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Virtual Reality – Niche or Reality?

Virtual Reality – Niche or Reality?

FutureSource Consulting analyst Michael Boreham told attendees at VRAR World in London today that we have finally entered an age where VR can become a commercial reality as the hardware and, more importantly, cost had reached a tipping point.

However,Boreham told the audience in his session on Virtual Reality – Niche or Reality that “content is a bit further away, we are still in experiment mode”.

He said that thanks to the recent launches in gaming VR, “games are a bit closer than TV. But there is a lot of experimentation in broadcast”.

Boreham explained that one of the major challenges to the true uptake of VR was monetisation. “It is not cheap to produce this content. Often content is quite short, so getting consumers to pay is difficult.”

“From a consumer point of view, it is more accessible”, he added. “The PS4 and others have helped here. There’s is a lot to be done to raise awareness. But is there an appetite. There is a challenge there in terms of raising appetite.”

Another factor, he told the audience, was awareness. FutureSource research found that only 7% of UK consumers had tried VR, compared with 5% and 4% respectively in Germany and France. In the US, the figure stood at 8% in US.

“Many people, while aware of VR haven’t experienced a truly great VR experience yet,” he said. However, Boreham pointed out that the number of 19 to 35-year-olds that had tried VR was double the average.

“Retail channel is key here, to raise awareness,” he added, especially with the number of consumer releases in gaming. “The console space is beginning to get really interesting,” he said.

FutureSource believes that by 2020 total content revenue will be in excess of USD$6bn worldwide. This will be split 24% to video and 76% games. The gaming VR market, though, at US$4.8bn, is still only 2.5% of the overall gaming market.

“The ideamichael-boreham of video VR is an excellent concept, but not all of it works. You have to remember that it is not an extension of traditional TV and broadcast,” he warned. “We have to throw away 100 years of technique. VR is totally different.”

Boreham said that commercials were not a bad use case, as the short timescale “will get over the burden of having to wear a headset for a longer period of time”.

In terms of video VR content, “movies and news are a nice thought, but difficult,” he explained. “Sport is where a lot of trials are going on.”

“VR works better with smaller sports, like boxing or tennis matches, where you can get the best seat in the house. But it doesn’t work so well with big stadium sports because of an inability to zoom,” he continued.
The duration of sports is difficult too, he said. “The average time for headset wearing in sports is 10 minutes, so 45 minutes for a football match is difficult to see at the moment,” he added.

Boreham believes that in the shorter term pay-per-view will be the preferred way to monetise VR in sports, echoing the early days of satellite TV. “In the short-term, it will be PPV around key boxing matches or other sporting events that we tap into in that basis”.

He also suggested that major TV or movie franchises might also tap into VR. “This could include big studios or tie-in to gaming, as we’ve seen with Fantastic Beasts,” he explained. “It might be bundled, so it might be VR companion piece to our BluRay of a film.”

The watershed for TV will be 2018, according to FutureSource, when the technology and take-up will be large enough.

Finally, he pointed out the need to restrict the availability of good and free VR. “While this gets the message out there, we have to be ver very careful. There is a tipping point between free and paid for,” he said.


Commercialising VR: sound bites

Commercialising VR: sound bites

One of the biggest questions about VR is where the revenue will come from. A panel of experts at VR/AR World had the following to say on Day One of VR/AR World:

richard-li-84efea491f3291d3f998e1abc67715c4Huawei chief architect of future networks Richard Li: “I saw some data from a survey on this topic before I came here. Of the 650 respondents, 78% people say gaming is number one [revenue source]. The principle driver is the number of VR gaming releases at the end of this year and we are yet to have Black Friday sales. 40% think TV is the next most powerful driver, but is being slowed by network issues. I believe we should also be looking at things like real estate and other major retail areas that can be done remotely. We should also look at education, which is a big market, as is medical.”

daan-kip-6dc57ea8684cae7ee9292eaf90af4b32Daniel Doornink, founder & CEO VRBase: “Good content is going to be a big money maker, especially in gaming. But to get there you need a hit, but there hasn’t been one yet. If you want to make money in VR gaming, you need to check out all the learnings available now to try to get that hit. Robot Recall could become a big hit. You need to know what is good, what works and how to utilise this.”

Richard-Vincent-ba99d04d5d68c7667bf97c0241210e49.jpgRichard Vincent, partner at Fundamental VR: “think about things that VR actually makes better. It could be in HR, training or simulation, for video presence. For business. I brie ve this is the next platform, just look at how mobile accelerated. Now is the time to hone in on, what competency do you need. Now is the time to acquire that knowledge.”

randolph-nikutta-d7b826773c4243917c55f609ad733c3fRandolph Nikutta, leader interactive high-end media, Telekom Innovation Laboratories at Deutsche Telekom: “If you look at it from the consumer view. How speedy will the transition be between big screens and these screens. I doubt this will happen in the next three to four years. It is about fighting for consumer time. This is where the industry is still in a trial phase. and that’s where they have to spend money and time.“

mathieu-ducrot-2704e11c2f334c49a0044c1b94902102Mathieu Ducrot, head of apps anticipation & connected ecosystems at Orange: “We have begun building some premium experiences in content. We believe that if you want want day to have the right monetise you need to build a market now, with proper hardware and content to embed the experience in market.”

