I think VR is falling short of it's full potential because we haven't reached a technological level that is able to reach it yet. They realized the basic VR tech worked and rushed to get goggles and release it to market, which is ok... but it's a small fragment of the VR puzzle.
The method of interaction is still too rudimentary, I think something like VR gloves where you have full finger and arm movement in the world would be closer to optimal.
The movement issue is a big one, and people can say the "teleport" is a good enough solution, but to me it's not. Bringing back analog sticks also is not good, because when you feel the disconnect between your character movement and your own, you tend to rely way more on just the analog sticks and at that point you're not really making good use of the immersion, it's just camera controls.
And frankly, we need a significant jump in computing capacity and AI routines because for VR we need a level of interaction with the world on an unprecedented scale, we need more elaborate AI behavior, most (if not all) objects should be moveable and have it's own physics values (I'd like beds and curtains to feel like beds and curtains, for example), which goes way beyond what is necessary for a conventional game, but would bring a VR space to the next level.
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