DEGREE PROJECT IN COMPUTER SCIENCE AND ENGINEERING, SECOND CYCLE, 30 CREDITS STOCKHOLM, SWEDEN 2021

Factors influencing the mass adoption of VR video platforms

MYROSLAVA ZAIETS

KTH ROYAL INSTITUTE OF TECHNOLOGY SCHOOL OF ELECTRICAL ENGINEERING AND COMPUTER SCIENCE Abstract Despite the number of studies demonstrating the opportunities for the broad implication of (VR) across numerous industry domains, including media, this technology has not yet made history, to a large extent, because of the bottlenecks that prevent it from becoming mainstream. A number of media houses, video production companies, and even VR equipment developers such as The New York Times, Disney, or invested into the creation of the VR video platforms and apps with 360-degree films and VR movies. However, their acceptance by a general public has been slower than many have anticipated. This paper explores the ecosystem of platforms serving VR video and identifies the factors influencing their development and adoption based on the insights from the previous research on the technology acceptance models (TAMs) of virtual reality and interviews with ten VR professionals: developers, content providers, and representatives of VR video platforms. This qualitative study reveals that VR hardware design and performance (degrees of freedom, rendered video quality, immobility, interaction with VR content, cybersickness), the price of VR headsets (which are monofunctional devices), limited socialization features in virtual environment, the lack of appealing VR content and issues with its production are some of the main components that hinder the interest towards virtual reality and VR video platforms by a large audience. These determinants, subsequently, may influence the VR users’ perceived enjoyment, usefulness and ease of use, essential for the emerging technologies diffusion. The paper presents the discussion on the bottlenecks and potential growth points that may become the drivers for the further development of platforms offering VR video and their adoption by the wider public.

Sammanfattning

Trots ett stort antal studier som visar upp möjligheterna för bred implikation av virtual reality (VR) över flertalet branschdomäner, inklusive media, har denna teknik ännu inte fått ett brett genomslag, i stor utsträckning, på grund av flaskhalsar som hindrar den från att bli "mainstream". Ett antal mediehus, videoproduktionsföretag och till och med utvecklare av VR-utrustning (som The New York Times, Disney samt Oculus) investerade i skapandet av VR-videoplattformar och appar med 360-graders filmer och VR-filmer. Allmänhetens acceptans har gått långsammare än många har förväntat sig. Denna uppsats utforskar ekosystemet för plattformar som leverar VR-video och identifierar de faktorer som påverkar deras utveckling och antagande baserat på insikter från tidigare forskning om teknikacceptationsmodeller (TAM) för virtual reality och intervjuer med tio VR-proffs: utvecklare, innehållsleverantörer, och representanter för VR-videoplattformar. Denna kvalitativa studie avslöjar att VR-hårdvarudesign och prestanda (frihetsgrader, renderad videokvalitet, rörlighet, interaktion med VR-innehåll, "cybersickness"), priset på VR-headset (som monofunktionella enheter), begränsade socialiseringsfunktioner i virtuell miljö, bristen av tilltalande VR-innehåll och problem med dess produktion är några av de viktigaste komponenterna som hindrar intresset för virtual reality och VR-videoplattformar att nå en stor publik. Dessa avgörande faktorer kan därefter påverka VR-användarnas upplevda njutning, användbarhet och användarvänlighet, vilket är väsentligt för spridningen av ny teknik. Uppsatsen presenterar diskussionen om flaskhalsar och potentiella tillväxtpunkter som kan bli drivkrafter för vidareutveckling av plattformar som erbjuder VR-video och deras antagande av en bredare allmänhet. Factors influencing the mass adoption of VR video platforms Myroslava Zaiets KTH Royal Institute of Technology Stockholm, Sweden [email protected]

Abstract INTRODUCTION Despite the number of studies demonstrating the The concept of virtual reality (VR) as an immersive opportunities for the broad implication of virtual reality technology is far from new to the market. However, rooted (VR) across numerous industry domains, including media, back to the 1950s with Heilig’s , and this technology has not yet made history, to a large extent, re-emerged in the 1990s with 3D video games, earlier it because of the bottlenecks that prevent it from becoming failed to become a standard due to the poor graphics, price, mainstream. A number of media houses, video production and low processing power (Jones et al., 2018; Sachs, companies, and even VR equipment developers such as 2016). The New York Times, Disney, or Oculus invested into the Starting from 2014, with the acquisition of creation of the VR video platforms and apps with Oculus for $2bn, virtual reality has been experiencing 360-degree films and VR movies. However, their increasing interest from the tech companies, investors, and acceptance by a general public has been slower than many media, being forecast to disrupt almost every industry in have anticipated. This paper explores the ecosystem of the long run (Mütterlein et al., 2017). VR was predicted to platforms serving VR video and identifies the factors be potentially adopted as the next big computing platform influencing their development and adoption based on the after the PCs and smartphones (Ericsson, 2017; Sachs, insights from the previous research on the technology 2016). acceptance models (TAMs) of virtual reality and interviews with ten VR professionals: developers, content Early research demonstrated the high interest of the providers, and representatives of VR video platforms. This consumers in immersive technologies. According to the qualitative study reveals that VR hardware design and survey conducted by the Ericsson Consumer Lab (2017) in performance (degrees of freedom, rendered video quality, the US, Western Europe, and Asia, 70% of early adopters immobility, interaction with VR content, cybersickness), expected that VR/AR would become mainstream in the the price of VR headsets (which are monofunctional domains of media, work, education, travel, retail, and devices), limited socialization features in virtual social life; 50% believed VR could replace movie theatres environment, the lack of appealing VR content and issues and physical devices (HDTVs, big screens, smartphones). with its production are some of the main components that As VR technology matured, it opened up the opportunities hinder the interest towards virtual reality and VR video for the individual entertainment experiences with the platforms by a large audience. These determinants, hedonic use motivation, similar to games and films subsequently, may influence the VR users’ perceived (Mutterlein, 2017). From the very beginning, the video enjoyment, usefulness and ease of use, essential for the entertainment industry (together with video games and live emerging technologies diffusion. The paper presents the events which were entirely driven by the consumers) were discussion on the bottlenecks and potential growth points considered some of the most promising markets for VR that may become the drivers for the further development of (Sachs, 2016). While gaming was named to be the primary platforms offering VR video and their adoption by the driver of VR adoption in the media industry, some media wider public. companies started developing their VR platforms (mobile Author Keywords or web-based) available for users to watch the video in VR Virtual Reality, Virtual Reality Ecosystem, VR Video, VR either on their smartphones or head-mounted displays Platforms, Technology Adoption. (HDMs). There were signs of the disruption in the media industry: among those who used VR headsets at least

