The experts weigh in: 3 reasons why location-based virtual reality will revolutionize the industry by Stephanie Llamas

Special thanks to Vinay Narayan, Charlie Fink, Joanna Popper, Amy Peck and Dreamscape Immersive for sharing their insights.

I am in an airport anywhere from two to eight times in a given month and I’ll be honest, I hate it. Not the traveling part - I love that. It’s the unrelenting TSA checks, the crowded lounges and worst of all, the blob of people that “queue” up when you are trying to board the plane. But I think the thing that kills me the most is the boredom…

Immersive experiences will be integrated into everyday entertainment, retail and public spaces.
— Amy Peck, CEO of EndeavorVR

What if you could travel before you travel? What if you could fly before you fly? That’s what Periscape wants to do for travelers with their new VR stations in J.F.K. airport in New York. For $1 a minute, users can jump into last year’s top-selling VR game Job Simulator or bounce beats from their favorite songs off red and blue shields in Audioshield.

But Periscape hasn’t invented the wheel – far from it. Location-based (or out-of-home) virtual reality was the fastest growing VR software segment last year, and this year we can expect it to reach over $200M in worldwide revenue, making it the second-largest entertainment category after XR games.

That’s not to say the market is full of winners. Quite the opposite – last year we saw a wave of location-based entertainment (LBE) venues shut down, and IMAX has admitted their VR initiative is bleeding cash. While it’s not without its challenges, LBE is still the path to the industry’s success. In-home VR is growing slowly and is far from mainstream with only 15M devices in use this year, compared to the 120M televisions in the world or the 89% of households in the US with smartphone access. It’s going to be a long time before VR proliferates the home, but in order for that to even happen consumers need to understand the tech first.

In this industry, seeing is literally believing. You cannot know VR unless you use VR. And that’s where LBE comes in: Instead of spending a couple thousand dollars on a computer rig, why not check it out at a local airport or mall or theme park to see what the fuss is all about? I mean, you were going there anyway, right?

I’m a strong believer that LBE will be the savior of VR. A bold statement, I know, but the experts have weighed in and they’ve helped me find the three reasons why this will be a revolutionary endeavor for the industry.

#1. Consumers don’t need to invest thousands in VR to know what it’s all about.

LBE is the best way to experience content for the price of a ticket.
— Joanna Popper, Global Head of VR for Location-based Entertainment at HP

Accessibility is the name of the game here – finding VR in your favorite places is getting easier than ever. “LBE has grown beyond traditional arcades and now has moved into mainstream locations such as movie theaters, airports and malls,” says Vinay Narayan, VP of Product and Operations for HTC VIVE. “For the mass consumer, it is increasingly becoming the way they experience VR, especially high quality VR, for the first time.” It’s affordable and popping up in places consumers visit frequently. So why not give it a shot?

Joanna Popper, Global Head of VR for Location-based Entertainment at HP agrees: “LBE is the best way to experience content for the price of a ticket and, in many cases, creates a social and bonding experience. Additionally there is usually an expert assisting with the technology as needed which makes it seamless for the user.”

First-hand experiences aren’t the only things driving awareness, though. After the exhilaration of a high-powered, full-scale VR experience, people are going to want to talk about it, and that’s one of the biggest issues the tech has right now -- not enough evangelism. Dreamscape Immersive, makers of Alien Zoo which ran at Westfield Century City mall for a month this past winter, said their number one driver of sales was word of mouth: Dreamscape CEO Bruce Vaughn says 97% of their guests said they would recommend it to their friends.

VR shouldn’t wait for the consumer, and accessible LBE experiences are going to be the path to getting VR to find consumers, not the other way around. By creating high-end experiences that show users the true power of VR, LBE is teasing them with a taste for what they can – and will – have at home some day.

#2. It’s growing fast, raking in $1B by 2021.

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LBE is growing rapidly and Forbes writer and XR author Charlie Fink believes it will stay the course if operators run it right. He sees the trend emerging primarily around adult entertainment centers. “VR does best when it is surrounded by other electronic/game attractions like those found in Toronto's Rec Room. There The VOID is nestled comfortably amongst VR attractions from the biggest names in the industry like Sega, Namco and Bandai, who have been carrying the torch for VR since the ‘90s.”

