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How Virtual Reality Will Change the World


Google Chief Game Designer Noah Falstein has been making games long enough to have lived through every iteration of the promise of virtual reality (VR). But with Sony, Google, Microsoft, Facebook, Nvidia, HTC, Samsung, Intel and other big companies investing billions of dollars in VR, that promise is finally being realized.

“With Samsung Gear VR and the upcoming Oculus Rift, HTC Vive, and Sony’s PlayStation VR, we have VR displays, input, and motion sensing hardware that’s high enough quality to really jumpstart the medium,” Falstein says. “That’s a big change from a couple of years ago when this was all getting started. The combination of super low latency and high frame rate in VR display devices together with exact position tracking input, puts you there in the world. It changes everything. That means that we are past the starting line.”

Falstein admits that at first this is going to be a small industry, but he believes VR will experience rapid growth and adoption powered by excellent hardware and software that explores and defines the way that people interact with the medium. “It’s real and it’s going to be a major business from here forward,” he says.

HTC, which delayed the consumer launch of its SteamVR-powered HTC Vive until early 2016, is still going to be first to market in the PC market. (Samsung Gear VR is already available in the mobile space.) HTC has partnered with leading independent developer Valve to encourage game developers, and also connected with Hollywood studios like HBO and Lionsgate to embrace interactive VR. Jeff Gattis, executive director of global marketing for connected products at HTC, believes the game and entertainment industries are still experimenting with VR.

“It’s going to be interesting to see how things evolve in the VR environment,” Gattis says. “We share Valve’s philosophy in allowing developers and storytellers to create what they want by offering them a blank canvas that they can paint.”

According to Tim Merel, managing director of Digi-Capital, by 2020 the virtual reality industry will generate $30 billion. Piper Jaffray forecasts sales of 12.2 million VR head-mounted displays (HMDs) in 2016. Oculus Rift is expected to account for 3.6 million of those headset sales, HTC Vive is forecast to sell 2.1 million units, Sony PlayStation VR 1.4 million headsets, and Samsung Gear VR five million portable headsets.

John Koller, vice president of marketing at Sony Computer Entertainment America, believes PlayStation VR has an advantage over the competition because of its global installed base of more than 25 million PlayStation 4 consoles. He also adds that Sony has its Worldwide Studios teams working on original VR game content like Sony Japan Studio’s The Playroom VR, Sony London Studio’s The London Heist, and Guerrilla Games’ RIGS: Mechanized Combat League. Additional exclusive games include Rebellion’s BattleZone and Crytek’s Robinson: The Journey.

“VR is great for gaming because it gives you a full-scale view of your place in the environment and that sense of presence that everyone likes to use,” Koller says. “VR takes over the two senses that you use the most—vision and hearing—and it tricks the brain into thinking that you’re in another environment

Augmented Reality

Digi-Capital is even more optimistic about augmented reality, which it forecasts to generate $120 billion in revenue by 2020. Merel believes the billions of smartphones on the market open up the opportunity for software makers to capitalize on that technology, which blends digital images with the real world through a phone’s camera.

Microsoft has hedged its bets on both VR and AR. The company has partnered with Oculus VR to include its Xbox One controller in every consumer edition retail package and also is offering plug-and-play Windows 10 connectivity and the ability to stream Xbox One games inside Oculus Rift. On the AR front, Microsoft is developing HoloLens, a wireless visor device that allows consumers to play games like Minecraft on the wall or on a table in full 3D.

“Windows 10 is going to be a great platform for augmented reality,” Mike Nichols, chief marketing officer at Xbox, says. “HoloLens is one device that shows that off, so that’s why we built it.”

One of the mysterious players in the augmented reality space is Florida startup Magic Leap, which has raised $592 million from companies like Google, Qualcomm, Warner Bros., and Legendary Entertainment. The company has designed a Dynamic Digitized Lightfield Signal, which generates images indistinguishable from real objects and then can place those images seamlessly into the real world. Ready Player One author Ernest Cline says Steven Spielberg and Warner Bros. Pictures may use this technology for the film adaptation of the bestselling book that’s in production.

