How to Monetize Virtual Reality apps: An interview with the head of VR at StartApp
Ariel Shimoni is head of VR advertising development at StartApp. A firm from Israel that aids mobile development of apps. With software running on over 250,000 apps on Android and iOS, reaching over 750 million monthly active users. StartApp is the third largest ad network on Android. I met Ariel at VRNY and immediately saw that he knows a thing or two about this.
How advertising will change in VR and how to make money doing it
Beyond the Headset: What is StartApp doing to encourage VR developers to build applications for VR?
Ariel Shimoni (AS): Our thought process is “You build the content and let me help you monetize it and turn it into a viable business”. We’re trying to see how we can support developers so that we’re able to provide a sustainable business model in VR.
This is always a problem with the new mediums where you might be generating fantastic content. Whether it’s games, passive experiences or video players that you’re putting out there, but you haven’t been successful in transforming it into a business. I’m a huge believer in ad supported free content, and when I say ad supported, I mean top quality brands — doing top quality ads, and placing them in a very intelligent way inside other VR experiences.
“You build the content and let me help you monetize it and turn it into a viable business”
So essentially, it’s very different from traditional mobile advertising where you take a demographic, take an advertisement, and combine the two. Because VR is more immersive, it needs to be tailored for those specific applications. Is that correct?
AS: The experience of consuming an ad in VR is similar to traditional advertising, but what you can achieve with those ads is a lot more valuable. From the developer’s point of view, it’s build an experience > integrate ads > make money. This is dumbing it down a lot, but in the larger sense, we’re doing something different here because the actual consumption of an ad inside a VR experience is very different.
How is advertising so radically different in VR apps? What can advertisers achieve in VR apps that they’ve been limited in until now?
AS: It really taps in a few of the buzzwords that are hovering around VR. One of them is presence and the other is emotion.
Advertisers are slowly learning the potential of the strength of a brand’s message using VR. Until now. Whether you were on mobile or on TV or desktop, there has been that boundary between you and the message. But, when you enter VR, you tap into real emotion, and for marketers and advertisers, that has always been the thing that they’ve been looking for. To create that emotion when someone comes in contact with the message the brand is trying to send is very powerful.
VR is completely unparalleled to any other medium. Research actually shows that you process real emotions even though you’re in a virtual environment. As a result, marketers can drive any emotion that they think will benefit their brand or their product or their message, and just do that. If done right, this is a goldmine for brands.
“I would strongly recommend any app developer using Unity to dive into VR development right now and start learning how to develop for this new medium”
It’s very early, but if I’m observing the trend, I would strongly recommend any app developer using Unity to dive into VR development right now and start learning how to develop for this new medium. I am very confident that big brands and advertisers will come in with big dollars once they understand how to harness this new medium. That’s what we do at Startapp. We mediate, explain and build these experiences with the advertisers inside whatever VR content we’re working with.
What are some things that you’ve learned on this path to developing VR advertisements?
AS: If I look first at the design process of an actual ad in VR, there are completely new rules. Until now everything was very well constructed and the rules were quite clear. You do an interstitial, or a banner — here are the sizes and here are the limitations, go to work. It was a very straightforward process. With VR, like so many other things in VR, there are no rules, no one ‘knows’ what to do so we had to experiment a lot until we could do it right.
We run 360 ad campaigns in VR with content given to us by ad agencies. They give us the material and we figure out how to distribute it.
Right now, the ad agencies and the production companies don’t really know what works and what doesn’t so we have to work together to experiment. What is the resolution of the video? What is the pixel density and bit-rates of every video so it will stream properly? If something doesn’t stream properly in VR and has latency, not only does it get a little choppy on screen, but it also makes the user start feeling dizzy or uncomfortable. So you have this new layer of physical sensation that is added into the experience that you need to be mindful of. Unlike streaming video, if VR content doesn’t work right, it’s not just the inconvenience of buffering, but it really might turn someone off the entire experience to the point that they will take off their headsets. There is a responsibility here to stream properly, and make sure it’s smooth inside whatever VR experience you’re creating.
