In a galaxy far, far away.
TV Universe Begins to Stir as Technology Gains Momentum
By Fred Dawson
February 1, 2016 – As the hype surrounding virtual reality moves into mainstream entertainment circles network service providers face still another situation where they have to weigh how far to go with allocation of human and infrastructure resources toward a vaguely defined service opportunity.
With the failure of 3D to get off the ground still fresh on network operators’ minds and the rollout pace of services supporting 4K UHD and High-Dynamic-Range (HDR) formatted content still up in the air, network operators may see little reason to dive into serious consideration of VR at this early stage. But they can’t afford to be too late to the party if nascent but accelerating attempts at making VR part of the OTT app mix catch hold.
Decades of VR development and misplaced expectations have given way to an unprecedented burst of enthusiasm buttressed by multiple research projections and a new generation of headsets, production tools and application concepts that are drawing the engagement of major players. These range from the massive $2-billion bet made on VR by Facebook with its purchase of VR technology developer Oculus in 2014 to Google’s aggressive approach to building a mass market through its Cardboard initiative and new YouTube programming to toe-in-the-water activities on the part of entertainment giants such as Netflix, Disney, Discovery Communications, the BBC, DirecTV, Comcast and many more.
A recent Goldman Sachs Group report predicted an $80-billion global market for VR and AR (augmented reality) by 2025 with $45 billion going to hardware sales and the remainder to software applications. On the software side, the $7.4-billion share Goldman Sachs sees going to video entertainment ($3.2 billion) and network-delivered viewing of live events ($4.1 billion) is second only to the $11.6 billion projected for the VR games market by that year, with healthcare, engineering and defense leading in other categories singled out for VR and AR applications.
While Goldman Sachs says AR software revenues will account for 25 percent of the $35-billion software pie, figures projected for the video and event as well as gaming software markets are focused on VR apps. In fact, while Goldman Sachs says VR and AR have the “potential to become the next big computing platform,” it predicts the far greater impact will come from VR, “given VR’s technological progress and momentum” and the fact that AR has “more technological hurdles to overcome, including challenges in display technology and the real-time calibration and processing of the real-world physical environment.”
Goldman Sachs is not alone in predicting a big future for VR. The same week in early December that its report came out, Macquarie Bank analyst Ben Schachter issued an advisory note that echoed Goldman’s core point: “We continue to believe that VR/AR is poised to be the next computing platform,” Schachter says. “And like the transition from desktop to mobile, it will be disruptive.”
While Schachter and others view 2016 as the year that VR surges to an unprecedented level of consumer adoption, in the grand scheme of things the ramp-up in the near term will be relatively slow. “Less will happen in two years than you’d think,” he says, “but more than you can possibly imagine will happen in the next 10….[O]nce these devices begin to get into consumers’ hands and developers launch content that moves beyond the ‘wow’ moment and into uniquely, useful experiences, it will be clear that entertainment, communication and many enterprise functions will change dramatically over the coming decade.”
For 2016, the Consumer Technology Association (formerly Consumer Electronics Association) estimates unit sales of VR headsets such as Oculus Rift, HTC Vive, Sony PlayStation VR and Samsung Gear VR will reach 1.2 million and generate $540 million in revenue, marking a 440 percent increase over 2015. Globally, Deloitte Global, in another study released in December, projects 2.5 million VR headsets sold in 2016 will generate $700 million in revenue with another $300 million generated by sales of ten million game copies selling at anywhere from $5 to $40 per unit.
“We do not expect VR to be used to any great extent in television or movies in 2016,” Deloitte says, noting the absence of content or even much in the way of commercially viable production gear. “By the start of 2016, we anticipate a small range of suitable cameras may have been launched onto the market, but the cost of purchasing or renting professional grade devices may initially be prohibitive for many projects.”
Equally if not more significant is the fact that there’s a steep learning curve ahead for VR filming, where the need to capture the 360o perspective means cameras will have to be invisible from all angles and under automated control to keep crew members out of the picture. Sports poses an even bigger problem, given that cameras in the field could obstruct player movement.
Handling the massive file sizes will be a big issue in post-production. “One production level camera features 42 cameras capable of 4K resolution,” Deloitte says. “This captures a gigapixel image (about 500 times the size of a standard smartphone image), and shoots at 30 frames a second. One subsequent challenge of capturing images at this level of resolution will be determining how to store, transmit and edit the files.”