Legendary Entertainment CEO Thomas Tull believes Magic Leap is the first medium that he’s seen that has the opportunity to be truly transformational.

“Most of the improvements that we’ve seen in home entertainment have been display devices going from standard def to high-defi nition, 3D, 4K, and beyond, but all of those things are really just significant enhancements of the ways we view content and experience things,” Tull says. “As a tech investor I’ve seen variations of this over the years and the reason I invested in Oculus is that was to me a quantum leap. Oculus did things that were very special. And then with augmented reality and the way we interact with the world with instantaneous information, it’s not just for entertainment. It’s a completely different way of potentially experiencing things, and that’s why I invested in Magic Leap. There is a lot to learn and there will be bumps in the road, but it’s a really exciting medium and something that I’m pretty passionate about.”

Mixed Reality

Oculus VR Founder Palmer Luckey, who convinced Facebook his technology was worth $2 billion, sees virtual reality and augmented reality converging into something new over time. Oculus has invested in companies like Pebbles Interfaces and Surreal Vision to explore those opportunities. But he sees VR as the leading platform for the foreseeable future.

“It will be quite a few years before we see a convergence between VR and AR because of the different trade-offs in software and hardware,” Luckey says. “VR is a lot more understood as a medium because it’s been explored for decades now. You can put a person inside a VR world and play games or tell stories. AR has mostly been shown as a utility tool to get things done like getting directions and other information from the world around you. No one has made a good AR entertainment tool yet. VR and AR are very different market segments today.”

A division at Google is currently exploring new opportunities in “mixed reality” through Project Tango, where the real world and virtual world combine.

“It has some very interesting potential when you turn the camera on in the back and let that image shine through your pin, and post super-imposed virtual images on top of it and use Tango’s tracking and sensors to make those appear very solid in relation to the angle that you hold the controller,” Falstein says. “It’s a very convincing illusion. Within a few years we’ll reach that point where we, as an industry, can add virtual images to real world images and sensors pretty seamlessly.”

Falstein compares these early days of VR and AR to Hollywood’s transition from silent pictures to talkies. Over time, motion pictures evolved into movies. He says terms like “VR” and “AR” may end up feeling like that was what existed before the industry reached mixed reality, or whatever word or phrase becomes popular.

“It definitely seems like a trend that we’re able to blend the real world and the virtual world increasingly seamlessly,” Falstein says.

TVs are not going away, yet

While Luckey sees a VR future, he admits that in the near-term traditional TVs (which are migrating to 4K in homes), aren't going away. There's imply too much content for TV, and the big screen integrates more naturally into everyday life. Plus, the pricing on early VR technology will be very expensive when you factor in the cost of a high-end PC. Piper Jaffray Senior Research Manager Gene Munster estimates that only 20 percent of household PCs will be able to run Oculus Rift or HTC Vive. But Luckey believes hardware prices will drop quickly on the HMD front, and PC technology is always improving at a lower cost thanks to Moore's Law.

At launch, even Sony's PlayStation VR will cost an estimated $350-the same price as a PlayStation 4 console. But Sony has dropped hardware prices consistently in its history and the goal with all of these companies is to attract first the early adopters and later more mainstream audiences.

Luckey believes that in the future, the very concept of the living room will evolve into a sitting room optimized around AR and VR usage.

"Tablets and smartphones decrease the relevance of the living room," Luckey says. "In the future, you'll be able to access rich media anywhere you are and seamlessly bring things in and out of the VR world. You could choose to project a big TV floating in your living room. The living room itself could be a box and you could make that appear to be any living room by wearing glasses or contacts that project TVs virtually anywhere you want."

That concept sounds a lot like the Star Trek Holodeck.

John Gaudiosi

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