1 several times a week, almost 2/5 shifted a part of their Nowadays, most VR content is classified as gaming video viewing to the VR experience (Ericsson, 2017). (Manis et al., 2018), which is driving most of the VR revenues. In 2019, Facebook’s CEO Mark Zuckerberg said A few years ago, the interest in VR in the media industry that the Oculus Store (Facebook-owned VR game and app was pretty high. In 2015, the New York Times launched its marketplace) had surpassed $100 million in lifetime sales, NYT VR app available on the smartphones and shipped a with 20% coming through .4 “On Christmas million free headsets to their print ​ Day, people bought almost $5 million worth of content in subscribers. Since then, NYT released dozens of VR films the Oculus store.”5 What is more, now, Facebook positions and became one of the flagships in virtual reality Oculus as “an all-in-one gaming headset.” journalism telling stories through a 360-degree audiovisual experience. In 2016 NBA announced the partnership with Besides people willing to invest more into the gaming the VR firm NextVR, streaming the games in virtual content, there is a growing demand for an industrial reality app; two years later, NBC partnered with Intel to application of VR. About one-third of VR devices are ​ provide 50 hours of live coverage at the 2018 Winter predicted to be purchased by enterprises.6 Olympics through the NBC Sports VR app. Large media ​ Identifying and understanding the barriers to the adoption houses and film production companies invested in existing of VR technology and VR video platforms, in particular, is or created own VR platforms with computer-generated VR an essential issue for the VR devices and content suppliers, and 360-degree content, among which were The Guardian, media houses, related businesses, and consumers. The MTG Tech, RTL Group, Dagens Nyheter, YouTube, specific questions related to the VR acceptance and use Disney, etc. In this field, they competed with the VR have been earlier addressed by scholars. Previous research hardware developers and producers such as Samsung, studies focused mainly on the technical aspects Google, and HTC. In 2016, Netflix, Samsung, Google, and (development and application), perception and adoption of Valve were top vendors offering VR content (Techavio, virtual reality devices (Mütterlein et al., 2017; Manis et al., 2016). ​ 2018; Lee et al., 2019), VR content such as gaming, sport ​ But the interest from the users has been lower than (Kunz et al., 2019) and 360-degree immersive films forecast. In 2017, there were 43 million unique VR users (Serrano et al., 2017; Jones, 2018) or VR technology in worldwide.1 As the research firm CCS Insight reported, the general (Laurell et al., 2019). The researchers also ​ ​ ​ amount of smartphone-based VR devices sold globally fell investigated the users' intention to use VR technology, by over 60% between 2017 and 2018 - from nearly 8 with the help of technology acceptance models (TAM). million to fewer than 3 million units.2 According to a Although these works bring interesting insights, research market analysis and consultancy agency IDC, between focusing specifically on the adoption and diffusion of VR 2017-2018, VR gear sales dropped from 6.7 million to just video platforms as an ecosystem consisting of the a projected 4.6 million units. By the end of 2020, the above-mentioned components is limited. This study aims company predicts the shipment of 6.34 million units of at providing an objective assessment regarding the standalone and tethered HMDs as well as 0.39 million likelihood of future use of VR video platforms and units of screenless viewers (smartphone-based VR highlighting the possible points of growth for the headsets).3 Still, despite the positive trend, the shipment businesses related to VR video. quantity is anticipated to be lower than three years ago. In this paper, the term “VR video platforms” is used This had an effect on the investments in VR video interchangeably with “VR content platforms” and “VR production. For instance, in 2017, after two years of platforms”. This study keeps video-on-demand platforms operations, Facebook shuttered its Oculus Story Studio under the spotlight due to the growing popularity of video even despite winning an Emmy for the short VR story services and the impossibility to stream VR video via “Henry.” Google shut down its in-house film studio linear TV. Interaction with the content (such as exploring Spotlight Stories in 2019. ​ video in all directions) is one of the distinct characteristics

1https://www.forbes.com/sites/charliefink/2018/01/02/how 4https://techcrunch.com/2019/09/25/oculus-eclipses-100-m -are-people-making-money-in-vr-or-when-will-they/ illion-in-vr-content-sales/ ​ 2https://www.ccsinsight.com/press/company-news/3726-vi 5https://seekingalpha.com/article/4320025-facebook-inc-fb rtual-reality-device-market-declines-in-2018-but-outlook-r -ceo-mark-zuckerberg-on-q4-2019-results-earnings-call-tra emains-positive/ nscript 3https://www.idc.com/getdoc.jsp?containerId=prUS461437 6https://www.idc.com/getdoc.jsp?containerId=prUS453267 20 19