Investors have taken notice, too. Amy Peck, CEO of EndeavorVR, points out that one company, CityLights, acquired the epic VR space adventure Spheres for $1.4M making it "one of the first real wins in terms investment into high-end VR content." I’m with Peck here – a quiet acquisition of this kind is no small feat. And as we see more investment and M&As, Peck says the landscape “will be less about arcades and destinations. Immersive experiences will be integrated into everyday entertainment, retail and other public spaces.”  

For the mass consumer, it is increasingly becoming the way they experience VR.
— Vinay Narayan, VP of Product and Operations for HTC VIVE

But for now, destinations will be where LBE gets its start, particularly those with consumer throughput already. Narayan highlights that the Dave and Buster’s Jurassic World VR installation is the largest to date, with experiences at over 110 locations. This is providing an easy access point for users at an enormous scale (not to mention the attraction of recognizable IP). Whereas VR arcades are still finding their footing (last year saw quite a few shutdowns), traditional arcades and entertainment centers with VR add-ons are profiting since people are not there to seek out VR experiences – they are happening upon them. And companies like Nomadic plan to travel the country to bring it to as many people as possible and not just setting up shop in one place. Consumers aren’t proactive with VR so don’t try to force it. Go to them.

#3. You can actually make money from LBE.

Fink says it’s not expensive to start: “Today it is very, very inexpensive to buy ten Vive units and gaming PCs, drop pipe and drape around the stations, install POS and other management systems like Springboard, and open your doors for business in a couple of days.” But it’s also not easy to stay afloat… he warns that “operating retail entertainment is not for the faint of heart.”

Today it is very, very inexpensive to open your doors for business in a couple of days. But operating retail entertainment is not for the faint of heart.
— Charlie Fink, Journalist and Author

I agree, and that is why I believe in the integrated approach where VR is put in places people already frequent. According to Popper, there is a sweet spot in “a gamified multiplayer experience native to VR in an environment that doesn’t require high marketing spend to drive traffic.” Alien Zoo allowed Dreamscape Immersive and Westfield to find foot traffic and help keep shoppers in the mall. This drove revenue for both. Alien Zoo was a temporary installation, but its success has spurred both Dreamscape Immersive and Westfield to install a permanent experience in the shopping center, which will debut later this year.

If you’re one of the lucky ones who has recognizable IP to attach to an experience, there’s an even bigger opportunity to increase throughput. “IP holders like The VOID are in a strong position because they can charge a premium for big titles like Ghostbusters,” says Peck. The VOID’s Ghostbuster experience debuted at Madame Tussauds in NYC and has the best of both worlds: IP and organic foot traffic. Add Popper’s recommended “gamified multiplayer experience” and you have LBE gold.

On top of this, one of in-home VR’s biggest challenges is monetization. Consumers aren’t ready for the free-to-play model, and upfront full-game purchases have a revenue ceiling (once you’ve tapped your accessible audience, there’s nowhere left to go). But after the in-home opportunity wears out, these experiences have the chance to license out their content to LBE centers and derive additional revenue from somewhere new.

Popular IP, installations at tourist attractions and gamified experiences are helping drive real revenue for companies like The VOID.

Popular IP, installations at tourist attractions and gamified experiences are helping drive real revenue for companies like The VOID.

If you build it (somewhere people go), they will come (because they’re already there)

What VR is lacking most is awareness, which is about much more than just knowing the technology exists. It’s about embracing the power, presence and agency VR affords users, which is unlike anything else. In order for the entire industry to hit 109M shipments in 2021, it has to put the devices in consumers’ hands, not just put them on shelves. And the focus isn’t just on entertainment: $4.6B is being invested in enterprise applications for VR. Consumers aren’t just going to consume products, they are bringing VR back to the workplace and building transformative tools for their professions – that is, once they know what the tech is.

LBE is going to be the thing that opens the world’s eyes to VR’s true potential, and even though some installations won’t succeed, we need operators to keep putting out compelling experiences so we can get consumers into headsets. Peck put it best: “Why do it? Well, because there are those who will make a lot of money in the near term... Beyond that, what could be better than cracking the code for a new paradigm in storytelling?”

I couldn’t agree more.

_________________

Want more VR data? Visit us at https://www.superdataresearch.com/data/?section=virtual-reality or contact Sam Barberie at sam@superdataresearch.com.

