New York – Investors backing virtual reality companies, knowing technology heavy hitters will sell consumers the necessary headsets other hardware, are looking to content, software and applications in the consumer and enterprise realms, experts said at the Virtual Reality 20/20 conference Monday (Oct. 17).
“They’ve built the hardware platform, that’s really set now,” Tipatat Chennavasin, general partner at VR-focused The Venture Reality Fund, said, referring to such big tech firms as Facebook (Oculus), Google (Daydream) and Sony (PlayStation VR). “Now it’s time to invest in the software ecosystem that supports that – that’s really the opportunity.”
Intel thinks “it’s going to become a mainstream computing platform,” Arjun Metre, investment director at Intel Capital, said, sitting with executives from strategic investment units at Comcast, Time Warner and Samsung on the panel moderated by Greg Kahn, the event’s executive producer.
Chris Fralic, partner at First Round Capital which, he said, has backed more than 350 companies with early “seed” funds, said his firm has been looking at social applications, at “how the 2D and 3D worlds come together” and at parallels of how app stores developed in 2008 with challenges on the publisher and consumer sides “that are playing out again today.”
Kahn asked whether or not virtual reality had grown beyond the point of worrisome comparisons to 3DTV, which fizzled out after a year or so of consumer electronics fueled hype. Scott Levine, managing director of Time Warner Investments, said the comparison to 3DTV often comes up but he thinks “the dynamics are much different.”
3DTV was about TV sales, Levine said, while virtual reality apps driven by mobile phones are “much more immersive” and the support by the biggest tech companies and the potential reach of applications are much broader than a TV-set feature. “There’s so much momentum,” he said.
Said Intel’s Metre: “We all agree, I think, it’s going to be a massive market.”
Enterprise uses of VR and augmented reality – which adds data and content to existing environments, a la Pokemon Go – are promising in such categories as health care, real estate, travel and education, the panelists said. “Obviously there’s a lot of money there and opportunity for transformative experiences,” Gus Warren, managing director, investments, at Samsung Global Innovation Center, said, though Samsung has not invested in those realms yet.
Location-based VR experiences have strong potential, too, although more in China, Japan and Korea, where VR-enabled Internet cafes are growing and karaoke clubs are popular. They could also turn up in U.S. shopping malls where they might have more upside than yet another women’s apparel store, Time Warner’s Levine said. Panelists said experiments like The Void in Times Square, offering a Ghostbusters-themed VR experience, are good for spreading consumer awareness but, as Levine noted, could have a difficult time drawing enough people spending enough money to be successful.
“The concern is, will location VR be the next laser tag? I hope not,” Levine said.
For VR content developers, the good news is that hardware makers are pumping money in that direction, knowing popular content is critically important. Facebook’s Oculus has already invested $250 million in content firms and plans to invest another $250 million, Chennavasin said.
Because it will take time for the base of VR homes to grow – something that will get big jump starts from Sony’s new PlayStation VR and from Google’s coming Daydream platform -- content makers will need the support before other revenue streams kick in. (Another key funding source: brands seeking the "halo effect" around VR as new and innovative and worthy of bankrolling via agencies or studios, per Levine.)
Yang said Comcast Ventures tells VR content makers it’s invested in -- including Baobab Studios, Felix & Paul Studios and NextVR -- not to focus on monetization yet. Between hardware-maker backing and venture investments, “if you manage your company appropriately, you can get well into 2019 and 2020,” he said. Content companies in VR have done well attracting venture funds, relative to content companies in general, he said.
Virtual Reality 20/20, which took place at the The Times Center, is the first event of NYC Television & Video Week, which continues with the Broadcasting & Cable Hall of Fame Tuesday night, Advanced Advertising and Next TV Summit on Wednesday (The Grand Hyatt) and the Hispanic Television Summit (The Grand Hyatt) on Thursday. More information about the week's events here.