2 of VR, that cannot be fulfilled by 2D video. Unlike As no suitable classification of VR video platforms and its over-the-air programming that serves scheduled programs, components is available, a thorough literature review has video-on-demand allows users to watch video content at been done. The scope has been restricted solely to the their convenience, across multiple devices and platforms topics relevant to the end customers - VR video viewers, connected to the Internet. The streamed VR content should excluding the examples of VR application in gaming, have higher resolution at reasonable bitrates than regular education, design, healthcare, construction, and so on. video and requires massive digital traffic. A taxonomy of current VR video platforms consists of a To explore the barriers and opportunities of this issue, the few key components (Appendix A). These are the research question was formulated as the following: What hardware components, content (360-degree or hybrid VR are the factors that influence the adoption of VR video video), software to produce and edit content, and platforms? distribution channels. The main goal is to provide a general overview of the The traditional approach of classification of VR hardware current state and to bring insights for future developments. lies in separation into two categories: input and output The theoretically derived taxonomy of VR video devices (Anthes et al. 2016). Hardware is usually classified platforms, applications, and content is presented, which as displays (output) - mobile- or computer-based headset; can be used in future studies. The explored factors that sensors (input) - physical controllers, eye-trackers, cameras affect the adoption of VR content platforms (gaming to interact with the virtual content; computers to process excluded) can be used in the other VR industries, enabling inputs and outputs. the ground for comparison. HMD plays a major role in the VR environment and is a RELATED RESEARCH AND THEORY distinct characteristic of VR technology. The headset 2.1 Virtual reality in the media industry: definition and completely obscures the viewer’s vision with the visual taxonomy data presented on the screens within the VR device. VR headsets have gyroscope technology that creates an Unlike (AR) that merges illusion of looking around in VR by tracking head computer-generated digital objects with the real world via movements. Besides, the high-end devices are equipped the medium that enables users to engage with them in with the accessories - hand controllers for more interaction reality (e.g., smartphone and the Pokémon GO app), VR is in VR. The VR headsets are either stand-alone or tethered a kind of immersive technology that puts users in an to the PC. Also, there are independent smartphone-based interactive virtual environment with the help of VR devices whose popularity, however, is gradually head-mounted displays (HMDs). These block out visual falling. senses from the physical world and produce visual and audio stimuli overriding and simulating users’ sense 2.2. VR in technology acceptance theories organs (Suh et al. 2017). Despite the numerous anticipations and studies on Thus, VR is often defined as “the sum of the hardware and immersive technology demonstrating its disruptive software systems that seek to perfect an all-inclusive, potential, it is still far from becoming mainstream. One of immersive, sensory illusion of being present in another the explanations is that unlike the invention of a new environment” (Biocca et al., 1995). Some observe the VR technology that often appears as a single event, the system as the tracking-stimulation relationship between the technology diffusion is a continuous process and its physical environment, hardware, and a human organism success often depends on the individual behavioral (LaValle 2017). intentions of the end users willing or not to adopt the novelty (Martínez et al., 2014; Davis, 1989). ​ ​ To explain the determinants of the acceptance of information technology and devices, the technology acceptance models (TAM) have been used by many scholars. The willingness of the individuals to use new technology was interpreted by two main factors: the perceived usefulness (the degree to which the users believe that the system will enhance their performance)

and the perceived ease of use (how much effort the use of ​ Figure 1. VR systems (LaValle, 2017) the system requires) (Davis 1989). In other words, if VR is simple and easy to understand, it will be seen as more

3 useful by the potential consumers and, thus, would hardware with key antecedents (variables): age, past use, influence the attitude toward new technology and its price willing to pay, and curiosity. It was found that there adoption. The validity of these constructs has been proved is a negative relationship between the VR users' age and by many studies and they are considered as important perceived ease of use, meaning the older the consumers variables. Since original TAM was limited to the are, the less likely they will find the VR hardware easy to workplace and did not take into account the hedonic and use. Past use has a positive influence on behavioral social influence on the adoption of new technology, it has intention and actual usage. Inherent curiosity (the desire to been improved and extended with the additional constructs seek and obtain new information) was named one of the - general and industry-specific variables appropriate for the most powerful predictors of the VR hardware usage, technology being explored to provide a more consistent although it needs further assessment whether the simulated prediction of the technology use (Taherdoost, 2017). Some curiosity can speed up the technology adoption. of the examples of the extended constructs (influence When it comes to the intention to adopt VR headsets, Herz factors) included personality traits, age, gender, learning and Rauschnabel (2018) argue that consumers “expect to opportunity, computer anxiety, presence, flow, trust, social ​ experience both a strong sense of virtual embodiment (the influence, critical mass, personal innovativeness, sensation of being another person) and virtual presence playfulness, interactivity, empathy, embodiment, habit, (the sensation of being at another place)”, and having only hedonic motivation, price value, content quality, etc. one of these requirements fulfilled may cause a negative (Rasimah et al., 2011; Mutterlein et al., 2017; Lee et al., effect. Users do not tend to consider VR technology 2019; Kunz et al., 2019). functionally valuable, but those that do, tend to favor VR Previous research deduced that the perceived usefulness of devices more. Those users that think that VR devices are VR devices promoted the positive usage attitude towards comfortable react more positively to the technology; thus, them although it did not directly influence the intention to a good design can be seen as a trigger for the adoption. use VR HMDs. The easy to use is one of the essential VR Health and privacy risks lower the adoption rates, while attributes for the customers, however, even if VR provides psychological and physical risks do not (Herz and the effortless experience, it does not necessarily mean that Rauschnabel, 2018). The standalone value of VR ​ the users have a positive attitude towards VR. The technology does not necessarily result in higher diffusion. intention to use is directly impacted by the perceived To be accepted by the mainstream audience, the ​ enjoyment: a degree to which using technology is seen as technology value should exceed the technological utility, ​ enjoyable on its own, apart from its performance. install base, and the available complementary products Regardless of the actual purpose of the VR hardware, the (Laurell et al., 2019). amusement has a significant impact on the intention to use Regarding the acceptance of VR content, people tend to VR devices meaning the customers “consider VR to be for experience it rather than watch (Ericsson, 2017). Jones et pleasure rather than usefulness” and see it as an al. (2018) researched the 360-degree film enhanced with entertainment medium (Lee et al., 2019). the external stimuli. They found that heat and elements Lee et al. (2019) added to TAM such variables as social related to smell improve the immersive experience and ​ interaction and strengths of the social ties. While perceived create a sense of interaction and embodiment that enjoyment was defined as the key belief variable, social traditional (spherical) movies are missing. Thus, adding interactions, and strength of the social ties increase the multi-sensory input (visual, auditory, thermoceptive, perceived enjoyment, which has a higher effect on the and olfactory) may impact the overall VR experience. intention to use than perceived usefulness. Social However, the stimuli and their intensity need to be interaction in VR as the degree to which the user can controlled carefully to maximize the effect, which does not interact with other people in the virtual environment can seem possible with the current technological play a significant role in the invigoration of the perceived developments. enjoyment. It was previously confirmed that in augmented METHOD reality, social presence (the ability to recognize other users in AR) indirectly increases user satisfaction through the The conducted research was a desk-based literature study feeling of togetherness. The strengths of the social ties on a as well as an empirical study based on the semi-structured VR device is the degree of communication between the interviews with VR experts. The received data was users and their acquaintances. triangulated to ensure that the obtained from multiple sources of evidence data is valid and reliable. Manis et al. (2018) developed the virtual reality hardware acceptance model (VR-HAM), extending TAM for VR