Tribeca brings VR to the masses, but with few surprises by Stephanie Llamas

The Tribeca Film Festival has once again embraced the emergence of immersive. Festivals like Tribeca are playing a huge role in helping to legitimize the medium, which is increasingly important as people go bearish on XR. But then again, we will still see a lot of the tried-and-true. Even though VR games are almost absent this year, there is a cinematic push toward activism and horror, themes we’ve seen before. That’s not to say innovative execution of these themes will be completely absent, with big names like Alexandre Aja (The Hills Have Eyes, High Tension) and a collaboration between OK Go’s Damian Kulash and Chris Milk seeking to make a splash at the event. However, just as we saw with CES and GDC, there won't be a lot of surprises. Here’s what you can expect to see at this year’s event. 

XR for change: As consumers show less and less interest in cinematic XR fiction, we are seeing a huge focus instead on ‘XR for change’. Themes at Tribeca will include racism (1,000 Cut Journey, Terminal 3), sexuality (She Flies by Her Own Wings), climate change (Coral Compass, This is Climate Change), hacktivism (#WarGames by Her Story’s Sam Barlow) and war (The Day the World Changed, HERO).

HERO  puts audiences at the center of a moment of a civilian air raid in a Syrian city, where choices shape one’s own experience. In an unprecedented use of interactive technology to convey a deeper humanity. 

HERO puts audiences at the center of a moment of a civilian air raid in a Syrian city, where choices shape one’s own experience. In an unprecedented use of interactive technology to convey a deeper humanity. 

Immersive content is become increasingly popular to not only inform but also tap into emotion in order to influence action. The challenge, however, is that it is hard to attract proactive at-home viewers with this type of content, meaning it can only really recruit users through event-based activations (like at Tribeca). Same goes for fundraising, but with more payment solutions surfacing, like Payscout and Worldpay, it will be easier to capitalize on the high emotions a user is feeling in that moment to drive donations.

Alexandre Aja tries to shed horror’s reputation for being a VR gimmick: The horror genre has always been an easy sell for VR, but it is quickly becoming a gimmick, so hopefully Tribeca’s showing prove that’s not the case just yet. Alexandre Aja is bringing an expert eye to the medium and will be showcasing The Skull of Sam and Midnight March. We’ll see if it lives up to his fans’ expectations.

Lambchild Superstar: Making Music in the Menagerie of the Holy Cow  is replete with magical music-making contraptions, friendly animals, robots, and audience members as they work together to create an original song.

Lambchild Superstar: Making Music in the Menagerie of the Holy Cow is replete with magical music-making contraptions, friendly animals, robots, and audience members as they work together to create an original song.

OK Go continues to show their innovative side: Unsurprisingly, Damian Kulash of OK Go, the band known for its wacky and mind-bending music videos, is helping to bring a music experience to VR with Lambchild Superstar: Making Music in the Menagerie of the Holy Cow (I’ve long said music could be a killer app for the medium). He's collaborated with VR legend Chris Milk, giving users agency to make music in an immersive dream world... with at least one cow.

Not quite a game: Though VR games won’t be in the spotlight, Owlchemy (the makers of Job Simulator who were acquired by Google) will debut their new Vacation Simulator, which shows how interactive entertainment can be about play without being a game.

The Chalkroom  combines the agency viewers have in a real-world installation with the fantastical elements of a virtual world.

The Chalkroom combines the agency viewers have in a real-world installation with the fantastical elements of a virtual world.

Contemporary art becomes VRt: Laurie Anderson and Hsin-Chien Huang will bring their 2017 narrative art piece The Chalkroom to Tribeca. This is following Marina Abramovic and Anish Kapoor’s VR showings at Art Basel, and an XR art distribution platform called Acute Art that premiered last year, which features work by Abramovic, Olafur Eliasson and Jeff Koonz. The avant garde eye of the contemporary art community is showing VR a lot of love, something that has traditionally helped bring validation to new media in contemporary art movements (as with Nam June Paik’s work in video and telecommunications, and Cory Arcangel’s video game art).

The Virtual View from CES 2018 - Roundup #2 by Stephanie Llamas

So as I sit in a Starbucks after chaos on the show floor both yesterday and today (guys, seriously, stop staring at your phones while you walk and for the love of god, say excuse me when pushing through!), I'm still in awe of the amazing things coming out of VR and AR. So if 2016 was the year of hype and 2017 was the year of disappointment, 2018 is the year of redemption.