  • david-edge-ff480d1296ceaca4c769536c44c0f785David Edge, associate & visualisation leader at Arup: “We need to understand the holistic total picture for constructive dialogue of VR. It really changes the way we work. It means we can change and possibly descale rational work streams, from contrition, planning, marketing and more. It allows for a better level of understanding by letting you see from every angle.”

Overcoming the network challenges of VR and AR delivery

Overcoming the network challenges of VR and AR delivery

“Without doubt, VR and AR gives us new ways to work and share,” Huawei chief architect of future networks Richard Li told delegates at VR/AR World today. “But to deliver these benefits we have to identify which areas to focus on to understand the technical requirements for the networks that deliver them.”

To do this, he says, the Chinese electronics giant “started with a few used cases and identified the requirements”, identifying three main areas: video, gaming and shopping.

Drilling deeper into video, Li said the requirements were to get 360 video for live event casting, including user interactivity and changing viewpoints. The issue here is the current bitrate is too slow. “There are two main issues, throughput and latency,” he said.

richardliHe explained that standard definition (SD) VR needs a bit rate of 100 Mbps.  However, he explained that with the advent of HD and UHD TV, the future requirement would be for 4k VR. “4k 3d needs 5gb per second. So how can you provide this?” he pondered.

In terms of latency, Li suggests: “We need to be at around 5ms to 7ms for VR and AR. Edge or fog computing could provide an answer.”

For VR gaming, which Huawei believes will be worth US$11.5bn by 2025 and have 216 million users, Li says it is all about developing interactivity with objects and players, which he says could develop “beyond user experience into true social interaction”.

In shopping, Li pointed out that you can already use Buy+ from Alibaba’s VR/AR lab and, while there are great advances here, it needs the development of real-time interaction with objects.

He suggested that it is limited by cost and naked-eye 3d technology, but pointed to the US$1.4bn investment in Magic Leap as an indication that things were moving  in the right direction.

Virtual reality – real or hype?

paul-jackson-660x825In a talk where he tried to avoid numbers, Ovum Principal Analyst Paul Jackson described how Ovum sees the VR/AR market shaping up over the next four years.

He stated that, while there are still a lot of technical challenges to overcome, VR and AR is finally set to become a mainstream reality.

He remarked that the technical challenges were “something Huawei and others are really getting to grips with,” pointing to upcoming sessions at VR/AR World on this topic from the Chinese electronics giant.

He stated that, while there are still a lot of technical challenges to overcome, VR and AR is finally set to become a mainstream reality. He remarked that the technical challenges were “something Huawei and others are really getting to grips with,” pointing to upcoming sessions at VR/AR World on this topic from the Chinese electronics giant.

“And now in a talk without numbers, here are some numbers,” he joked, before pointing out that by 2020 there will be 330 million VR or AR headsets in people’s homes and offices, according to Ovum’s forecasts. The research house also believes that the global VR market will be worth up to USD$285 billion by 2020.

He said this revenue will predominately break down into three areas: apps, games and video. He added that once the technical challenges of broadcast VR are overcome, the VR video market is likely to slowly overtake the games market. He also pointed out that revenue from content would overtake hardware by 2018 as technology and the companies developing hardware mature and consolidate respectively.

Jackson also predicted the winners and losers in VR over the next few years. The winners included:

  • Headset makers and content generators
  • Platform owners
  • Mobile operators
  • Multichannel content firms
  • Social platforms
  • Virtual reality venue owners.

He pointed out that multi-channel content firms, such as Sky TV and Netflix are in an ideal position to carve a large chunk out of the content market.

In terms of losers, Jackson highlighted:

  • Infrastructure providers
  • Telcos operating walled gardens
  • VR Hardware manufacturers
  • Traditional game developers

He said that there are too many VR Hardware manufacturers at present and that there would be consolidation here, “with some vertical niches emerging”.
He explained that game manufacturers were on there because it is a “substitution market”, where customers switch from one game to another. He said VR will become a mainstay of gaming, and that games companies will need to respond to it to gain growth. He added: “If you’re not doing VR it’s not going to bankrupt you but could be slivering a couple of percentage points off your revenue.”

He wrapped up his keynote session to an enthralled full house at VR/AR World by pointing out the things to watch out for.

The first was Venue VR and VR cinema. He said that iMax was already trialling VR cinema. “An out-of-home consumer application for VR.”

Another innovation was light field technology and computational photography. He described it as “a technology that blurs the difference between a rendered experience to a live filmed, but still interactive”.

whalemagicleapAnd then there’s Magic Leap (pictured left), he said. The Minority Report-style AR company has gathered USD$1.4 billion in investment, but a “product is still rumoured to be 18 months out”.

