By Joseph Williams

Virtual reality streaming company NextVR has delivered live content from the NBA, NASCAR, the PGA and several other event organisers. It currently uploads about one event a week to its Web platform, often more. During the PGA Masters Tournament, for example, NextVR broadcasted live every day. Cofounder David Cole said the company has the “largest compressed audience of VR viewers on the planet,” though he declined to provide further detail, as he said the company only shares such information with its content partners. SNL Kagan recently caught up with Cole during the NAB Show in Las Vegas to discuss NextVR’s business, the future of virtual reality and how the technology could change content consumption.

SNL Kagan: Tell me how you started a VR company when it was so nascent, before there was money to be made?

David Cole: The company actually was founded as Next 3D in 2009 around a compression technology for 3-D televisions, and we built that with a number of partners, including Turner, and ultimately we worked with ESPN at ESPN 3D. The compression technology basically reduces the bandwidth required to carry a 3-D programme. Then, in 2012, we made a very aggressive early pivot to deliver to VR. So we’ve been doing this a long time, and the reason was, we very institutionally believe that VR is going to be the best place to play out stereoscopic content, that this is going to be the device, unlike 3-D television that ushers in a sea change. We built our entire VR pipeline on top of a mature broadcast pipeline that was already in place, that was already battle tested. We were up and running really fast, in late 2012/early 2013, which in VR was like duct tape-andcardboard prototype level.

We saw YouTube announce that they will now support live 360-degree video, which directly overlaps your product. How does this affect NextVR?

It doesn’t. You see that it’s being classifi ed almost uniformly as a gateway drug to VR. It’s not stereoscopic. It’s fundamentally a panorama that you look around, so it doesn’t provide a sense of presence. Whether it be YouTube 360 or Facebook [Inc.] 360 or even playing out on other devices besides VR, the way we look at those is that they’re excellent opportunities to promote a real VR experience. We might tease a VR experience and link from that YouTube content into a real VR experience, but what we do on our platform and what we deliver on another platform will sort of be the equivalent of selling a 3-D movie with a 2-D movie poster. In terms of what we do technologically, we absolutely could not do in any other architecture but our own. It’s a really complex architecture. It is something that we control it end to end. You have really strong video quality compared to your competitors, and you’re building an impressive content stream, but there is still room to improve and expand.

What’s going to be the tipping point that really brings VR into the mainstream?

It’s going to be a convergence of a number of things, and one of them is the device resolution itself. Almost 100% of the audience is seeing our content through smartphones right now. This will be the last generation of devices that are using displays that really weren’t built for VR, if you look at what’s coming from the fi ve major manufactures in the display space building purpose-built displays for VR with high pixel densities to be integrated in mobile and standalone devices. This is going to change the ecosystem. There is a race to the top in terms of VR display quality and hardware. You’re not seeing the market fl ooded with inferior hardware. Form factor, resolution, comfort, latency: All those are getting better by orders of magnitude. The second thing is content density. If you get your shiny new Gear VR, in a long dedicated weekend you can kind of exhaust the content, but what we do makes your device shiny and new with every live event. That phenomenon has to increase. You have to be able to have a consumptive relationship with it. Multiplayer experiences have the same kind of potential, because they’re always new.

So what’s the endgame here? Do you see VR replacing the traditional video medium, or is it just another platform competing for consumers’ entertainment time?

So there’s the politically correct answer, that new technology and new media tends to be accretive, but I’m not sure that we aren’t seeing some patterns form that will set the bar to the experience so high that they may not go back to the same regular viewing habits. One example of that is the way we support multicamera. We can allow users to choose their own camera, so you can be sitting center court, and something’s happening down by the basket. You can glance and tap and it will take you to that camera position. You can also pause the game and replay it from another perspective. That is addicting. Once you get used to seeing something like that, having that superpower to be able to move, that feels like it’s going to bend things a little bit toward VR, everything else is going to feel a little bit lame. It’s a little more engaged than you typically are. It’s this lean-forward rather than lean-back thing, but what we’re fi nding is that it’s really addictive, so we might see new viewer patterns form that do suggest that for really exciting, high-energy stuff people will tend to pick up their VR device rather than watch it on TV. Sure, but the nice thing about TV is the social aspect. Is that something for which you’re developing a solution, or will VR be an individual experience for the foreseeable future? There are 10 different social media integration projects at NextVR right now. Most of them you could guess who they’re with and they span from communicating telephonically on digital devices to things that are more text-based. But we’re integrating with 10 different major service providers right now for social experiences, so I think that’s going to be part of the norm. If you want to be interrupted, if you want to let somebody in and share the experience, then you’ll absolutely be able to do it. That can be with somebody who’s in VR, and that can be with somebody who’s outside of VR.

OTT embraces a brave new VR world

By Greg Potter and Seth Shafer

Video delivery and content creation services for virtual reality have only just begun to emerge but have already garnered interest from investors searching for the Netflix or YouTube of VR. Not to be left behind, incumbent over-thetop providers like Netflix, Hulu and Alphabet Inc’s YouTube have launched efforts targeted at the new delivery channel. It’s too early to determine winners and losers in the space, but the next few years could be very interesting as dedicated VR headsets begin to sell in larger numbers. There are two types of VR headsets. Wired headsets offer the premium VR experience, while wireless headsets are signifi cantly less powerful and immersive. Wireless headsets from both Google Inc. (Cardboard) and Samsung Electronics (GearVR) are a much cheaper option for consumers to get a taste of VR, since a smartphone attached to the device provides the most expensive components of the system. Wired headsets from HTC Corp and Oculus began shipping in early 2016, and Sony Corp. plans to launch its wired headset for the PS4 in October. Wireless headsets, depending on the brand, are able to access VR apps and content from Apple Inc.’s App Store and Google Play. GearVR users have access to the GearVR platform run by Oculus as well as Google Play.