Most of the biggest announcements happened earlier this week, but Lenovo stole the spotlight as they released details on their Google VR standalone device and camera, the Mirage Solo and Mirage Camera:

Lenovo finally breaks out its Google standalone headset: the Mirage Solo.

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How it works: Lenovo will launch its Google standalone device in Q2, competing with the Oculus Go. The company says the device has inside-out tracking, 6DOF and 110 degrees FOV. Reports are conflicting on price. 

What it means: Lenovo was the first to commit to a standalone Daydream (the Lenovo Mirage Solo) and now that HTC pulled out they have the spotlight. Google worked on the original Daydream with HTC but it felt more like a throwaway side project than a viable product. Now that they've shifted their partnership focus to Lenovo, a company that has thrown itself into VR with a Microsoft headset and computing solutions, they may have stronger potential. While HTC has its own products to focus on, Lenovo needs companies like Google and Microsoft to power their VR accessories. Neither of those companies are really "hardware" companies -- they create hardware to support their lucrative online and software solutions -- but Lenovo is strictly hardware. It's what they do best. And the standalone is purported to have a lot to offer: inside-out tracking, 6DOF and 110 degrees FOV. What this means is there's no need to tether it to another device, no need to set up external sensors, and you can move and see inside the content as freely as you can in the Oculus and VIVE. Final price is still up in the air as conflicting reports range from "under $400" to $400 to $450, all of which are similar to the Oculus and PSVR, and less than the VIVE. But if quality rivals those high-end devices, they could still entice consumers to spend the extra cash in lieu of buying the $200 Oculus Go. One added note though is that Google quietly invested a lot of money in content, so we should see improvements on that end that, again, could help give the device an added edge (despite Oculus's catalogue).

TL/DR: It functions like a tethered device, but without a clear price point it's unknown as to whether it can rival the Oculus Go.

 

SteelSeries is prototyping a VR doorbell prototype.

::Puts on headset:: Welcome to the USS Callister... oh, wait, you're pizza's here!

::Puts on headset:: Welcome to the USS Callister... oh, wait, you're pizza's here!

How it works: Honestly, Tom Brant at PC Magazine explained it best: "Bluetooth Low Energy (BLE) protocol to transmit signals from a motion detector to a receiver connected to the computer powering your VR headset, which would display or sound an alert in whatever game or app you're currently using."

What it means: **WARNING: BLACK MIRROR SPOILERS** After Ryerson University and the MIT Media Lab unveiled their project last year to "bring back the dead" by creating what they dub "augmented eternity", which analyzes a person's digital footprint to revive them in AI, all my worst nightmares from Black Mirror seemed to be coming true... And now we are seeing new tech reminiscent of that in the show's USS Callister episode, and it's creeping me out! Well, ok, no one's DNA is going to be used to create virtual versions of people (yet), but we may be able to hear the pizza guy while in VR like the spaceship's captain, Robert Daly.

**OK I'M DONE RUINING BLACK MIRROR FOR THE PEOPLE WHO HAVEN'T SEEN IT YET** To reiterate for those of you who for some reason have not caught up with the show (c'mon guys, get it together), SteelSeries is creating a tool that sends alerts to VR users in their headsets of something in the real world needs their attention. This is actually really important. One of the biggest issues folks have with VR is the feeling of isolation full immersion can give us. Even when you don't want interference from the real world, life is still going on around us and sometimes we need to pay attention to it whether we like it or not. Honestly, I never use VR once I've sent my order on Seamless because of the ire I fear from the poor driver who has to come back after he left when I didn't hear my doorbell. But it's not just about a knock at the door: this tech could save us from the perils of the real world as well. It could alert of us intruders, people or pets who for some reason decide to enter your virtual bubble, or even a bird flying through your window and b-lining it toward your head (not that that has ever happened to me... ok, yes, it did. And it pooped EVERYWHERE. All windows are now closed during VR sessions.). And because it's Bluetooth-capable, it can go anywhere within a reasonable range (e.g., next to your doorbell), and it reportedly can go months without needing to replace the battery. 

TL/DR: Go watch Black Mirror.