All of this is something that took us weeks of literally experimenting, and this is how we’re learning. And we finally got it down right; it’s looking great.
What type of VR apps have been most successful in your experience to this point?
AS: From what I’ve seen and our surveys, naturally games have been the biggest attracting point which makes total sense. But if I’m putting games aside, some passive experiences have been quite successful, like being on a roller-coaster ride, or the experience of being underwater with whales and dolphins. That type of thing has been successful. The third thing that has been doing pretty well is anything related to 360 video. People seem to really like consuming these. There are lots of players and YouTube-like apps just for 360 VR content and they have been very successful.
What do developers need to know in order to make VR apps successful in order to monetize through advertisements?
AS: It’s a little too early to know. Everyone is saying “VR is still missing that killer app” — that one app that gets people’s attention. But, from what I’ve seen out there, don’t just assume you know how to do VR, but really pay attention to the experience that you’re creating. If anyone has had the chance to play Land’s End from ustwo on Gear VR but that is a stellar example that is completely unique. I think that should be a staple. If you’re going into VR, think about how you can provide an experience that really takes advantage of its capabilities. If VR has the capability of taking the user and putting them in a completely alternate reality, fucking go all the way. Don’t hold back! It’s a technology that allows developers and designers to go nuts with their imagination.
“Fucking go all the way. Don’t hold back!”
If I can recommend something to developers, it’s to let loose and really go crazy.
How can developers monetize VR apps?
AS: VR advertising is an up and coming monetization model for VR apps. The concept is familiar, and we discussed it above, and brands are starting to put more and more attention and dollars into this medium. While the audience may not be huge at this point, it’s the right time to start exploring how to integrate ads and how to measure their effectiveness.
The most popular business model in VR right now is to go full paid. I’ve been talking to a lot of developers recently, they’re selling mainly on the Oculus store and Steam store, and they’re quite content. They’re telling me that you can build a business on it, they’re building the experiences in Unity which is a programming language that they’re familiar with and because distribution platforms already exist whether they be on mobile or desktop.
The platforms are already primed to take in content. They’re selling games anywhere from 99 cents to $14.99. These are the kind of prices that I’m hearing from developers, and it works.
This is very optimistic news, if I’m comparing this to mobile. In the early days of apps, mainly on the app store, the vast majority of apps were paid. They were 99 cents, a dollar or two and major developers grew on that revenue. Today, the trend has moved to free and this will happen with VR, but in the early days, paid is a great model to start with.
I know that you guys at StartApp are hosting a VR hackathon. What should people expect from it, and why should people come?
AS: We put together a 24 hours in VR theme. So the event is 24 hours long, and the theme of the event is also 24 hours. We’re giving the teams a challenge of reimagining our day to day lives inside VR. Each team will be assigned or will pick a part of the day, morning, afternoon, night and in that part of the day, they will have to take something that we do, something that we’re very familiar with and reimagine how it will look in an immersive environment. So if it’s 8AM and you want to look at your day’s schedule, how will that look in VR? Or you might want to create a weather app in VR. At night, if you’re hosting a party, how do you choose the music in VR? Or if you want to do some meditation before sleeping, you can create a meditation app.
“I want to have people rethink our lives in VR”
I want to have people rethink our lives in VR. This is the challenge and we’re looking to gather around 50 developers, designers, entrepreneurs, anybody who’s enthusiastic about this VR technology to come and have a great 24 hours. There’s gonna be tons of surprises, a lot of fun stuff, free headsets, awesome refreshments, and of course, cash prizes for the top three winners.
There will also be great judges and mentors from around the city, a lot of VR experts from the video field, or web VR and game developers. A lot of educated people. It’s the first time we’re doing this is NYC and we hope it will become a little tradition, who knows!
If you’re interested in VR app development and want to know how to turn it into a viable business, reach out to Ariel at ariel@startapp.com
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