The Future Of Monetization Isn’t What It Used To Be

This is a post from VRARA SF member ADVR, authored by My Tran. It can be read in full here. 

It’s (thankfully) not often that a famous football player is accused of a double homicide that leads the LAPD in a slow-speed chase on national television, inadvertently scoring the Ford Bronco the most memorable unpaid visibility of all time. A lot has changed since the 90’s, and, as our world becomes increasingly digital and interconnected, the way we consume media and retain information also continues to evolve. As it stands, we’ve adjusted to the inundation of digital marketing via mental tunnel vision and by employing applications to block ads for us. Anyone who has ever searched for a product online is familiar with what can be summed up as being stalked around the web; in my particular case, because I visited jewelry designer Pamela Love’s website some time this past month, Pamela Love product ads “follow” me to any site privy to my browsing history. Whatever annoyance I felt was negligible, until I was forced to look at ads for $450 jewelry alongside an article on the humanitarian crisis in Aleppo. Pamela Love’s marketing team isn’t to blame; it’s the fault of an algorithm that doesn’t discriminate product from content. However, experiencing that cognitive dissonance means I now have a negative association with Pamela Love’s products. These digital marketing methods are very much embedded in the online ad culture and will continue to be a means of distributing sponsored content. Still, I would argue that to further perpetuate these marketing habits will only exacerbate the public’s growing distaste towards sponsored brand presence and encourage the use ad blockers.

Where retargeting is an example of informed but non-contextual digital marketing, ads built around a story represent the other end of the marketing spectrum. Major labels commission reputable ad agencies that know how to frame their brand in a relevant narrative. But smaller companies that don’t have that luxury still know that a strong story — a reason why for the product — resonates. In 2014, toy startup Goldieblox produced an ad that won a four-million dollar Super Bowl spot. That Goldiblox ad then went viral, resulting in sales that have increased 7000% since. People voluntarily view and share ads that embed the product inside of a quality story, and the positive emotional footprint casts the brand in a favorable light, which encourages spending. When we look towards the future, the evolution of programmatic advertising in virtual reality (VR) and augmented reality (AR) calls for us to set a precedent for advertising practices that resist problematic 2D digital marketing methods. Designing an unskippable ad in VR and AR means matching an immersive platform with narratively immersive sponsored content.

Read the rest

Thought Leaders: Where Are We in VR/AR's Life Cycle?

This post was authored by Kristie Cu, business strategist and VR/AR lead at VRARA SF member Orange Silicon Valley. It originally appeared on Medium. More info on VRARA SF and its members can be found here. 

Where AR and VR Stand in 2017 After a Dizzying Wave of Hype

By Kristie Cu

Virtual reality headsets are not hard to find in 2017. Just take a look at the next big conference you attend; you’ll likely find some type of Oculus or Vive demo. Visiting a newsstand? You’ll likely be able to find a free Cardboard in a magazine, covered with someone’s promotional branding. Visiting a sports stadium? You’ll probably find VR demos there as well.

You’ve probably tried one or more of these VR or augmented reality demos. Why? Because we saw how much smartphones changed the world, and the future of tech seems even more promising. But now you’ve tried it — were you blown away? Do you immediately want to buy a high-end headset? Desktop hardware? More games? Controllers?

Using technology as a shiny promotional tool can work when it’s nascent; everyone wants a taste. But, when someone gets a mediocre-at-best first taste, it can be hard to convince that user to return. VR and AR can be used as gimmicks, but they can also be so much more. That’s why VR/AR still needs a successful and robust market introduction to fully deliver on the platforms’ promise.

While we haven’t seen shockingly wide-spread adoption, there is still reason to be optimistic — about AR, VR, and the evolution of both industries as we see new applications unfold.

Here are some positive highlights: Early statistics show strong potential for VR/AR market size. The few numbers that we have point to a growing, promising industry — to date, approximately 5 million Samsung Gear VR’s, 915K Playstation VR units, 420K HTC Vive headesets, and 350K Oculus Riftshave been sold. Meanwhile, a reported $2.3 billion in venture capital has been deployed into AR/VR. We also know global smartphone is at all-time highs, which could be viewed as additional addressable market, a whopping 2 billion+ people who could be using mobile VR — which will of course depend upon successful mobile hardware and software.

Sources: Samsung, Sony, SuperData Research

What’s to come has constantly been the story of the slower, but larger market of AR within the enterprise. A topic perhaps less visible to consumers, but extremely powerful and potentially enabled by some of the VR technologies that exist today. Beyond the fact that the forecasted addressable market is large, few AR headsets are available, and early signs point to a need to attract more developers and wait. Larger corporations are just getting started, with many focusing on illustrating ROI through proof of concepts.