4 The research consists of a few constructs. First, the factors the focus was shifted towards the specific problems in the of acceptance of VR were outlined, supported by the VR industry to provide as targeted and applicable academic literature on VR adoption, industry reports on information as possible. The interviews have been the current state and development of immersive recorded and partially transcribed with the main statements technologies, including virtual reality and the VR industry presented as the quotes. news. Together, they formed the theoretical foundation for RESULTS AND ANALYSIS further interviews. The literature review emphasizes the sources investigating virtual reality, not traditional Based on the literature overview and the interviews with technologies such as 2D films. the industry representatives, the adoption factors of VR video platforms have been identified and structured based The empirical part consists of qualitative research in the on their nature: technology, content, social (individual form of in-depth semi-structured interviews aiming at beliefs). Only those factors were highlighted if at least one deepening and broadening findings from the literature. of the interviewees signified their influence. Then, the results are triangulated and explained, implications are discussed and limitations identified. Technology-related factors Together these three elements provide an understanding of Cost of VR hardware. A too high price may limit the user the current state of VR video platforms and define the most base. According to the survey by Greenlight Insights, in critical factors necessary for their further adoption. The 2015, 71% of consumers were willing to pay more than qualitative method has been chosen since it is appropriate $200 for VR hardware; in 2016, this fraction reduced to for the situations when the topic is understood partially, 42%. Such a trend may indicate that for consumers, the and there is a need to explore it in-depth. Semi-structured cost of VR HMDs is more important than the benefits of interviews allow us to validate the findings but also VR usage. However, it may also be possible that identify and fill in the gaps in the existing research. consumers put more emphasis on the hedonic aspects of VR hardware utilization (Manis et al., 2018). “Cost of VR hardware is reasonable for the developed world, but it can’t be expanded to developing countries” - VR Content and Marketing Lead. “If the hardware is cheaper and HMDs are smaller - it could impact the wider adoption” - VR News Editor. The cost of VR HMDs depends on the type of device. Smartphone-enabled VR devices (such as Samsung Gear VR or Google Cardboard) are the most affordable on the market, starting from as low as $10 on Amazon.com but the user experience is limited and completely dependent on Figure 2. Research strategy. the phone. Samsung Gear VR with controllers costs around In total, ten VR experts, developers, and VR producers $90 but extends its value proposition with the possibility to from Sweden, the US, and France have been invited to interact with the content “manually.” The HMDs with the participate in the interview, namely two executives at best screen resolution and most immersive experience, Swedish VR distribution platforms ViaReal and DN VR such as Oculus Quest or HTC Vive, cost around $400 what (mobile and Oculus apps that deliver 360 video, VR video, is considered as the vague investment into the device that and live streams); managing director from Swedish VR is used on average 6.2 hours per month (IDC, 2019). industry organization, a professor from KTH VIC Lab, Following the cost reduction curves seen for smartphones five VR developers & content producers (Sweden, France, and PCs, the VR/AR HMDs’ prices may fall 5-10% USA), one game developer (Sweden). Each interview annually (Sachs, 2016), which may expand the customer lasted from 30 to 60 minutes. There were five open-ended base, especially to the populated developing regions. questions with follow-ups regarding the stage of the VR Design and performance. The VR HDMs are rather technology maturity; main problems with the mass bulky, not fashionable devices. The technical glitches are acceptance of VR technology; the factors that prevent the not uncommon. VR applications (whether adoption of VR video platforms; possible drivers for the smartphone-based or PC-based) should be faster and VR video platforms’ development. The questions were lighter. The set-up of the HDMs is one of the challenges based on the technology acceptance constructs, although for the users: unlike the mobile or computer interfaces, the