The biggest factor driving the expectations for 2016 has been the improvement in headset or what in industry jargon is known as HMD (head-mounted device) technology. As noted by Deloitte, the market will consist of two types of VR headsets: fully featured systems and mobile-optimized systems. “Full feature devices will likely be designed for use with either the latest generation games consoles or PCs with advanced graphics cards capable of driving high refresh rates,” Deloitte says. “‘Mobile VR’ incorporates a high-end smartphone’s screen into a special case, enabling the headset to fit more-or-less snugly on the user’s head.” Samsung’s Gear VR, priced at $99 and powered by Oculus technology, is a leading example of this VR category.
The high-end device lineup is led by the Oculus Rift, pre-order priced at $599 with a late March rollout date; the HTC Vive, slated for April rollout with price yet to be announced, and the Sony PlayStationVR, due out later in the year. All three have been widely reviewed in prototype mode, most recently at CES 2016, with enthusiastic feedback from gaming specialists.
For example, Gizmag reviewer Will Shanklin found all three compelling on a visit to CES. “All three give you the basic VR experience of transporting you somewhere else,” Shanklin writes. “If any one of them were the only virtual reality that existed, we’d still be excited about this emerging frontier.”
While there are some consequential technical differences, the overarching consideration for buyers is availability of good content, which gives the edge to Oculus in Shanklin’s opinion. Oculus, in addition to having the backing of Facebook and the broadest range of content already in play, has been drawing developers to the platform through its Oculus Studios with plans to introduce 20 more VR games this year. Moreover, Oculus is teamed with Microsoft’s Xbox One, making the game console an alternative to high-performance PCs as the processing platform for playing games, which is sure to spur additional game development.
Other reviewers have given the content nod to HTC Vive in light of its deal with Valve, a leading video game maker which is leveraging the headset to support an integrated hardware-software gaming system it’s calling SteamVR. And, of course, in the wings is PlayStation VR, whose backers promise to have a boatload of content available with launch.
These headsets far outperform previous VR devices with extremely high-resolution displays – one 1080 x 1200 OLED (Organic LED) display for each eye with a 90 Hz frame rate in the cases of Rift and Vive and a 120 Hz rate with PlayStation VR. This means, with the exception of Oculus Xbox users, consumers using Rift and Vive must also have access to a high-end PC to run the headsets. Oculus is offering a complete package with appropriate PC and headset priced at $1,499.
Reviewers offer varying assessments of how the systems compare from a technological performance standpoint, but Vive seems to be winning highest praise for enhancements that include motion tracking capabilities utilizing two wireless infrared cameras placed at the corners of a room to interact with the headset’s 37 sensors. As a result, scene changes tied to head and bodily movements across a room create the sense of physical exploration in the VR experience. The system has a camera built into the headset to provide a user-activated view of the real surroundings that allows the user to avoid stumbling into things.
Writing about the Vive for online publisher Pocket-Lint, reviewer Stuart Miles notes Vive’s full movement capabilities offer “a more comprehensive range of possibilities than many other units.” He also is impressed at “how smooth the experience is. Graphically there’s no sign of lag, no delay as you move your head, hands or body…There’s no flicker and the headset is pretty comfortable too, with the soundtrack being completely enveloping.”
But it’s a measure of how far VR veterans have gone in adapting to what others might find off putting that a reviewer can rave about an immersive VR experience that includes “an umbilical cord of cables coming out of the back” of the headset, not to mention a headset that looks like “a giant scuba diving mask” with a headband “more akin to a gas mask fitting…than skiing goggles” that serves to reduce “some of the front weighting of the unit.”
As the Deloitte report cautions, “Any company that is considering VR in any regard should have a careful look at the likely addressable market. Recent breakthrough technologies that required consumers to wear something on their face have not proven to be mass market successes. While VR headsets may sell better than smart glasses or 3D TV glasses, also consider that using the technology may require a set of behavioral changes that the majority of people do not want to make.”
CableLabs, which in its recent re-organization has listed VR as a major area of ongoing interest, took pains this past year to gauge consumer response to the VR experience by bringing a cross section of non-users into its facilities for a test run. Surprisingly, the response was “overwhelmingly positive,” reports Steve Glennon, principal architect for CableLabs’ Advanced Technology Group.