Corporations, VCs and angels alike are investing in the opportunity to see new means of productivity and entertainment to come of both AR and VR. A surge in the number of VR/AR focused funds indicates high interest and enthusiasm in the market, including funds like Virtual Reality Venture Capital Alliance (VRVCA), Presence Capital, The Venture Reality Fund, Colopl and corporate groups like HTC, Comcast Ventures, Qualcomm Ventures, Intel Capital, and Google Ventures.

So far, some early investments results have been mixed, but some positive signals have emerged in early 2017. Corporations continue to indicate strong interest in the AR/VR markets, and I have compiled a timeline of the most noteworthy moves this quarter.

See interactive timeline

While market signals are still waiting to mature, corporations continue to push forward. Samsung will push forward with a $150 million fund that will in part target young VR startups. HTC announced its own new push in the mobile VR arena, and its Vive headsets will feature prominently in IMAX’s new VR theater in Los Angeles. HTC appears to be confronting challenges shared by Facebook’s Oculus division, rolling out new financing plans to make its Vives accessible to a wider audience. That move echoed the Mar. 1 Oculus announcement that its headset prices would be cut from $499 to $399.

What’s clear is that the value from this emerging technology is indeed promising, but that the precise value is still being determined — puzzle pieces are constantly in flux: from the hardware itself, to business models and pricing, to content and strategic partnerships. Thus, as all players seek to establish themselves as first-market-movers, their decisions should be fueled not only by short-term value, but also by long-term customer value as well.

Kristie Cu is a business strategist focused on corporate strategy, virtual reality, augmented reality, deal sourcing, and partnerships at Orange Silicon Valley.

Plotting VR's Learning Curve: A Conversation With Strata

In VR and AR's early days, we're learning a lot about consumers' appetite and understanding. One phenomenon we've observed -- especially with VR -- is that newbies grasp it right away, then quickly ideate other areas where it could apply.

In other words, after receiving a VR demo -- say a gaming or productivity app -- they'll intuitively begin to verbalize other prospective VR applications that could apply to their lives or work. They'll talk about how they see everyone from doctors to designers using it.

The phenomenon played out at this week's Chief Learning Officer week, where we witnessed VRARA member Strata give demos to long lines of people from the corporate training/learning segment. The hot topic of the day became VR's place in everything from management to industrial training.

"I've been working in tech for many years, and have never seen a new technology that people understand so quickly when you give them a demo," Strata CEO John Wright told me. "And their minds will immediately go to other VR applications that make sense."

One reason for this cognitive leap is VR's visual intensity. It strikes users to such an immersive degree that they understand it on deeply visceral levels. It's also interesting to watch new users intuitively pick up controls/inputs without instruction (sometimes a function of age).

But there's also a downside to the phenomenon: because it's so deeply visceral, it can't be explained in words. So the masses won't truly grasp VR until they try it in person. That raises a barrier in these early cost-burdened days of VR, when relatively few people have access.

This is supportive of two things that will bring VR to the masses sooner: mobile VR and location-based VR (e.g. VR arcades). The latter will need to come before wide-scale HMD home ownership... just as the arcades of the 70s and 80s preceded home gaming console ubiquity.

But the biggest lesson is that VR's adoption and market penetration will start slow, but then hit a tipping point and suddenly accelerate quickly. That will happen when a critical mass of consumers get that initial "wow" experience, then naturally imagine other apps they want.

But all of the above mostly applies at the consumer level. The adoption cycle will happen faster in the enterprise, as we've argued. Like consumers, corporate buyers will need to try VR to get it, but ultimately they'll have a greater impetus to invest given potential cost savings.

That brings us back to Strata. It's beginning to target large companies that have decentralized teams that need specific training. Doing that in a virtual environment is cheaper than dispatching human capital to far-flung locations; and it's more effective than training videos.

One of Wright's demos is an immersive guide to fixing a Ford truck tire, which could be used by dealerships as a design reference. Similar processes could be applied to everything from Jiffy Lube to Supercuts, where quality control and common protocols need to be enforced.

This makes the corporate franchise sector an opportune area for VR. We're not there yet but the first step is awareness. Once the tipping points comes -- as we saw with enterprise app development in the smartphone era --  the corporate spending will flow quickly.

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Learn more about the VR/AR Association, San Francisco Chapter here. 

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The Future of VR: Discreet Hardware, AR Convergence and Cultural Evolution

We all know that VR will play some major role in the future of media, content, commerce and several other verticals. But its specific trajectory isn't as clear.

The Future of Everything blog tackles the question, including insights from ADVR's CEO & Co-founder Arnaud Dazin. His quote is below, joining a who's who list of VR innovators. 

We agree with the outlook: VR and AR's potential will truly be reached when they converge in the form of hardware that's sleek and discreet enough (a la Moore's law) to support all day use.

And of course there will need to be cultural acclimation and legal underpinnings that evolve in step with that technological progression. Read the rest here.  