5 interface of the VR systems may not be intuitive for the wireless connection (5G) would enable the transmission of users (although the stand-alone VR systems are easier to gigabits of data “over the air interface for a large number use). The navigation inside the VR environments is uneasy of users … in the most radio resource efficient manner” on mobile devices, although it's improved on the HMDs what could contribute to the VR technology adoption with the usage of controllers. Easy to set up, budget (Prasad et al., 2018). mobile-based headsets require the smartphones with a high Low-latency 5G network, combined with the distributed display resolution (for the convenient visual experience), cloud, and eye-tracking that enable , appropriate processing power, motion trackers, and a could impact the user experience in VR, contributing to the long-lasting battery. On the contrary, the tethered headsets quality of the content without the need for wired are bulky and “awkward to wear,” they limit users’ connection to PC. 5G connection may enable VR movements due to the wired connection to PC, are streaming and contribute to the wireless VR adoption. dependent on the PC processor being able to render video at high speed, and, in addition, they create a safety hazard Degrees of freedom (DoF). The numerous researches since the user may get caught and fall (Lai et al., 2019). prove that the HMDs with 6DoF provide a higher sense of presence than the ones with 3DoF. The sense of presence "Cables are horrible. Future lies in wireless VR" - VR directly impacts the user's view and inclination of using a Content Producer. tool, from the point of both usefulness and ease of use Rendered video quality. Video quality is named to be one (Chandrasekera et al., 2019). ​ of the most significant hurdles in the VR industry. Even if Some VR devices (such as smartphone-based) allow only the 360-degree video is shot with the help of 4K Ultra HD ​ three degrees of freedom (3DoF) when the users can view (4096×2160 pixels) cameras, at the moment, the VR ​ ​ in any direction by simply rotating their heads. However, hardware and software are not able to deliver the 4K the body movement in the real world does not lead to the quality in VR. Nowadays, nearly every VR headset has a ​ move in virtual environments. On the contrary, HMDs horizontal field of view of about 100 degrees and a with 6 degrees of freedom (6DoF) allow them to reflect the resolution of around 1440×1600 pixels. The users can still ​ moves of the users in the real world in VR. In modernized see the pixels, and the text in the small font is hardly ​ VR environments, the 6DoF is achieved by the room-scale readable. For a more immersive experience, the human ​ VR with the headset or controller triangulated in the clear vision should be raised to at least 210 degrees, which will playspace. For many VR HMDs, the tether is still required also multiply the number of pixels and the angular due to the limitations in the processing power as it helps to resolution (the number of pixels within a unit angle). The ​ ​ run more complicated programs smoothly and provide a fundamental problem is that the headset with a field of better graphic rendering. view of 200 degrees and twice as much of the angular resolution will multiply the number of pixels sixteen-fold. Hand tracking. VR limits the physical movement of the ​ Currently, no GPU on the market is able to process it.7 users. To move objects and teleport themselves in a VR environment, people use controllers. Some headset makers The problem can be solved by eye-tracking and foveated require external tracking devices and cameras. Facebook rendering when only the area where the user is looking at announced the hand tracking as an early consumer feature is rendered in a high resolution. The VR HMD's makers with the help of the built-in cameras in its Oculus Quest in have already announced the devices with the built-in 2020. It will allow users to interact in VR directly with eye-tracking technology: Oculus Quest enabled developers their hands, without controllers. Not only with a Dynamic Fixed Foveated Rendering (FFR) feature will the feature bring a new layer of interactivity, but it that renders the peripheral of the lenses at a lower will also require the development of a whole resolution than the central area. HTC manufactured its ​ gesture-interaction system. aimed at the commercial clients Vive Pro Eye VR headset ​ at the market price SEK 12 499 - the price tag that may be Haptics. Haptic feedback is a mode of communication that ​ seen as too high for the mass-market consumers. simulates the sense of touch (vibration, pressure, temperature, etc.). It deploys physical resistance and Network speed. The size of VR video files is another vital ​ encompasses the position and movement of the human component. Much higher quality would be needed for a body in space. Haptic feedback has been demanded by the fully realistic experience than what is currently accessible consumers and requested to be added to the VR in even high-end VR systems. Since mobility was one of experience. The start-ups HaptX or Noitom are currently the key reasons for the smartphones adoption, high-speed developing interactive gloves. VR Electronics is developing the Teslasuit - for VR. Both hand 7 https://uploadvr.com/foveated-rendering-matters/ ​

6 tracking and haptic feedback require the language to be and it’s the same scale as making movies” - VR Content developed - just like for smartphones and touchpads. Producer. “Regarding the haptic feedback: it is necessary to build a 360 video (or even VR 180) has a lower relative creation language for that” - VR expert. cost than VR content due to the more affordable equipment’s price. The cheapest 360-degree cameras can Health issues. Some known side effects of the VR ​ ​ ​ be bought for under $100. With such a price tag, even technology use include motion sickness (also called including the pre-production, shooting, and cybersickness) closely related to the latency issues; eye post-production, the creation of 360 videos for VR strain as the result of vergence-accommodation conflict, ​ ​ platforms is more affordable, faster, and easier than VR when the eye tries to focus on the pixelated objects in the videos. distance while they are just a few centimeters away; nausea; physical discomfort such as muscle strain in the “High-end production costs 10,000 SEK per VR [360 ​ neck and shoulders as the result of prolonged use of VR; video] piece.” - VR Lead ​ cognitive overload and distracted attention. The long-term The production of VR content is also a time-consuming consequences of VR usage are also not researched task that significantly delays the release of VR movies and extensively yet. There are concerns that regular use of VR updates to the existing content. could accelerate the development of short-sightedness (myopia). Research by specialists at Leeds University “To throw someone off the roof in VR, it took us five found that only 20 minutes in VR could influence the people and two weeks of a full-time job to find a perfect ability of children to absorb the distance to objects. It is speed.” - VR Producer. ​ ​ advised that the VR users take breaks frequently to avoid The very lack of standards in content creation is taken to nausea. be a reason for slower VR growth. Adapting VR Content-related factors experience for different platforms also requires significant resources. Content offerings. The chicken-and-egg issue is a well-known phenomenon in VR/AR when consumers "We spent 3-4 months per year full-time, 2-3 people just to (individuals or enterprises) are hesitant to purchase adapt the software to go from Steam to Oculus, and on hardware without a wide range of content or apps, while each platform, we have a different HMD" - VR Content content developers are not eager to invest in VR/AR Producer. without the user base. Not all content providers believe in the potential of VR “We introduced technology without anything to see. video platforms. Traditional VR video still lacks Content is the key” - VR Producer. interactivity, which makes people more interested in VR games rather than VR movies. To use VR, customers heavily rely on visual content. In the analysis of the social media posts, Laurell et al. found out Monetization. Monetization of the content becomes a that about ⅔ of the users who tried VR were concerned challenging task for the VR content creators who have to about the stand-alone value of the VR HMDs (tech cooperate with the VR distribution platforms that also play specifications) and the network externalities value (content the role of the publishers. Platforms handle distribution, offerings). That means that while the VR hardware payments, subscription, and communication with the functionality can be improved considerably, the VR customers. VR content providers have to rely on the industry should create more content to simulate the publishers since “it is hard to get much traffic organically.” usefulness of VR (both hardware and technology in Due to the underdeveloped VR platforms scene, there is no general). or limited competition between the platforms, which gives Cost of VR content production. Some larger players such them more bargaining power over the content providers. as Facebook, Google, Sony tried to bridge this gap by Quite often, the distribution agreements with the VR investing in both equipment and content or software platforms require a noticeable cut (for example, Valve (Sachs, 2016; Ericsson, 2017). However, the price of Steam typically takes about 30% off the sales with some content production is still too high. exceptions). The free-to-play and subscription models, earlier successfully employed by the games industry, are “For us, creating a new VR content costs $100-200 restricted by the lack of compelling content or content thousand. It takes about $1 million to develop a VR game, updates, which are essential to make people pay.

