Virtual’s New Verve

Buzz about virtual reality swept across the trade-show floor at January’s Consumer Electronics Show in Las Vegas, a critical Eevent for both creators and trackers of entertainment-technology trends.

As conventioneers were stirring, a panel of experts focused on next-generation video consumption assembled in a ballroom at the Venetian and tried to make sense of it all. Inquiring minds wanted to know: did the hoopla surrounding virtual reality remind them of the 3D-TV craze that tore through CES five years ago?

"Nobody wanted to wear those ridiculous 3D glasses for two-and-a-half or three hours," recalled Eric Fitzgerald Reed, vice-president of entertainment and tech policy for Verizon. "3D was more aspirational rather than really bringing something to drive the marketplace."

"It was a solution to a problem the industry didn't have," agreed Cameron Friedlander, who heads marketing technology for consumer packaged goods giant Kimberly-Clark.

The panelists quickly formed a consensus on VR, however. Sure, you have to wear funny glasses with virtual reality, too — but unlike 3D-TV, VR isn't some fad display technology. In fact, the immersive, wildly engaging potential of virtual reality isn't really all that comparable to single-screen display advancements like 3D, or even 4K,

Indeed, while 3D-TV rewarded wearers of its cumbersome eyewear with an often-incremental payoff, VR represents a complete, 360-degree, immersive experience. Users step into a fully realized world that shifts to accommodate their perspective,

But VR offers applications that go far beyond entertainment sectors like television and video games. With VR, real estate professionals conduct virtual open houses over the internet, giving would-be buyers an all-embracing tour from thousands of miles away. Sports teams like the Stanford University football squad train their quarterbacks with VR. And there are hundreds of other applications, spanning education, health care, the military and other industries.

Then there's the investment, which includes Facebook's $2 billion acquisition of Oculus Rift two years ago.

"I have been a skeptic of virtual reality for a long time, but it's safe to say I'm a converted skeptic," says Brett Sapington, senior analyst for research company Parks Associates. "There're too many big companies involved now who are spending real money."

Indeed, investment bank Goldman Sachs projects the total VR market will be worth $80 billion by 2025, with video entertainment consuming $3.2 billion of that pie. According to Deloitte, VR will have its first billion-dollar year in 2016, with hardware sales generating around $700 million of that total.

In terms of TV and the broader realm of video entertainment, VR is definitely in the nascent and experimental stages. Standards and best practices are still being hammered out, and we're still a few years away from production and distribution pipelines being developed to the point that, say, a full primetime show can be seen in VR.

But tech companies like Facebook and Google (whose Cardboard headset has been a key driver of the early market) aren't the only ones taking VR seriously. Media companies are looking to get in on the action, too.

"Frankly, TV, film and the media business in general need to get going here — the VR world is really looking forward to embracing them," says Michael Yang, managing director of the Silicon Valley office for Comcast Ventures, the venture-capital arm of the eponymous cable and media giant, which has already made three notable investments into VR companies.

"It's with video content where people most experience VR," Yang adds. "The hardware manufacturers are going to be scared to ship expensive new headsets without a library of content."

The concept of immersing a viewer in panoramic, 360-degree 3-D images has been around for decades. In fact, VR technology has been widely used in video gaming for 25 years, dating back to at least the introduction of the Sega VR headset in 1991.

This device, which was designed for the Sega Genesis gaming console, featured LCD screens in a visor, along with stereo headphones. Sensors, primitive by today's highly advanced standards, were also embedded so that the system could detect the user's head movements and react accordingly.

Plenty of notable VR products followed, such as the 1995 introduction of Nintendo's Virtual Boy, as well as the 2003 launch of the virtual-world phenomenon Second Life.

For years, however, the technology needed to make VR a mainstream reality wasn't sufficiently advanced. The hardware required for the high-end graphics processing was prohibitively expensive and too bulky. The steady march of Moore's Law — simply put, that computer processing power will double every two years — has remedied that issue.

But beyond advancements in computer technology, credit goes also to the concurrent explosion in mobile video for giving VR the chance to go mainstream. While wearing headsets is impractical for groups of, say, family members sitting around a living-room television, it fits right into the personalized, binge-laden viewing patterns occurring everywhere these days with smartphones and tablets.

Brian Seth Hurst, a prominent member of the Television Academy who consults for the entertainment industry on VR issues through his company StoryTech, credits two inexpensive, consumer-friendly product introductions for sparking the VR market two years ago.

Samsung brought out the Gear VR Innovator Edition headset for its Galaxy mobile phones in December 2014. Priced at $99, the popular device sold out this past Christmas. It has so far served as a gateway for developers of mobile video, helping them understand how VR technology works and allowing them to imagine storytelling in a brand-new way.

Also arriving in 2014 was Google Cardboard, another low-cost headset meant to encourage development of VR content and technology. In 2015 Google added the option of uploading and downloading 360-degree video to its YouTube platform. So users can now plug a Google Cardboard into an Android mobile device, log onto YouTube and click on an icon that delivers 360-degree VR video.