The final one to watch: On-demand VR content, with a move towards live VR coverage by 2020.

Stay up to date with all the session at VR/AR World on Twitter and look out for our live streams

Huawei: VR in Networking Technology


Taking place from 19-20 October 2016 at ExCeL London, VR & AR World 2016 is Europe’s biggest VR and AR event, and is being sponsored and promoted by HUAWEI Network Technology Laboratory Attracting co-participation from leading authentic experts in the VR network industry Huawei come together with the world’s top players, such as Vodafone, British Telecom, Deutsche Telekom and Nokia.

During the event, HUAWEI will release its first VR Ready Network innovative solution and prototype in the industry. VR Ready Network innovative solution, composing of non-congestion network architecture, latency optimized overlay network (Live-MDN), deterministic low latency network (Hard-TCP), and next generation high throughput transport layer. Combined with various business scenarios, they will give solutions, and in-depth discussions with a number of partners about how to co-operate, taking into consideration their own network operation issues.

Huawei’s sessions at VR & AR World 2016



VR & AR World, ExCeL London, 19-20 October 2016

There’s still time! If you’d like to meet other VR and AR professionals and find out more about how both virtual and augmented reality are being used across a wide range of industries, and how companies plan to use them in the future, visit the VR & AR World event website.

Virtual Reality and 360-degree video: What impact will they have on the Professional Acquisition Market?

Ahead of this year’s VR & AR World event, Futuresource Consulting’s Adam Cox gives his view on the potential impact VR and 360 Video will have on the professional acquisition market.


Strictly speaking, 360 video isn’t virtual reality (which tends to be computer rendered), but virtual reality and 360 video have become one and the same thing in popular parlance as they often (but not always) use the same headsets to view content.

The ability to watch 360 video on YouTube and Facebook without the need for headsets is a key differentiator between the two technologies as it immediately gives video creators popular platforms on which to publish their videos that doesn’t need additional investment from consumers. Essentially, 360 video is currently far more accessible than “true” VR.

Many of the production challenges that exist for VR are the same for 360 video, but the unique and rather obvious difference is that 360 video requires a camera, or more specifically, cameras.

The principles of 360 video are well understood – multiple cameras are required to provide 360 degree coverage, the images of which are stitched together to produce a coherent video – but there is a wide degree of variation in the way this is achieved.

Many productions are using multiple cameras mounted on a rig, which at the low end (the GoPro Odyssey and Facebook Surround 360 rigs for example) is an affordable solution, but at the high end, cinema quality images are traded off against extremely high cost and unfavourable physical characteristics – imagine the size, weight and cost of a 16 camera Arri Alexa rig for example! Another issue is that however accurately engineered the rig is, inaccuracies produced when mounting the cameras will result in greater issues when stitching the content and so many productions favour integrated cameras to minimise this.

At IBC this year there was an array of cameras claiming to be professional, but most could optimistically be described as “prosumer” at best. Still, these cameras can and are being used by professionals to experiment in the art of 360 productions and in many and varied professional applications where the 360 element adds a new dimension. One example that has been given is consumer 360 cameras being used by forensic teams to give greater context to the high quality photographs taken at crime scenes.

At the high end of the integrated 360 camera spectrum there are only a small number of models on the market. The Nokia Ozo and Jaunt One being the two main contenders, although high prices and limited availability means that sales are currently limited. Futuresource expects sales will remain low, especially as once the initial early adopters have purchased, the industry is likely to rely on a rental model due to the experimental stage at which 360 video is currently at. Unless 360 video is the bread and butter of a production company, renting makes a lot more sense than investing in a $60K camera – a trend seen across the camera markets.

Professional 360 cameras will remain niche in the short to mid-term. In Europe, the market will be around 10% the size of the European digital cinema market in 2016, but longer term they will play an increasingly important role in the acquisition market overall.

Futuresource Consulting’s Virtual Reality: Niche or Mass Market? report forms part of its Virtually Reality Tracking Service – a quarterly service offering regular market evaluation and industry assessment reports. Futuresource will be discussing this at VR & AR World conference in October. If you’d like more information about Futuresource Consulting reports in the VR and AR digital entertainment space please do get in touch here.

About the author: Adam Cox

Adam joined Futuresource Consulting in a research and consulting capacity in 2006, and currently heads up Futuresource’s Broadcast Equipment Team. Adam has expertise covering the full broadcast production chain from acquisition to content delivery, following both market and technology trends, and is heavily involved in work looking at end users such as broadcasters, service providers and videographers as well as the corporate and education markets and in addition to work examining the broadcast equipment sales channel.


VR & AR World, ExCeL London, 19-20 October 2016

If you’d like to meet other VR and AR professionals and find out more about how both virtual and augmented reality are being used across a wide range of industries, and how companies plan to use them in the future, visit the VR & AR World event website.