7 "People stick to the platform if there are constant updates" Content duration. The VR, storytelling is characterized ​ - VR Content Producer. by a slower tempo and shorter duration. Shorter experiences work better with VR. While games aim at Some platforms hook traditional video users with VR. For around 20 min in VR at a time, the consumers of VR 360 example, the NBA broadcasted games in VR as part of its video news spend, on average, 6 min per session. VR films League Pass subscription package rather than a unique created by New York Times typically do not exceed 10 offering. minutes. One interviewee said that he easily spends a few Storytelling. The way the audience consumes content in hours in VR daily, but his case is rather an exception than ​ VR is different from the consumption of traditional media. a common trend. The distinguishing part of VR video, whether it is movies, “VR is a short-term device. Even in video production, TV, or live events such as concerts and sports, is that the attention span shortened from 30 min to 10 sec.” - VR VR user is not a passive observer but rather a participant of Producer. the VR story. The viewer can choose where to look, where to move, and which objects to explore. While the “We can sit in the movies for 90-120 min. But in VR traditional flat films are mostly plot-driven, in VR, there is experience, 20 min is solid for now” - VR Producer. no guarantee that the user will see any of pre-planned Since VR offers a more immersive experience, some types events or actions. of content may not be appropriate for the mass audience. “We are moving from storytelling to story living - it’s a For example, it's harder to consume news in VR in the different way to explore VR.” - VR expert. same way as in traditional media - the scenes of war or violence may seem too traumatic for certain categories of “It’s easy to watch Youtube or traditional video, but in VR, users. it’s harder to navigate users.” - VR Developer. Social (individual) factors Conversion of the two-dimensional multimedia content into a three-dimensional space requires a new approach. VR paradox. Among the challenges the industry faces, VR films are different from traditional movies. Motion Ericsson (2017) defined the so-called VR paradoxes of pictures are comprised of a wide range of camera shots, mobility, isolation, and integration. Customers can travel typically taken at altogether different times and scenes, anywhere in the , but their physical split by cuts. In post-production, the filmmakers heavily movements are limited; VR makes possible rely on the so-called "continuity editing" - the system to communication and socializing inside the virtual space edit and maintain these shots together to create an illusion (e.g., games or social VR) but isolates users from their of the coherent sequence of events for the viewers. While physical surroundings; those who experience challenges in the scenes can be linked by other techniques such as their everyday lives are more likely to be more active in fade-in, fade-out, dissolution, about 95% of editing virtual reality. boundaries are cuts (Serrano et al., 2017). According to the “Social is a factor that is holding VR back” - VR expert. observation by Serrano et al., in traditional cinematography, the action discontinuity (when the Despite it being possible to watch media with friends in sequencing frames are not related to each other, with the VR rooms such as Bigscreen or AltspaceVR, the complete change of the venue, time, and scene) is the least technology is more disconnecting from the social frequently used while in VR movies they are the most perspective. VR is still a personal thing: in a VR common. One of the possible explanations is that due to environment, the user feels lonely and isolated; the the higher level of immersiveness, the continuity edits interaction and emotional feedback are not available, the limit the opportunities of the free exploration of VR user can’t share the joy with the other participants. Facial environments. expressions and body language are not tracked; hence the VR avatars remain distant and indifferent. The use cases In VR, audio is often used to guide the viewer throughout such as streamed live sports events in VR haven’t driven the narrative. VR video is sometimes compared to the the adoption the way many have expected. theatre: the scenes are staged. The Walt Disney's creators ​ of Myth: A Frozen Tale enhanced visual effects: the scenes The future of the social aspect of VR is undecided yet built as an inverse theatre, the focus moves around a user although some companies invested in the tools enabling in a circle, and the scenes out-of-focus desaturate and social interaction within VR. For instance, Facebook has gradually deem. built social VR features into its Facebook Spaces and Oculus Room services, but shut them down in October 2019, announcing the launch of Horizon - a new social VR

