www.musically.com Mighty Real Virtual Reality and the Music Industry A Music Ally Primer :: by Stuart Dredge Introduction Virtual reality (VR) isn’t a new technology by any stretch of the imagination. Yet in 2016, it’s a bona-fide buzz for the tech industry despite past flops. So what is it, and what kind of predictions are experts 1 making for it? Introduction software on a computer or games console – Oculus Rift and Defining VR Sony’s PlayStation VR being two of the prominent examples. Second, there is mobile VR where the software is running on a Looking for a dry but factual definition of virtual reality? Try smartphone either held up in front of the viewer’s eyes, or Merriam Webster’s dictionary definition: slotted into a headset – which may be a device (like Samsung’s “An artificial environment which is experienced through sensory Gear VR) or simply a housing for the smartphone (like stimuli (as sights and sounds) provided by a computer and in assemble-it-yourself Google Cardboard headsets). which one's actions partially determine what happens in the There is some crossover between the two areas: the Gear VR environment.” uses technology from Oculus Rift’s creator, for example, Or Oxford Dictionaries: although it is not as powerful. “The computer-generated simulation of a three-dimensional It’s important to understand the difference between virtual image or environment that can be interacted with in a reality and augmented reality (AR). Where VR immerses you in seemingly real or physical way by a person using special an entirely-virtual environment, AR is more about projecting electronic equipment, such as a helmet with a screen inside or digital information and/or characters into the real world around gloves fitted with sensors.” you. Although depicted in science fiction as far back as the 1930s, “Where VR is like wearing a console on your face, AR is like the term “virtual reality” as we currently understand it came to wearing a transparent mobile phone on it,” was how research prominence in the technology world in the 1970s and 1980s – firm Digi-Capital put it in 2015. Many experts think the the latter yielding the bulky headsets and sensory gloves that boundaries between the two technologies will blur in the coming many people associate with the phrase. years, but for now, they are separate. In 2016, though, virtual reality developments are focusing on two related areas. First, dedicated headsets running VR 2 Introduction Great Expectations The latest wave of VR and AR hardware and content are in their early days: any attempt to gauge how many people will buy the hardware and how much money the content will make are speculative guesses, to put it politely. The buzz around these technologies means there are no shortage of research firms and analysts willing to speculate, though. Here are some of the latest forecasts. Digi-Capital In April 2015, research firm Digi-Capital released its them over the network. “Someone has to pay for all that mobile Augmented/Virtual Reality Report 2015, making the bold data,” as it put it. prediction that AR/VR revenues “could hit $150bn” by 2020, with AR accounting for $120bn and VR $30bn. CCS Insight In June 2015, CCS Insight published forecasts for AR and VR The report suggested that VR’s key market will be hardcore as part of its wearables research service, claiming that 2.5m VR games and 3D films, as well as niche uses for businesses – and AR devices would be sold in 2015, rising to more than 24m meaning tens of millions of users. in 2018. By contrast, Digi-Capital suggested that “AR’s addressable Its report suggested that AR’s applications will be focused more market is similar to the smartphone/tablet market” meaning on design, logistics, medicine and education, whereas VR will hundreds of millions of users; hardware pricing similar to those be focused more on games, videos, travel and social. mobile devices; and potential to make money not just from consumer applications, but from the mobile data required to run 3 “Most consumers find virtual reality a mind-blowing experience period from 2014 to 2018. It broke the latter figure down by the first time they try it. We believe it has tremendous potential audience: 10.9m units bought by hardcore gamers, 18.1m by and it's not just about expensive high-end devices such as the light gamers and 27.7 by (or, rather, for) “kids, tweens and Oculus Rift,” said chief of research Ben Wood. teens”. “For only a few dollars, consumers can dip their toe in the water Its report claimed that VR hardware revenues would rise from with an inexpensive cardboard holder for a compatible $1.4bn in 2015 to $2.3bn in 2018, while revenues from games smartphone. We expect this