By default, HTC’s wired headset, the Vive, uses the SteamVR platform run by Steam, and Oculus’ Rift uses the Oculus Home platform (separate from the GearVR platform it runs as well). With some easy menu manipulation, both the Oculus Rift and HTC Vive can use the SteamVR and Oculus Home platforms. Software to create 3-D, 360-degree videos and pictures using smartphones has been around for many years, but the methods to view those fi les has been limited to two-dimensional smartphone and computer screens. VR headsets represent a new, much more immersive way to view those types of fi les, and we may see more new smartphones able to capture such images. Despite the infancy of the medium, media and entertainment fi rms have rapidly stepped up with VR-focused video. Early efforts from Netfl ix, Hulu, Google and Facebook Inc. have included producing original VR content, as well as releasing apps to view existing two-dimensional video on VR platforms. Traditional media companies such as Time and The New York Times have also dipped their toes into VR waters alongside broadcasters and cable networks. Predicting actual consumer demand for OTT VR content remains a guessing game, but the potential upside for content providers could be large, especially for major subscription video-ondemand services and for digital publishers with a signifi cant amount of ad-supported video content. Netflix, Hulu and Amazon spend billions each year on licensing content and producing original programming to attract and keep subscribers for their respective video services. The widespread availability of exclusive VR content could provide a differentiator among services and a customer retention tool. The easiest road to VR for incumbent OTT distributors seems to be using existing television and movie content for display on a virtual screen in a VR environment. Netfl ix, Hulu, YouTube and Oculus Video have taken this route and quickly developed apps to launch on VR systems. Netfl ix, though, is a bit of an outlier in the VR market, since it does not actually distribute any VR movies, shows or clips.

The Netflix VR app is a virtual living room that plays Netfl ix on a large television. OTT VR apps have mirrored the larger OTT market itself, with both user-generated and professional content being distributed. Additionally, ad-supported, transactional and subscription models are being used. Adsupported VR content could also be a boon for publishers. Advertisers would likely pay a premium for ad inventory within immersive VR experiences that can’t be easily tuned out, skipped or impacted by ad-blocking technology. YouTube, Hulu, Facebook and Crackle (owned by Sony Corp.) are positioned to capitalize on VR advertising on their OTT video platforms. Similar to the Roku Inc. business model, VR hardware providers, including Facebook and Sony, could potentially aggregate and sell ad inventory across third-party content and apps on their platforms. Aside from investing in VR content directly, media fi rms have also actively been taking stakes in videofocused VR startups. Comcast Corp. Comcast Ventures has invested in NextVR, while Google Ventures, Time Warner Inc.’s Time Warner Investments and the Walt Disney Co. have each taken stakes in a variety of fi rms. Most investments have been early stage speculative rounds, although Jaunt’s $65 million Series C round from Disney in September 2015 was a sizable later-stage round.

Microsoft wading deeper into the VR pool

By Greg Potter

M icrosoft Corp. recently announced the crossplatform availability of Windows Holographic, supporting both augmented reality (AR) and virtual reality (VR) headsets with an optimised version of Windows 10 for AR and VR applications. Windows Holographic will implement voice and gesture controls, and spatial mapping, along with the application program interfaces (APIs) to control them. The core Windows services (Edge Browser, Windows Store, UWP, etc.) will also be available for use in thirdparty AR/VR devices like the Oculus Rift or the HTC Vive if those devices decide to support the operating system (OS). These devices already use the PC version of Windows 10 as the basis for their platforms, but opening up Windows Holographic will allow users to interact at an OS level in an AR/VR environment, providing a common user interface and APIs for use by developers to create their applications. Until now, Microsoft has been seen as reluctant to become involved too deeply in the VR market in its nascent stage. So far the company has been minimally involved in this space, having struck one agreement to ship Xbox One controllers with Oculus’ Rift headset, and releasing a VR version of the video game Minecraft. Microsoft has been much more interested in the AR side of things. It began shipping its AR headset, the HoloLens, to software developers in March at a price of $3,000. If and when HoloLens is released to the public, given its high price point and Microsoft’s focus on business applications for the device, it By Greg Potter is seemingly being targeted at business users and not the average consumer. With the announcement of the availability of Windows Holographic, Microsoft could be priming the pump for a major push into VR. Sony Corp. is slated to launch its PlayStation VR headset for the PS4 later this year, while Microsoft’s current Xbox One lacks the processing power to capably render VR environments. However, Microsoft has been rumoured to be developing a new console for release in late 2017. Codenamed Scorpio, the console is expected to have more than enough processing power to handle VR gaming. Microsoft is likely to do something similar with the console as with its Surface devices, i.e., create hardware that aptly demonstrates to consumers (and original equipment manufacturers) the usability and viability of that particular version of Windows. This would leave thirdparty hardware manufacturers to produce headsets at different price points to target the mass market once Microsoft achieves some modicum of success. With more headsets in development from other OEMs, Windows Holographic is Microsoft’s best effort yet to be the OS of choice for AR/VR headsets. Other companies, particularly Alphabet Inc.’s Google Inc., are expected to release their own operating systems and/ or headsets in the near future. Meanwhile, Microsoft is looking to avoid a repeat of practically ceding the smartphone OS market to Google’s Android due to less-thansuccessful software and hardware partnerships.