8 world in 20208. In 2017, Microsoft acquired social VR In a nutshell, the VR industry is experiencing several platform start-up company AltspaceVR. Mozilla hurdles that prevent users from adopting this new introduced WebVR Hubs - a virtual room available in the technology and consuming VR content on video platforms browser.9 on the everyday basis. They are discouraged by the price and design of HMDs, their limited performance, mobility, Audience interest. Interest in video games, live events, and interactivity (restricted degrees of freedom, hand and video entertainment is entirely driven by consumers tracking and haptic feedback), insufficient screen (Sachs, 2016). For many production companies, the hype resolution and the negative effect on the viewers’ around VR did not result in orders; for many, it was a well-being (motion sickness). It’s nearly impossible to one-time order, with the low user retention rate. Unlike the socialize inside VR, and the experience cannot be shared traditional forms of video content, such as movies and TV with a wide audience due to a limited user base. The VR series, VR remains a one-time experience, which makes it video currently available on video platforms does not seem more difficult to market it to the end users. Besides, VR is to be a significant reason for purchasing the VR device, often associated with gaming rather than with TV, while the nature of it (duration, navigation, storytelling) cinemas, or video streaming services. For many users, VR does not suffice the investment decision into content is seen as a cultural, intellectual experience and, thus, too creation by VR studios. Subsequently, the opportunities for complicated. the monetization of VR video are limited, especially taking "People do not know what VR is, they can’t imagine it, but into account its high cost of production and low user their experience is different after they try it" - VR expert. awareness and retention. Location-based VR, such as arcades or VR installations in DISCUSSION the museums, helps to introduce technology to the users. The goal of this study was to explore the factors that Traditionally being more popular in Asia due to the influence the mass adoption of VR video platforms. The developed internet cafe culture, VR arcades also expanded challenge of this task was related to their complexity. Not to the Western world. They provide for the users an only do they need to host VR videos to attract and retain opportunity to experience VR on the high-quality VR users, but also, the viewers must own VR headsets to be devices without the necessity to invest in the hardware. able to experience immersive visual content. Besides, the HTC Vive changed its marketing strategy and started industry indirectly depends on the software providers to targeting arcades with its software platform Viveport produce the computer-generated VR content as well as on Arcade. the state of technology and infrastructure for it, such as Famous brands can drive users' interest in the VR content network speed. Each of these components has its platforms. Platforms like Viareal offer virtual house tours distinguishing characteristics that can have a significant into Paradise Hotel or online visits to Tivoli park. AR, as impact on the attitude of the end consumers towards VR another type of immersive technology, may help to video platforms in general. Thus, a complex evaluation promote and democratize VR for the wider population. was applied. Install base. VR platforms are working with a limited user Perceived usefulness and perceived ease of use have been base. Even though mobile phones are ubiquitous, mobile considered as two basic constructs in the new technology VR has limitations described above, while the spread of acceptance. However, for VR, perceived enjoyment is the VR HMDs is limited by their price. Also, the users may key to mainstream adoption since the users see it as the not see the other ways to use their VR headsets. hedonic medium. In the case of video, people watch it mostly for entertainment and less for work or educational "Smartphones are multifunctional devices, while VR purposes. devices are monofunctional, and there are no extensions to their functionality. To be successful, VR should be an The extent to which the users find VR enjoyable depends essential solution instead of a supplementary one,"- VR on several factors. Some of them were specified in the researcher. previous research on technology adoption. For instance, immersion, presence, flow, or interactivity (the attributes of the VR content) have been named a few antecedents that impact the user experience with VR. Comparing findings 8https://www.oculus.com/blog/introducing-facebook-horiz from the previous research and this qualitative study, we on-a-new-social-vr-world-coming-to-oculus-quest-and-the- classified the relevant factors into the categories referring rift-platform-in-2020/ to technology attributes, content quality, and individual 9https://venturebeat.com/2019/08/30/microsofts-altspacevr- qualities or beliefs. It is also interesting to note the social-space-hits-oculus-quest-on-september-12/

9 intertwining of the factors that directly influence the VR experience and, thus, impact the perceived enjoyment attitude of the end users towards VR and the factors that from their usage, the success of the VR video platforms is impact the industry players (VR studios and platforms). doubtful. The obtained results suggest several implications. Third, this study’s results also indicate that to be accepted by a wider audience, the VR glasses’ design and technical First, the lack of compelling VR video is one of the main characteristics should be considerably improved. HMDs factors that hinder the general customers’ acceptance of the should be standalone, more interactive, and provide a VR video platforms. These findings correspond with the better video quality, which together may mitigate previous publications. For example, the limited content experienced by many VR users cybersickness. It is worth proposition was named one of the biggest obstacles to the highlighting that technology characteristics have been mass adoption of VR technology (Perkins Coie, 2020). The ​ addressed in great depth by every interviewee what makes reasons that hold up VR studios from investing in the us acknowledge their high importance. The 5G production of immersive movies root in two realms: initial infrastructure and built-in eye-trackers have been named costs and a limited user base. Significant financial some of the few improvements that may contribute to the expenditures, human resources required to create a individual human perception (UX); however, it’s too early computer-generated video, the time needed to produce and to evaluate their potential impact due to the limited adjust VR video to various platforms, and the platforms’ research amongst the larger user groups. revenue split compromise the chances of VR creators for the desired investments return. The fact that VR is a Fourth, the significance of the communication in virtual ​ short-term medium (meaning the customers spend a rather reality within the VR platforms should not be neglected as little time in VR daily) deteriorates the value of the it directly influences the enjoyment and indirectly - the technology in the eyes of the end consumers and thus intention to use VR (even though the nature of VR requires narrows down the opportunities for the video monetization complete isolation of people to increase immersiveness via advertising or subscription for the video platforms and and the feel of presence). Unfortunately, social interaction content developers. is not yet possible in VR, although there were attempts to bring the elements of socialization as the other users' Second, although constant content updates are avatars. But without proper face and hand tracking, it does indispensable for the video platforms’ user retention, due not seem possible yet to reflect in VR the people's to the so-called "chicken-and-egg problem", it is hard to emotions in . This might get changed with the tell whether content development will become the driving introduction of face tracking which is currently being force in the VR industry since the price of the mounting developed by some of the largest producers of VR headgears plays one of the key roles in the consumer hardware, such as Sony and Oculus. decision process (and that’s something that neither VR platforms nor VR content producers have much power to Finally, the interest in VR video platforms is mostly fueled control, apart from giving away cheap cardboards at the by marketing and media coverage. Most consumers are exhibitions or trade-shows). Especially, taking into account aware of VR only through indirect experience, mainly that VR glasses are monofunctional devices that can barely from TV and online media such as social networks, be used for other private purposes but gaming. There is a YouTube, etc. Thus, advertising and investments into VR positive correlation between the cost of the equipment and arcades may be a way to stimulate the curiosity of the the immersive experience it delivers. On the one hand, the potential adopters. It corresponds with the past use more affordable VR glasses are, the more people can construct - people who already tried VR favor it more. purchase them and thus get acquainted with VR Another solution may lie in the partnership between the technology in the domestic environment. On the other VR video platforms, VR hardware providers, and content hand, the research done by Manis et al. (2018) producers, resulting in the subscription packages, demonstrated that people who are willing to pay a higher especially, if the access to the VR platforms and HMD is price for the VR hardware tend to enjoy it more than those offered as an upsell to the traditional two-dimensional willing to spend less. This can be explained by the more video content. top quality of , interaction, and in One issue that hasn't been extensively covered in the the high-end VR HMDs. The smartphone-based gears may research papers but which was mentioned once in the remain the first-contact VR device in the developing interview is the privacy matter. So far, the users haven't markets for a while, but they will not be able to been concerned about how their behavioral data was communicate the actual value of immersive video. Without collected and used in VR, but this may become a factor of the prevalence of inexpensive HMDs able to deliver decent