 

In light of everything we've heard so far and my perusal of the show floor, these are the biggest trends I'm seeing so far:

  1. VR for everyone: VR and VR accessories are going untethered this year with quality products at accessible price points that don't need supporting hardware or external sensors.
  2. The tried-and-true are seeing refinements, with HTC's VIVE Pro taking the lead. But smaller companies like Pimax are even getting on board with innovations like 8K (even if it does have kinks). 
  3. There's going to be more interactivity implemented into the hardware both inside and out, with inside-out tracking, eye tracking and real world alerts helping us feel more comfortable immersing ourselves.
  4. Prices are coming down. With really good, recognizable IP, standalones, which wouldn't require the added cost of supporting hardware and accessories, could penetrate the mainstream market (but probably not until next year). 
  5. There's more support for 2018 being the year of XR enterprise. Well, at least, that's where the money's at...
  6. MR funding has picked up, but now with a little more realism.

Follow me @stephinaners and tweet at me with your comments, questions or recommendations, and stay tuned for more updates to come this week!

If you didn't catch my first round up, click here to get more insights.

Also, SuperData CEO Joost van Dreunen put together a stellar write-up of his own, so be sure to go check that out.

 

Ok, now seriously, after your CES parties tonight go stream a little Black Mirror. Happy nightmares!

 

 

The Virtual View from CES 2018 - Roundup #1 by Stephanie Llamas

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This will be my second year attending CES. While I don't think any of us are looking forward to the crowds and chaos, I am definitely excited to see what new XR (Virtual, Augmented and Mixed Reality) innovation is out there.

After XR's somewhat lackluster showing last year, 2018 is record-breaking for the medium at CES: according to the CTA, exhibit space for the Augmented Reality Marketplace has grown 10% this year, with an added 18% for the Gaming & Virtual Reality Marketplace. 

While there is sure to be mountains of cool stuff to report on, let's start at the beginning. Here's a rundown of the latest announcements:

AR-enabled book Charlie Fink's Metaverse is now available on Amazon (and I contributed!)

The Fink himself

The Fink himself

In case you haven't heard, Charlie Fink has put together an amazing, AR-enabled book featuring contributions from a long list of the who's who in the XR industry, including Phillip Rosedale, Annika Steiber, Stanford's Dr. Walter Greenleaf, Ori Inbar and so many more. I am incredibly honored to be listed alongside such talent as Charlie kindly asked me to contribute two chapters -- one on monetization (you can read it in Forbes) and another on definitions and why it's important for the industry to be on the same page. The coolest part about the book? You can whip out your phone and see content in AR. It's now available on Amazon and trust me, it's awesome.

 

HTC VIVE unveils hardware upgrades with the new VIVE Pro.

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How it works: The Pro provides higher resolution (making small text readable, for instance), added comfort and optional wireless use using Intel technology and a battery pack. Price and launch dates are yet to be announced.

What this means: Tethering has been a big issue for VR thus far, which is why the HTC VIVE Focus and Oculus Go were designed to hopefully quell that issue. However, VIVE is striving to create gold-standard devices (think of it as the iPhone of VR: higher cost, higher quality, lower accessibility), so experience is going to continue to trump affordability. But cost may be the key to adoption, at least in the beginning, so they will need to corner the enterprise market and provide extra compelling content for high-end users until mainstream consumers gradually get hungrier for premium devices.

 

Oculus partners with Xiaomi and Qualcomm to launch the Oculus Go worldwide and the Mi VR Standalone in China.

Oculus_Xiaomi_VR_Stephanie Llamas.jpg

How it works: Both headsets are powered by Qualcomm's Snapdragon 821 Mobile VR Platform. Xiaomi will be Facebook's hardware partner, manufacturing the affordable devices as Oculus focuses on powering them with their proprietary VR tech. Xiaomi will also work with Oculus developers to localize content for the Chinese market.

What this means: Facebook can invest in VR without an immediate path to profit, unlike HTC VIVE. Therefore, they can afford to create more economical products that will help boost overall penetration and, in turn, make them the primary household name for VR. Oculus is also focusing on Facebook's strong suits -- social media and experiences -- rather than invest in hardware development where they don't need to. Right now, HTC VIVE is winning China in regard to high-end devices, so this is Oculus's chance to get into the region by selling to a different market. Meanwhile, Xiaomi, which shipped over a million devices by November 2017, is striving to corner the Chinese standalone and premium mobile markets in the face of their strongest competitor, Huawei, who is working with Oculus competitor Google. These partnerships bode well for all companies involved -- as long as the quality of experiences are high enough not to deter the general public from VR (the way the Cardboard did).

 

Intel announces new volumetric capture technology, new VR/AR content studio and an "exploratory partnership" with Paramount Pictures.