Linking VR with the equally hot realm of mobile video is creating excitement in the market. At press time, aspiring VR storytellers were eagerly awaiting the introduction of several high-end VR headsets in the first quarter of this year. One is the Facebook-backed Oculus Rift, scheduled to hit stores March 28 with a price of around $600. Also highly anticipated and set for first-quarter release is the HTC Vive.

These high-resolution headsets will connect to devices like personal computers and Sony PlayStation video game consoles, allowing users to experience VR at an even higher level.

The Rift, for example, will deliver stunningly realistic 1080 x 1200 resolution to each eye, with a 90 Hz refresh rate, while its headphones will be able to create 3D audio effects. Rotational sensors will adjust the image to wherever users turn their heads.

As Hurst sees it, the technology for VR has arrived. It's now up to the creative world to catch up. He frequently refers to the VR programming market as the "Wild West," a place where standards and best practices are still very much in flux,

"We're in a nascent industry that has a lot of hype — you just don't have the artistry of storytelling yet," he says. "That's the next step. The technology is just now starting to fall into the hands of indie filmmakers, who are working to figure out all the artistry. There are no rules right now."

As with most emerging display technologies — 3D-TV, 4K, you name it — scarcity of content is an issue for VR. "Most of the investment so far has gone into the technology, but not necessarily into the content," Hurst points out.

Indeed, a number of tools have recently emerged for prospective VR storytellers. Last year, for example, Google introduced Jump, a $15,000 rig of 16 GoPro Odyssey cameras armed with special software that can stitch together an immersive, spherical, 360-degree image. But in terms of skill set, there's a big difference between shooting a standard HD image and virtual reality.

"With a movie, you count on everyone staring at the same point on the screen," Sapington says. "With VR, everyone is looking at something different — it's like having a bunch of different witnesses, who each saw something different. This is the challenge — you have to be able to fill 360 degrees of image and move the story along."

But there is movement. And just like in the broader video entertainment market, disrupters are racing to stake their claim in VR, presenting competitive threats to traditional media companies. For one, Defy Media — a leading producer of online video for younger audiences — announced a partnership last fall with VR tech company 360fly to create VR content for Defy's Break.com online video platform.

Perhaps more importantly, both Netflix and Hulu announced plans last fall to launch VR apps. Hulu even commissioned a short VR film, an apocalyptic-themed meteor thriller called The Big One.

Discovery Communications is one of the early media companies to recognize the need to develop acumen with this new narrative tool before the insurgents do. It is already shooting VR shorts through its new Discovery VR unit, which was formed last year.

The division's initial foray was to create nine short-form VR interstitials built around existing TV properties. For example, for Discovery Channel's Shark Week last summer, the Discovery VR team worked with the producers of the company's MythBusters franchise to produce three short VR "experiences," each exploring shark feeding frenzies in the Bahamas.

Another featured Survivorman star Les Stroud displaying his skills in the wild. The shorts were distributed via Discovery's iPhone and Android mobile apps, as well as through YouTube and Samsung's service for mobile VR video, Milk.

At this point, Discovery is one of the few major media companies directly involved in the VR market.

But others are working closely with VR start-ups, In November, for example, Comcast Ventures — along with Time Warner Investments, Dick Clark Productions and others — kicked in part of a $30.5 million funding round for start-up NextVR, which live-streams events like presidential debates and NBA games in 360-degree virtual reality; in February it announced a five-year agreement with Fox Sports for VR broadcasts of such events as NASCAR races.

Comcast Ventures has also backed Baobab Studios, a VR animation studio founded in Redwood City, California, by Maureen Fan, the former vice-president of games at Zynga, and Eric Darnell, director of DreamWorks Animation's Madagascar film series. Another Comcast Ventures-backed company is AltspaceVR, operator of an avatar-based VR experience akin to Second Life.

While the mission of Comcast Ventures is to invest in a broad array of emerging technologies with a big upside, most of the 80-plus companies it backs have — or will likely develop — some relationship with either Comcast proper or the company's NBCUniversal division. Yang sees huge potential for VR, on a relatively short timeline, in realms like cable TV and theatrical distribution.

"A year ago everyone would have said, 'It's all about video games,'" Yang relates, "but games are costly and take time to produce. I see video content leading the charge on VR. I think the other applications will come downstream."

In fact, VR deals are coming fast and furious, with the venerable Sports Illustrated touting a VR edition of its annual swimsuit edition, and the Associated Press launching a VR digital channel.

While investments are being made in production, they're occurring in VR distribution as well. Disney, for instance, last year brought Littlstar into its Los Angeles-based start-up accelerator program; the company aspires to be a kind of Hulu for virtual-reality content,

Using an Apple TV media streamer and a VR headset, Hurst recently demonstrated the Littlstar app for emmy magazine. VR content from sources such as Discovery can be streamed in much the same way as an HD show from an SVOD source like Netflix.

For his part, Hurst believes many of TV's initial forays into VR will come through collaborations with sponsors on short videos. "It can't come out of a show budget right now," he says. "It will be the marketing guys who create an interactive experience."

Eventually, he adds, the VR talent developed through these short-film projects will find its way into the writers' rooms of primetime series. "Good storytelling is what is missing in VR right now," Hurst says. "People think VR is going to change storytelling. It's not — you still need a great story. It just gives you more tools."