VR 101: Lesson 1 -- DISTRIBUTION (& Its Challenges) -- #1 In a Series

[The following is the first in a series of posts about the burgeoning world of Virtual Reality (VR) by guest blogger Omar Noureldin of Manatt Digital Media.  He previously wrote a VR-focused "Cheat Sheet" overview of the VR space (and key players in it).]

To understand what the virtual reality (VR) distribution pipeline will look like, a stroll down memory lane vis-à-vis online video will be instructive. It took time for the online video ecosystem to develop into what it is today -- and that was largely because of disjointed and competing distribution platforms in its early years. Anyone with a smartphone, tablet or computer knows that YouTube -- despite new "real" significant challengers like Facebook -- continues to dominate this space with over 1 billion users.  But, this took time (and an acquisition by Google, which merged Google’s less than stellar Google Video platform). Still, the vast majority of YouTube’s content is user-generated.

Then there are the premium content platforms like Netflix, Hulu and Amazon, all of which have turned the prime-time TV model on its head. First, by reusing content, and now by creating original content. Vimeo is a growing player in this space (among numerous others) and has laid its stake in the ground by focusing on high-quality, high-resolution content and on content creators -- and it is now dabbling in VOD and SVOD models.

So, what does this mean for VR? What is the opportunity?

Well, the opportunity is for new digital distribution platforms to emerge that focus solely on VR content. The reason some believe nnovation will happen with these new distribution platforms, rather than from giants like YouTube, is because VR distribution will require advancements in packaging and transferring vast amounts of data across existing networks that are not necessarily ready to handle that kind of traffic.

Herein lies a massive challenge. High-quality VR content is not mobile friend ... at least not yet ... for a couple of fundamental reasons. First, current bandwidth capacities limit the amount of data that can be transferred, and mobile devices are limited in their storage capabilities. Second, mobile processors literally overheat and melt when trying to play high-quality VR content that is more than five minutes long.

Today, the big online video distributors are all about mobile, which creates a disconnect in strategy and focus if they want to move full force into VR. Moreover, YouTube is still trying to figure out how to be profitable in the traditional online video space, so many pundits believe that makes little sense for them to spend a lot of time, money and effort to develop new distribution channels for VR (especially when YouTube is now focused on developing its own premium original content, as original premium VR content is a ways away).

Instead, many predict a proliferation of VR-focused distribution platforms and companies experimenting with different ways to deliver the content—Vrideo is one of them. The company recently hosted a VR Meetup and panel discussion on this very topic in Santa Monica. As discussed earlier, there will need to be technological innovation at every level of distribution—packing, transfer, storage and processing.

Do not get me wrong, there is already talk of the big media and online video companies (Google, Amazon, Netflix, Disney, etc.) and telecoms (AT&T, Verizon, etc.) eventually going to war to acquire these smaller VR distribution companies.  But, it is likely to be an M&A war, not a technological advancement war.  Google has already invested a whopping $500 million into MagicLeap, which is developing VR technology that merges the real and virtual worlds -- so-called augmented reality.

Massive sums of money are being poured into VR right now -- and distribution is one of the keys to unlocking its potential.

[NEXT IN OMAR'S CONTINUING VR SERIES WILL BE LESSON 2 -- SOCIAL, followed by Lesson 3 -- Hardware, Lesson 4 -- Advertising, and Lesson 5 -- VR Rights.  Stay tuned ...].

VR 101 -- Your "Cheat Sheet" of The New Immersive Landscape -- Guest Post

[The following is a Guest Post by Omar Noureldin of Manatt Digital Media.  I work closely with Omar -- he is a rising star in Manatt Digital Media and knows his stuff.  Equally important, he shares the passion of innovation ... and possibilities.]

Beyond Gaming—Understanding the VR Landscape

Virtual reality is not new. The technology has been around for 20+ years, but has lacked widespread distribution and consumption due to limiting factors in technology and content. That is changing now.

Currently the biggest player is Oculus VR—the headset and software developer—made famous by Facebook’s $2 billion acquisition of the Southern California startup. Other hardware companies including, Samsung and Sony, are quickly moving into this space, adding some competition to the mix. At the same time, content developers are rapidly prototyping the impact the technology will have on all sorts of content.

WHAT IS VIRTUAL REALITY?

Virtual reality (or “VR,” as it is often referred to) is a computer-generated interactive environment that simulates 360-degree views in multiple dimensions by wearing special headsets. For many years VR environments were hard to sell because they made users motion sick due to slow computer processing speeds and tunnel vision. However, the Oculus Rift headset is being dubbed the first “affordable” device that overcomes these problems (I am very sensitive to motion sickness and have used the Rift without any problem).

Breakthroughs in rapid computer processing and lens manufacturing now allow devices to simulate multidimensional experiences while keeping the body’s sense of equilibrium. For example, Oculus uses new processes to better conform to the body’s sense of movement, and new magnifying lenses expand the scope of vision.

WHO ARE THE OTHER PLAYERS?

The short answer is there are a lot and many more coming. In terms of hardware there is the Oculus Rift, Sony’s Project Morpheus and Samsung’s Gear VR. Google has been making some strategic investments in addition to its DIY Cardboard headgear set.

On the content side, it’s a free-for-all. There are small VR production companies popping up everywhere, and a high concentration of them in L.A. Digital LA recently held a #VRLA Meet-up to demo some of these products. It was also the first-ever VR live-streamed event.

On the Hollywood side of things, the major studios—not wanting to be left behind—have caught on and are investing in some of these VR production companies. More to that point, at Sundance more than a dozen short VR movies were presented and the Sundance Lounge staged a demo room for some of these devices and developers.

WHERE ARE THINGS GOING?

This is a hard question to answer, but one thing is for sure—it’s beyond gaming. Movies are the first obvious choice, but there is (virtually) no limit. Live music events, medical procedures, investment analysis, defense training and aerospace simulations are a few of the areas that are being primed for VR technology.

Another unknown is the use of mobile. All the current headset devices are large, clunky and expensive. It is and will continue to be hard to sell a $300 headset to consume VR content that is still in its infancy when there is so much standard content available at no or little cost. Thus the advent of mobile VR through devices such as Google’s Cardboard and mobile headset is very interesting. This has the potential to explode because it’s cheap, familiar and readily available.

Many media and technology companies are still adjusting to the brave new world that is digital. The learning curve will be even steeper with VR, so it’s best to understand what is going on early.