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How it works: Volumetric capture provides video viewers with enhanced depth, allowing them more virtual space to interact with content. Intel is currently using sports venues to test their True VR platform's volumetric capabilities, giving users the ability to change their perspectives in real-time (they are the Olympics' official VR partner). They also announced a VR mini-PC at CES.

What this means: Volumetric capture is essential to the growth of 360 video. Without it, the experience is just too voyeuristic, which makes VR videos go stale rather quickly. It also provides true immersion and that will grow interest. Just 18% of American users watch videos using their headsets (not including Cardboard) and they only watch for about 10 minutes during a single session (of course, this partially has to do with mobile VR limitations like phones overheating). More immersion means more compelling content, which will provide incentives for users to stay in their headsets longer and advertisers, for instance, the opportunity to better tap into this market. However, volumetric is nothing without good content, which Intel is trying to tackle by opening their own studio and partnering with Paramount. If done successfully, the combination of immersion and content will be enticing to general consumers and, therefore, boost adoption and revenue potential.

 

LooxidVR was named CES 2018's most innovative product.

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How it works: The premium mobile device tracks eye movement (the first of its kind) and brain sensors, providing data on user interaction and allowing for a more in-depth user experience. Preorders begin February 1. 

What it means: This could be a real coup for premium mobile, which is in danger of becoming obsolete quickly as standalones are released. However, if phones are still incapable of giving lasting experiences without overheating or providing high quality graphics, this technology won't be enough to keep mobile VR alive.

 

iStaging creates an affordable and easy solution to creating spatial VR capture with VR Maker.

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How it works: iStaging Corp. focuses on real estate solutions in VR and AR. According to the Taiwanese company, "via use of just a fisheye lens and rotator, VR Maker condenses hours of capture and stitching work into mere minutes." This allows anyone with a smartphone to easily create virtual tours. 

What it means: Realtors are general consumers, which means they are not always VR-savvy. But I have long believed in the promise of VR and AR for real estate (I wish I had had that option before my exhaustive 2 month search last year when I visited over a dozen apartments!), so giving folks with different levels of VR experience an easy tour solution is essential. Arm realtors with this tech and some cheap Google Cardboards, and millions of house hunters could be renting and buying without even needing a live visit. This also introduces people to the idea of VR, especially if they can use this to try higher end mobile devices.

 

uSensAR gives more Android users than ARCore. 

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How it works: uSens CTO and Co-founder Yue Fei claims the technology will allow folks with lower-end Android phones to experience AR, allowing the AR to access vastly more users than ARcore. According to Fei, "ARCore currently only serves about 30M Android phones, which is just 5% of the entire Android smartphone ecosystem.” The tool supports Unity, C++, Java and their own SDK, which will come out this quarter. 

What it means: I mean... it would be game changing. First, it's super easy to develop for (supposedly). Second, the iPhone is expensive, so affordable Android devices really reign supreme in many markets, including the biggest one: China. This would give AR developers the opportunity to potentially monetize better and allow them more content freedom without the same restrictions as the App Store. 

 

I'll continue to keep you posted as I walk the show floor and hear more announcements. In the meantime, wish me luck...

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Think I missed something? Want more info? Email me at stephanie@superdataresearch.com!

Magic Leap's finally here... so now what? by Stephanie Llamas

While the product looks and sounds amazing it's important to remember that we still don't know that much about what Magic Leap really has up its sleeve. What we've seen and heard so far is a concept, a design, and some descriptions of the experience. However, XR is something you can't understand until you actually experience it yourself, no matter how vividly people describe it to you. The promise is enormous but if it holds up, it will be industry-changing, and I very much hope that's the case. 

I'm sure the price point will be high and inaccessible to most consumers for awhile. However, what they've claimed to do will make it infinitely easier to innovate for a more mobile, interactive experience than most VR and AR we see today. That could revolutionize so much more than the entertainment business since such a surreally real experience could facilitate more meticulous training programs for things that need it, such as surgeries and design. 

Magic Leap has found an interesting way to skirt tethering without actually removing it. They announced the headset is tethered to a small, portable base, so it's almost as ordinary as wearing headphones attached to a cell phone. It will be a long time before something like Magic Leap (claims to be) can be completely untethered and easy to wear. This is a really creative solution to that.

