graphics ran dedicated VR laboratories to demonstrate their servers, that VR applications of the time needed "very high performance hardware to sustain even a marginal degree of immersion", and that Sun's likely uses for the VPL patents included computer-aided design, medical imaging, simulation and product development.

End of the winter

According to Mergen and colleagues, interest in consumer-grade VR revived around 2011, mainly for entertainment, as Valve, NVIDIA and the start-up Oculus moved head-mounted VR "from being exclusive to technical elites in specialised labs" to a mainstream medium. Heise online traces the revival to a prototype that an inventor built in his garage in 2009 and that later became the Oculus Rift. In 2012 Palmer Luckey launched a Kickstarter campaign to crowdfund the Oculus Rift DK1; Basu describes it as the first time an HMD design was offered commercially at a price point of US$300. According to the same chronology, Valve freely shared its work on low persistence displays in 2013, which made lag-free and smear-free display of VR content possible.

On 25 March 2014 Facebook announced an agreement to acquire Oculus VR for a total of approximately US$2 billion, including US$400 million in cash and 23.1 million shares of Facebook common stock, plus a possible US$300 million earn-out. At that point Oculus, founded in 2012, had received more than 75,000 orders for Rift development kits. HTC and Valve announced the HTC Vive in 2015.

See also

• History of virtual reality
• VPL Research
• Virtuality Group
• Virtual Boy
• Oculus Rift