democratisation of the technology and apps would rise from $947m in 2015 from 15.7 million to deliver growth not just in affluent mature markets but also in active users to $2.8bn in 2018 from 47.6 million active users. emerging markets where smartphone penetration is stronger than ever. KZero In January 2015, KZero published its estimates for the growth of the consumer VR market, predicting 5.7m units sold in 2015, rising to 23.8m by 2018 – and 56.8m units sold in the five-year 4 be willing to spend around $300 on a virtual reality gaming SuperData Research device,” suggested the report. Research firm SuperData released its VR Gaming Market Brief 2016 report in January 2016 focusing on the gaming side of “This suggests that platform holders will initially have to heavily virtual reality. It claimed that the global market for VR games subsidize their hardware to claim significant market share. Most will reach $5.1bn in 2016 based on an install base of 55.8 likely, the report finds, consumers will initially familiarise million people. themselves with virtual reality on their smartphones and less expensive options, before committing to a bigger expense.” It added that “light mobile VR” will reach 27m unit sales in 2016, accounting for 71% of the consumer market for this technology. Tractica Finally, research firm Tractica has predicted that 2016 will be “the make or break year for the second coming of consumer virtual reality”, thanks to the competition between Oculus Rift, PlayStation VR and HTC Vive. The company claimed that the combined revenue from VR hardware and content will grow from $108.8m in 2014 to $21.8bn in 2020. Its report suggested that this will include a shift in how that money is made: in 2017, content will account for a third of total VR revenues, but this will rise to nearly two thirds by 2020. In January 2016, the company issued another report “As hardware manufacturers seek to become the dominant suggesting that between 2015 and 2020, 200.1m VR headsets platform, they face the challenge of ramping up an audience in will be sold worldwide, including 76.7m in 2020. It also order to attract third-party developers. However, even hardcore predicted that 52.2m VR accessories will be sold in that five- gamers, a group generally known for its appetite, indicated to 5 year period including gamepads, hand-tracking devices, “locomotion devices and VR vests and suits”. “The second coming of virtual reality is upon us, and industry participants are keen to ensure that products are fine-tuned prior to release in order to avoid a disappointment in this high- potential new category,” said the company’s principal analyst Craig Foster. 6 Current Players From Oculus Rift and PlayStation VR to content startups like Vrse and Jaunt, there are a growing number of players in the VR space. Here are some of the key companies worth 2 knowing about Current Players Hardware You don’t need a headset to experience VR: you can simply download a compatible app (or open a 360 video in the app of YouTube or Facebook) and hold your smartphone in front of you to watch and pan around the content. Still, there are a number of headsets either available or in development from large technology companies and small startups alike – with the likes of Apple thought to be preparing to enter the market too. make the campaign a success, after which Oculus set to work Here are the key hardware devices and companies worth building its first headsets for games developers. knowing about in the VR space. That’s an important point about Oculus Rift: the headset still hasn’t gone on sale to consumers – that will happen on 28 March 2016, with pre-orders having started in early January – Oculus Rift but anyone has been able to buy one of its two developer Made by Oculus VR, which is otherwise known as ‘the startup prototypes: DK1 and DK2. Facebook bought for $2bn’ when CEO Mark Zuckerberg decided that virtual reality was the next big leap in The commercial edition will cost $599, although buyers will communications technology. need a PC powerful enough to run its software – bundles of PC and Rift start at $1,499. The Oculus Rift first came to prominence as a Kickstarter crowdfunding campaign in August 2012 for a VR headset Oculus VR has also developed a pair of hand-worn controllers focused on games. More than 9,500 backers pledged $2.4m to – called Touch – which will enable people to manipulate objects 8 in virtual worlds by gesturing rather than by using a mouse and keyboard. They will launch later in 2016. While the emphasis remains on games, when Zuckerberg announced Facebook’s acquisition of Oculus VR in March 2014, he made it clear that he had ambitions well beyond gaming.