Experiences are reported to be less strenuous than VR, allowing for longer user sessions. VR's limited experiences have been one of the industry's major issues and has made it difficult for companies to keep users coming back to their headsets. AR is consumable for a longer period of time than VR, but there isn't any content that makes people feel compelled to keep using it. MR could be the best solution, especially since the IP rumored to be involved with Magic Leap seems to be compelling. 

I have long believed that Magic Leap's funding and the caliber of their investors means the device IS special -- even if we all were annoyed that it took them so long to let us in on the secret. The crawl they are making into the market will put MR revenue behind VR and AR for awhile, but it will outgrow them quickly after that -- that is, if it can become affordable for the general consumer.

How Microsoft turned AltspaceVR into the Cinderella story of the year by Stephanie Llamas

I first heard about AltspaceVR almost two years ago, when the number of VR users was barely the size of Montana's population. I was pretty skeptical considering VR's tiny addressable audience at the time and that this platform required enough users to build an interpersonal experience. Fast forward to 2017 and VR has begun to really show its potential, with headset shipments approaching 16M units and the social VR space on track to earn $3.1B by 2020.

Courtesy: SuperData, 2017

Courtesy: SuperData, 2017

As a long-time advocate for the industry I never doubted social VR would succeed -- I just thought AltspaceVR might have been jumping in a little too soon. After meeting some folks from their talented team it occurred to me they had something other platforms, even Facebook, are so desperately trying to find: a connection with a dedicated fan base that doesn't just love the experience, but the company itself. 

Why is AltspaceVR so special?

AltspaceVR has a reputation of really listening to their fans, trying endlessly to create a non-hostile safe space for people to hang out and do the things they wish they could in real-life with others who are far away. And when I first tried it, I was genuinely shocked by how amazingly friendly and welcoming the users were. One even saw I was struggling and gave me a tour, showing me how to get from place to place and even taking me to a great vantage point to view their favorite virtual landscape.

So when I heard in July that the platform was to be shut down, I was deeply saddened. The reason behind this seemingly unexpected decision was, according to AltspaceVR, the fall-through of an investment round and "the general slowness of VR market growth [which] made most of our investors reluctant to fund us further." 

The V-ROI dilemma

This is not a new story. Dozens, if not hundreds, of VR studios have come to a close after lack of funding once investors caught on to the fact that no, VR is not going to pay dividends on their investments in the next year or two. As SuperData, and others, have said many times before, the market is going to show slow exponential growth, and its inflection point is anywhere from two to four years out. 

But then AltspaceVR managed to reemerge following an outpouring of fan support, donations and public declarations of love for the platform (after all, they did host a virtual wedding). Less than a month later the company was able to go into "deep discussions with others who are passionate about AltspaceVR [and] who want to guarantee that our virtual oasis stays open."

And today we found out just who those discussions were with: Microsoft. This is quite possibly the biggest industry partnership with a small development team since Job Simulator creator Owlchemy was acquired by Google this past May.

So what does all this mean for the future of VR?

It's no secret investors are looking for a quick return on their investments, and over the last couple years the VR market was flooded with funding after Facebook acquired a little-known headset maker called Oculus for $2B. But because the market was so new, many didn't really know what they were investing and, therefore, how long it would take to see returns. After three years and less than $5B in revenue since 2014, this VR thing wasn't looking so promising anymore.

Big players have stayed heavily involved, with the likes of Google, HTC, Samsung and now Microsoft very heavily investing into a long-term commitment; the last time we saw this kind of push from so many heavy-hitters was with smart devices. But it often looks like these goliaths may push the smaller guys out. For example, Facebook revealed its social VR platform Spaces earlier this year and certainly struck some fear into the hearts of many groundroots developers out their - including AltspaceVR.

Microsoft, however, wants to compete with the big guns already entrenched in the industry, so who better to partner with than a company with so much fan loyalty their users literally revived the dying platform (almost) by themselves?

Microsoft will continue to allow AltspaceVR to run on other devices as it has up until now. Like HTC VIVE, Microsoft wants to forward this industrty as a whole knowing that is the only way they themselves can succeed. So I don't foresee them trying to completely close off their ecosystem in the way we have seen with Oculus. And that's good news for everyone in VR.

This is how investors are going to once again understand the potential of this industry even after learning a valuable lesson when it comes to long-term commitments. Expect this to be the beginning of VR's next wave of major funding -- fuinding that could finally get us the shovel we need to dig VR out of this trough everyone has been dwelling on so much.