The VR Industry, Part 5: What’s Next

This is the fifth and last part in a series exploring the current state of the VR industry. I would recommend reading parts one, two, three, and four first.

As discussed in my last post, I believe cinematic VR is the single biggest opportunity in the VR industry right now. For the final installment in this series, I’ll summarize what’s been said so far and speculate what’s to come.

Everywhere you look in VR right now, you are seeing the rise in relevance of cinematic VR. I am absolutely certain that the next two years will be spent trying to create VR experiences that are a combination of game and cinema.

I’ve personally spent the last few years down in the trenches: building stop-gap cameras, competing to win funding from brands, and spending way too much time or money on things that software now does for free. If you’ve been reading along, I’ve made some increasingly contrarian claims:

  1. Almost all of the time spent in headset is in the entertainment category, with VR games slipping from ~100% three years ago to somewhere around 35% by the end of the year and cinematic VR making up the rest.
  2. The VR games portion of the industry is behaving in a manner we’d expect, but cinematic VR is in a state of pain. The pain is the result of the rapid democratization of technology creating massive numbers of content producers without a clear path to monetization.
  3. Non-entertainment companies won’t grow very large because the hardware and software layers that would once represent dozens of successful companies will instead be rolled into the core VR experience (this includes payments, ads, messaging, streaming, SLAM, NLP, avatar generation, eye tracking, face tracking, etc.). I predict social and education will be too tempting for these companies to ignore as well. Microsoft in particular has been very open about their ambitions in the education market. Meanwhile both Google and Valve have announced major integrated social features in the last week.

Big companies tend to move slowly or misunderstand the exact needs of other industries, so in the short term a few companies will find success building new tools that take advantage of the fact that it’s becoming increasingly easier for would-be creators to produce VR content. Others will find success building VR products for industries that are too small for big companies to care about, like architecture.

Facebook’s AR Studio makes it easier to create AR for their platfrom. Will they make similar tools for VR in the near future?

These considerations will only keep established players at bay for so long. I’m certainly biased, but I believe we’re heading to a future where the hardware and software layers of VR computing are consolidated to such an extent that all of the most successful VR companies will be in the entertainment category, especially in those that monetize content direct to consumer.

If you’ve read all of my prior posts, it might seem counterintuitive for me to say that now is the time to focus on creating content, but what I’m actually saying is that now is the time to focus on content so long as it’s different from what we’ve already been doing and it doesn’t use the business models that made sense to use for other computing paradigms.

So what have we learned about VR that could guide us? Well, surprisingly little. Up to this point VR has existed under a binary: either it’s a game or it’s a video (a.k.a. cinematic VR). Games are active experiences where the user has agency and the designers spend a lot of time thinking about the friction between ease of use and challenge. Meanwhile, cinema is highly empathetic and relies on suspension of disbelief: the idea that we’ll never do anything to violate the illusion that you’ve been pulled into a passive fantasy world.

I am absolutely certain that the next two years will be spent trying to create VR experiences that are a combination of game and cinema. However — and this is my most contrarian opinion so far — I believe that the foundation of this interactive medium will be cinema, not games.

I know that it’s rather shocking to assert that game engines won’t be the foundation of VR, but until game engines can capture the nuances of the millions of subtle facial expressions that humans use to interpret emotion, intent, and meaning, it’s just not going to happen.

That being said, game engines combined with volumetric or light field capture could be used in innovative ways to attempt to properly render people in games. In these scenarios the game engine is only generating the part of the world that’s not related to the story. To me, that means it’s still therefore a primarily cinematic artform.

This gray area will no doubt be the subject of much debate in the near future, but what’s exciting is that no one really knows what the combination of game and video will look like or how to classify it— only through experimentation will we be able to find answers. For now, I’ve simply been calling it “interactive cinematic VR.”

In attempting to understand this emergent artform, I think it’s helpful to delineate the difference between immersion and interactivity because the two are often conflated.

Immersion vs. Interactivity

Immersion is the result of technological progress: headset displays that improve in resolution each year, more robust spatial audio engines, tracking of bodies (faces, eyes, hands) that starts as something you wear and eventually becomes wireless, etc. The upshot of immersion is that it creates embodiment. Everyone in VR was confused for a long time in thinking that empathy was the end goal of VR, but cinema has always been a highly-empathetic art form. It turned out that what we were really hitting on was embodiment: the sensation that your true self is present in the virtual world. The technology-driven, ever-improving sense of embodiment is what makes VR experiences increasingly powerful — and that’s a fantastic trend for the industry — but at the end of the day, incrementally improved immersion is about selling hardware.

When I refer to interactive VR, I’m referring to expanding the way we tell stories. What’s crucial, in my opinion, is that we focus on implementing the technologies that further this goal. To do this we’ll need to shift from our current overemphasis on immersion and start working on interactivity.

The core struggle will involve exploring versions of agency that do not violate suspension of disbelief. This means that the interactivity we bring to cinematic VR will not be in the form of visible user interface elements — that’s the easy stuff. Instead it will be about extending cinematic VR computationally in a way that the viewer is unaware of. To borrow from the gaming world: it will be frictionless interactivity.

The technology could come from gaze tracking (and eventually tracking the rest of the body), natural language processing, bio/neurosensors, artificial intelligence, or any number of new technological developments, so long as they can be deployed in a cinematic way.

It’s worth noting that these types of interactive technologies will need to be implemented on the platform/consumption side in order for consumers to have access to them. This means that YouTube may choose to start with gaze tracking, whereas Facebook might choose to start with volumetric capture plus game engine (these two things are actually already happening). These choices could lead to legitimate platform differentiation.

Even more exciting is that interactivity could lead to new monetization opportunities for creators. Will a consumer pay to download interactive cinematic VR just like they already do for VR games? I certainly hope so.

Everywhere you look in VR right now, you are seeing the rise in relevance of cinematic VR. In the last month alone Unity announced a slew of new features for hybrid cinematic VR/game engine experiences, Valve announced a new video category on Steam VR, Facebook shuttered Story Studio and will instead commit $50 million to “non-gaming, interactive content,” and Google announced Jump Start — an ambitious plan to support 100 cinematic VR projects in the next seven months. These announcements are coming from the titans of the VR industry.

Now that we recognize the importance of cinematic VR, we can begin the next phase of exploration. I am very excited about the future of this embodied interative cinematic art form — more simply known as VR.

I hope you have enjoyed this series. Thank you for your time.

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