“You are caught on camera about 70 times per day. In 2030, that number will increase exponentially with the prevalence of Reality Capture (volumetric capture). Wearing stylish, lightweight glasses that can do both VR and AR will be as common as wearing jeans, and the ability to film your personal and public highlights for later review in VR will replace selfies as the new favorite pastime. From reviewing your day in third person to improve posture to finding that perfect comeback after being roasted the night before-these are some of the exciting social impacts and future implications of VR. And because any great technological advancement also comes with human behavioral changes, privacy and laws regarding what we capture and share will be a pressing topic of the future.”

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ADVR is a member of the San Francisco chapter of the VR/AR Association. To learn more or become a member, contact us. 

Mobile is the "Here and Now" VR/AR Opportunity: VRARA's San Francisco Fall Event

Though PC and console VR are sexier, mobile is where VR could really scale.  This was a central theme that emerged during VRARA’s packed San Francisco Fall event.

For instance, the 2 million headsets that will be sold this year (IDC), are dwarfed by the 2.6 billion global smartphones that are the installed base for mobile VR.

Yes, it's still the lesser version of VR but it's improving. Moreover, mobile VR's mainstream-friendly price point make it the gateway drug that VR needs at this stage.

The same goes for AR: Lenovo’s Carter Agar showed us practical use cases for smartphone-based AR through the recently released and Tango-powered Phab 2 Pro. 

With Tango’s depth mapping and area learning, use cases range from the whimsical (virtual dominos on a real table) to practical (interior design, guided indoor navigation).

Beyond Borders

Moving on to our panel, three heavy hitters are sinking their teeth into VR and AR through corporate strategic investment: Orange, Lenovo and Comcast Ventures.

A cross-section of the VR world can be seen in Comcast Ventures’ investments over the past year. Michael Yang leads a team devoted exclusively to CV’s investments in VR and AR.

His investment thesis is grounded in VR's vision as the next major platform shift. But more importantly it’s one that scales across geographic and vertical/industry borders.

For example, CV investment NextVR, revolutionizes a media staple with massive reach: live sports. It's also broadcast’s saving grace against cord cutting, which VR will amplify.

Orange meanwhile stands as a carrier at a time when VR/AR data payloads will skyrocket. Its Orange Silicon Valley (OSV) subsidiary tracks emerging tech opportunities.

According to OSV business strategist Kristie Cu, VR aligns with 5G rollouts. And that’s good timing, given that mobile VR and AR’s data throughput will certainly need bigger pipes.

Bottom Line Results

Lenovo meanwhile manufactures PCs for VR’s graphical processing needs. And it’s competing on the AR front, as shown in Agar’s earlier presentation.

Lenovo’s director of worldwide innovation, Joe Mikhail had a lead role on Meta’s series B round, and correspondingly believes AR’s real opportunity is all about enterprise. 

This includes everything from workplace productivity to manufacturing and industrial design, such as 3D modeling, he says. It's one reason AR will surpass VR in market size.

In these enterprise integrations, the name of the game will be to improve operational efficiencies, agreed both Mikhail and Cu; and to demonstrate true bottom line results.

VR Pioneer Tony Parisi: Content is Where the Magic Is

The area that holds VR's biggest opportunity will also be its biggest challenge: content. Wevr VP of platform products Tony Parisi explored this and other insights to kick off Orange Silicon Valley's excellent Through the looking glass: Hollywood & Silicon Valley get immersive.

Amidst the VR excitement, the content angle seems to be a reality check that's gaining steam. Just yesterday at TC Disrupt, VRSE CEO Chris Milk estimated VR's available (non gaming) content to be about a "week's worth" -- not enough to sell 50 million headsets, he asserted.

To kick off tonight's session, Orange's Chris Arkenberg challenged Parisi on what makes this VR revolution different from past phases of excitement. "We're seeing echoes of the past," Parisi answered," but there are fundamental differences in today's environment."

Specifically there's Moore's Law: cheaper chipsets enable more powerful and affordable hardware. We also have more and better developers today in areas like gaming. Lastly we now have two generations of digital natives, which will be a receptive consumer base for VR. 

Arkenberg questioned if Facebook's acquisition of Oculus was a catalyst or at least partially responsible for the VR renaissance we're now seeing. And if that's true, to what degree will social media drive VR development/innovation as well as consumer adoption? 

Parisi believes social will have a big home in VR, but there are lots of challenges. For one, most of our online communication is asynchronous. So getting people together in the same virtual spaces -- a la AltspaceVR or the next Second Life -- will be a lot harder than it looks.

There are also rendering challenges in social VR scenerios that involve avatars. There, we see the challenge known as "Uncanny Valley:" When avatars are too photorealistic, but off by just a little bit, it freaks people out. So he advises for more "cartoony" avatar styles in early days. 

Other content challenges include building room scale immersions (a la HTC Vive) that go beyond passive or stationary ones (a la Rift). Next-generation VR design will involve input + motion he says. And it's early days, so the process of getting there is largely iterative.

"A lot of it is experimental," he said. "There's no style guide for VR quite yet."