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Low-Cost Virtual Reality Goggles From Mattel, Powered By Google Cardboard

Consumer Virtual Reality ("VR") and Augmented Reality ("AR") are often mentioned in the news as Next Big Things that will revolutionize entertainment (among other things). But high-end VR and AR gears like the Oculus Rift and the HoloLens, respectively from Facebook and Microsoft, both expected in 2015, will come with a hefty price tag. However, new low-cost VR goggles powered by Google (NASDAQ:GOOG) cardboard technology are coming soon.

Google Cardboard is a simple VR headset that was announced at Google I/O 2014. The device, a smartphone head-mount with lenses and magnets, can be fastened around the head and used as a head-tracking headset. Any smartphone with stereoscopic display and on-board accelerometer for motion sensing - standard features of today's smartphones - can be inserted in the device and generate 3D scenes with associated audio, that the user can enjoy in interactive, immersive VR mode. The first Cardboard applications are emerging and Android developers are creating new ones.

Cardboard aims at developing accessible virtual reality ("VR") tools to allow everyone to enjoy VR in a simple, fun, and natural way. The Cardboard SDKs for Android and Unity enable you to quickly start creating VR apps or adapt your existing application for VR.

Mattel (NASDAQ:MAT) is resurrecting the famous View-Master, first introduced in 1939, as a cheap VR headset. The new VR View-Master will hit the stores in the fall, in time for the Christmas season, and cost $29.99. The device will first support Android phones via a Mattel app, and iOS support will be added later. Though the smartphone app alone can generate all content, Mattel will also bring back to life its huge library of reels for the View-Master of old, and sell reels adapted to work with the app, at $14.99 for a pack of four.

I think there is a good chance that the new View-Master will sell like sliced bread, starting next Christmas season. The View-Master of old did sell like sliced bread for decades, especially for children entertainment. If so, both Mattel and Google, which owns most of the underlying technology, will profit big.

The low-cost of the Mattel VR View-Master and other forthcoming Cardboard-based VR headsets shouldn't give the wrong impression of limited performance and quality, because these devices use smartphones for all the heavy lifting work - motion sensing and tracking, computing, visual rendering, and sound generation. High-end smartphones are as expensive as dedicated VR gears or more, but most target buyers already have one.

In related news, LG Electronics ("LG") announced a custom version of Cardboard made for LG G3 smartphones. The device will take full advantage of the high-end G3 sound and display, and it will be given for free (that's low-cost indeed) to those who buy a new G3. The money is in the Cardboard VR applications and games on the Google Play Store. LG is persuaded that the market for cheap VR apps will be big:

This is just the beginning of the virtual reality movement, which until recently was expensive and inaccessible to everyday consumers.

It's to be expected that other Android smartphone manufacturers will follow LG's path and offer low-cost or even free Cardboard-based VR solutions to their users, which will result in more profits for Google.