Writing in a recent blog, Glennon says, “[W]e were surprised by how few expressed any discomfort and how positively regular people described the experience.” Fifty-seven percent of the visitors said they “had to have it,” while 88 percent could see themselves using a head-mounted display within three years. “Only 11% considered the headset to be either uncomfortable or very uncomfortable,” Glennon notes, adding that “96% of those who were cost sensitive would consider a purchase at a $200 price point,” which is well within the range of mobile VR headset like Samsung’s Gear VR.
But content availability is a big issue. “[W]e asked what would stop people from buying a virtual reality headset,” Glennon says. “High on the list of items was availability of content. Setting aside VR gaming, people didn’t want to spend money on a device that only had a few (or a few hundred) pieces of content.”
Judging from recent developments, a dearth of non-gaming content may not be a problem for long. A new survey of Hollywood content creators jointly sponsored by CTA and NATPE (National Association of Television Program Executives) finds most believe VR represents a game-changing method of storytelling. The consensus of 16 executives interviewed in depth for the study was that, beyond gaming, the strongest genre meriting VR development is horror. Sports and concerts were also cited as promising areas of development.
But respondents also made clear they recognize serious hurdles must be overcome before a significant tide of non-gaming VR content emerges. These include the need to generate a viable model for content creation, including a determination of the endurance cap for sustained viewing, with a clear pathway to monetization.
“The future of VR is dependent on quality content and, with this study we wanted to provide a more comprehensive look at Hollywood’s attitudes on the many opportunities and challenges this technology faces,” says NATPE president and CEO Rod Perth. “This study presents a snapshot of the types of genres that could be adapted to this dynamic technology but also offers a realistic picture of its limitations.”
CableLabs’ Glennon cites three VR content factories that are acting to fill the void, including JauntVR, which recently secured $66 million in investment funding led by Disney, Creative Artist Agency’s Evolution Media Capital and China Media Capital; Immersive Media, whose VR productions include an American Express-sponsored Taylor Swift concert video, and NextVR, which, Glennon notes, “seemingly wants to become the ‘Netflix of VR.’”
NextVR has caught the enthusiasm of Comcast Ventures, which joined with other investors in a recent $30.5-million financing round. “As the preeminent company that can transmit live high definition virtual reality over the Internet, NextVR’s lens-to-lens system captures and delivers immersive experiences for marquis live events,” say Comcast Venture managing director Michael Yang and principal Gavin Teo in a recent blog post.
Recent big TV network forays into VR include a VR-enabled version of a CNN-sponsored Democratic primary debate, Discover Communications’ Discovery VR, a series of short-form VR experiences in nature, and the BBC’s creation of a VR version of its Strictly Come Dancing TV show. Netflix has broken into VR with an app for viewing through the Samsung Gear VR that puts the viewer in front of a virtual giant screen located in different settings such as a ski lodge to watch any Netflix movies or TV episodes.
Among pay TV distributors, DirecTV, focusing on mobile VR development at its digital innovation lab, has taken the lead with a VR app that takes viewers inside the boxing ring to experience a recorded fight. In a recent interview with Multichannel News, DirecTV senior vice president of digital entertainment Tony Goncalves was quoted as saying, “We’re not sure how VR will evolve and shift from flat, non-immersive TV experiences to the level of almost putting consumers inside a movie, but for pay TV and video content providers, it’s very important to explore new ways of seeing content, and VR falls into that category.”
Perhaps the biggest center of early network-delivered VR activity can be found at Google, which has over 14,000 “spherical videos” running on YouTube, much of it user-generated content. “[With] VR (virtual reality) we’re starting to see some of the first signs of really incredible storytelling,” says Ben Relles, head of comedy and unscripted at YouTube.
Google is also heavily engaged with developers targeting Google’s $20 Cardboard headset with VR apps delivered over mobile links. For example, The New York Times has distributed Cardboard HMDs to its 1.1 million subscribers in advance of releasing the first in a series of VR short films, The Displaced, which is a documentary following the lives of three refugee children fromSouth Sudan, eastern Ukraine and Syria.
While all this activity adds up to a drop in the bucket next to mainstream content development for 4K UHD, there’s no reason at this point for pay TV distributors not to take seriously the possibility that before too long they may be packaging VR services for delivery over their broadband pipes. This will represent another strong incentive for building out gigabit access networks, given that, by CableLabs’ estimate, a single VR stream suited for use on high-end systems like the Oculus will consume between 150 and 200 Mbps of bandwidth.
“This is not just hot and sexy, a passing fad,” says CableLabs’ Glennon. “It has massive potential to transform lots of what we do, and we can all expect incredible developments in this space.”