VRTL—pronounced “virtual”—is a networking group for the virtual, augmented and mixed reality industries that unites creatives and executives across each of the three respective ecosystems.
The inaugural VRTL Summit, which covered the entertainment and enterprise sectors and focused on content creation tools, cinematic storytelling and gaming, took place at Paramount Studios in Los Angeles earlier this year and brought speakers from all sectors of the industry to cover conversations about content creation tools, cinematic storytelling and gaming.
AListDaily caught up with the show’s founders, Sunny Dhillon, partner at Signia Venture Partners, and Ned Sherman, founder of Digital Media Wire as well as a counselor and director at Manatt Digital, to talk about what brands and marketers need to know about VR.
How are you identifying sectors that are adopting VR?
Sherman: Within the entertainment and media sectors, there are kind of three drivers: cinematic storytelling, VRcades and games. In the enterprise sector it’s really fascinating. Automotive, healthcare and travel and leisure have really been taking off.
How will VR shape the future of cinematic storytelling and entertainment?
Dhillon: I think creators like [visual effects producer and director] Rob Stromberg, who have won Oscars and are now coming into creating VR-first content; companies like 8i, one of my portfolio companies, that are doing volumetric video capture and re-rendering of holograms within real-time experiences—that kind of technology put in the hands of people like Stromberg is a perfect combination of amazing boundary-pushing, never-before-done technology and pre-existing Oscar-winning, Emmy-winning, creative talent. I think that combination is what we’re starting to see now. Paramount’s a great home for that, and we look forward to working, from my venture fund’s perspective, with many of our studio partners to help promote and create some of that content in the future.
Why do you think VR and 360-degree video are such rich territory for brands?
Dhillon: From the perspective of advertising, 360 video is perhaps the largest supply of inventory right now that advertising brands can insert product placement and sponsored messaging. I’m actually not a personal fan of 360 video. I think it’s a very shallow use case of what VR can be. I’m a much bigger fan of where things will be two-to-three years from now—which is volumetric video, light-field capture. In other words, holograms. You’ll be able to walk around a specific space, using what we call six degrees of freedom—you’ll be able to integrate live holograms of real people into the virtual world, or into the real world as augmented reality holograms walking thereby alongside you. So I think that actually creates a far more compelling advertising medium due to it being far more immersive. It doesn’t shatter the immersion of the virtual world, or it doesn’t shatter the use case the hologram is there to pertain to. I always considered 360 video more akin to banner ads and pop-ups right now. You learn to just drain those things out, or you’ve got an ad blocker installed on your browser already just to ignore it because it’s noise. I think a real, true, additive—boundary-pushing kind of virtual reality advertisement that’s still in the works. We’ve seen a few of them and they’re pretty cool. And there are a lot of brands putting money to good use. Madison Avenue’s all over it from the agency world. But I think that it’s very experimental right now, it’s very boundary-pushing. It’s not necessarily leading to ROI for conversion to paid sales just yet.
What are the trends, insights and developments you are experiencing and noticing? What can you share?
Dhillon: Some trends that been made evident are how slow adoption has been categorically. I think there’s been certain pockets of content that have really adopted; early adopters to VR are typically gamers. Gamers are always early adopters to new technology on any consumer platform. So, I think hardcore gamers, early movers in cinematic storytelling and a lot of the infrastructure-type guys—folks who are used to building in Unity on real gaming engines, people who are used to pushing the boundaries in visual effects in the Hollywood sphere—and to be able to import that into a compelling, interactive narrative now. It’s no longer lean forward, lean back—it’s very much back and forth the whole time the way that you would in any kind of conversation. That’s what virtual reality is bringing to the forefront. And I think there’s been some pioneers that we’ve seen, a lot of whom are here with us at VRTL, who are kind of really pushing those boundaries.
VR is so new that there’s not a hard and fast rulebook for creating content yet. What surprising things did you learn that may help other VR creators?
Dhillon: Some of the challenges that creators have faced have been lack of funding. There’s not a lot of money out there right now due to the cyclical and circular reasoning. If somebody invests, if myself, amongst other investors for example, invest in a piece of content, we want to understand what the recruitment period is going to look like. And there’s not a great deal of headsets or big end-user audience that’s materialized yet that would help us recruit that. If it’s, you know, a traditional media monetization model—advertising, subscription, paid download, electronic sell-through, whatever have you—I think that you need a big chunk of people watching this stuff, or watching the trailer to this stuff, who will then convert to paying. To use a gaming analogy, such as a freemium kind of model, you’re going to have only a certain percentage of your overall user base who’s ever going to convert to paying. So I think that the limited size of the end-user audience right now is kind of what is constraining really top-tier content coming into the forefront. I also think VR headsets themselves need to come down considerably in price; they need to be more ergonomically designed and you actually need more traditional-branded IP coming into the forefront here. And I think that’s something that Paramount can hopefully assist with its own IP portfolio.
What is currently the biggest challenge for marketing VR? What is the current state of VR marketing looking like?
Sherman: I think the main challenge is the number of installed headsets that are on the market. I mean, we’re in the low millions right now, so the audience is just not as large as it can be. Also, the quality of headsets needs to improve, you know, dramatically. But the real upside is that the level of retention in VR-immersive experiences is extremely high, and with AR which is, you know, partially immersive, you’re seeing the same things. So the ability to really reach audiences, pull them into this immersive environment and for them to retain the brands and marketing they’re participating in is very high.
How will it impact advertising?
Sherman: Well, I think we’re going to start seeing more brand extensions as opposed to retrofitting existing campaigns—and really, storytelling, and bringing audiences into stories instead of taking existing campaigns and just retrofitting those for VR experiences.
What are you doing as a company to help VR become more palatable?
Dhillon: What we’re doing to help move VR and AR forward is putting our checkbook to work. We’re early-stage investors, we support entrepreneurs, trailblazing entrepreneurs who want to really push the boundary on any new-frontier technology. VR/AR is one of those frontier technologies that we’re very active in right now. We’re one of the most active investors in early-stage VR/AR investing. We continue to scour the landscape for compelling investment opportunities. So I think investment, and more so mentorship, helping tie business development and IP into some of these content production kind of deals, helping on distribution, helping with analytics on who’s watching what, how can you package that up and incorporate advertising and brand placement—things like that.
What needs to happen for the VR industry to really take the next step?
Sherman: Well you know, if the market is poised to reach $100 billion market by 2021, there are three main challenges. One is availability of audiences. Audiences right now are limited by the number of headsets on the market, so we’re really looking at just over a million, two million headsets on the market. Content and the availability of content, there are a lot of people in the creative community working on projects, but still, limited amount of content on the market right now. And finally, consumers getting comfortable with the products and that ease of use which is a technology obstacle being addressed. So those three things are really the challenges that need to be overcome for the growth of the industry.
Follow Manouk Akopyan on Twitter @Manouk_Akopyan