10 uncertainty in the future. This topic requires further how they can make their VR video platforms more investigation to evaluate risks and possible outcomes. attractive and useful for the consumers. As with the majority of studies, the chosen research The research shows that the adoption of VR video method (combination of literature overview and platforms depends on several factors, which can be semi-structured qualitative interview) has potential presumably divided into a few categories (individual, limitations that should be borne in mind. Literature review technology- and content-related). The inability of VR is important for setting up the theoretical basis for any devices to deliver the low-latency, high-quality video with research, hypothesis formulation, knowledge development, the advanced level of immersivity, combined with limited and, potentially, generation of new ideas and directions. VR content offerings, and relatively high price of the Nonetheless, conducting it and evaluating its quality can hardware that will only be used for the one-time be a challenging task for the situations with limited or no experience adversely affect the perceived usefulness and prior research. The lack of the comprehensive research of perceived enjoyment and therefore negatively impact VR video platforms became a reason for the following users’ attitude towards the VR video platforms. The lack of assumptions: 1) VR and traditional video platforms have socialization feature in VR as opposed to the group similar operational principles (apart from the necessity of viewing of films or sport events also hinder adoption rates. HMDs), with content being one of the key elements; 2) the VR video as a new medium has not reached the known TAM constructs relevant to VR technology and VR appropriate readiness phase yet. Unlike the 2D films, the hardware can be applied to the VR video platforms too. storytelling of the VR movies isn’t standardized (meaning Also, the data presented in the literature can be outdated the best practices are still in development). Often, the due to the time needed to review and publish the findings navigation in a VR environment is complicated (thus and the fact that the VR industry is rapidly evolving, with influencing the perceived ease of use) while short video new VR-related inventions being constantly patented. duration and narrow monetization opportunities make this Because of the nature of qualitative research, the number type of content less attractive for financing by the of interviews was limited. It was hard to utilize a random producers of the immersive video. Since video is a key part sample approach. Only two managers working with the of any video platform, the content construct is considered a VR video platforms agreed to be interviewed, thus, the vague factor for its adoption. scope of VR platforms was narrowed to Sweden and did From the considerations mentioned above, it can be not include the global players such as Netflix or Youtube concluded that the VR technology and VR video platforms whose participation would add on to the research quality. are not mature enough to become mainstream but the steps Since the transcription is the researcher’s responsibility, the platform stakeholders are taking are pointing in the there is a risk of misconveying what the interviewee right direction. Removing the bottlenecks in the VR meant. While semi-structured interviews are considered hardware and content proposition, as well as adding social more reliable than unstructured ones, still the given interaction to the VR experience, open up opportunities for answers could have been influenced by the way questions the broader acceptance of the VR video platforms and, as a were delivered (Alsaawi, 2014). Thus, the received results result, create the network effect multiplying the number of should be interpreted with caution and supplemented with customers and devices. the additional data. The paper is based on previous research and represents the CONCLUSION views of the VR industry players. While it reveals the challenges that the industry faces, the opinions, and This paper presented an overview of VR video platforms experiences of the end users of VR video platforms are not as a complex ecosystem of the hardware, software, and taken into account (even though all the interviewees are content and introduced the challenges that the industry is avid VR users themselves, they may be biased when it facing based on the research of the user intentions and the comes to the personal experience with VR content). The position of the VR professionals (business perspective). taxonomy and the factors described in this thesis may By bridging the gap between the previous findings of become a foundation for the qualitative or quantitative users' perception of VR and the problems that the industry studies of the most crucial factors for VR video platforms is struggling with, the research aimed at giving the better adoption from the perspective of their customers (however understanding of the bottlenecks in the technology and the conclusions related to the VR video can’t be applied to provided the VR industry practitioners with the ideas of the “traditional” 2D video content). Further research may reveal the best spots for the cooperation between both VR

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APPENDIX A A taxonomy of the VR ecosystem in the video industry. Adopted from: Anthes et al. 2016, Mütterlein et al. 2017.

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