Or will it end up as a niche market, like motion controls?
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Yes, because it's passive technology. Active technologies like Kinect will be niche, people want to sit back and play/interact. VR will catch on when price his whatever the magic number is. I suspect the units will be subsidized early on if at all possible, probably through specific subscriptions fees, but that will only last a couple years. That's assuming a normal cost curve for new tech.