Opinions expressed in thispiece are solely those of the author and do not represent the views of SNLKagan.
Itmay be easier for virtual reality start-ups to than it is for them tomake money right now.
Everytime I look, the VR investment numbers grow, as they tend to do with every hotnew media tech platform of the day. A few months ago, I pegged venture capitalinvestments in VR at$1.8 billion from 2010 through 2015, citing CB Insights estimates, but that didnot include a few chunky M&A deals worth an additional $1 billion or so.
Butwhatever the exact level of capital formation is, questions remain as to themost viable business models for VR and its cousin, augmented reality.
Althoughvideo gaming and movies have become the platforms most associated with VR, thetechnology's immersive applications go well beyond entertainment topornography, defense, medicine, advertising, commerce, enterprise and newscoverage.
Digi-Capital,a global M&A firm specializing in AR/VR, mobile, and games, has publishedsome widely quoted projectionsfor AR/VR revenues of $120 billion combined by 2020, with $90 billion from ARand $30 billion from VR.
Itis easy to be dismissive of Digi-Capital's robust vision for a relatively newtechnology with currently thin economic granularity, but the numbers may notmatter as much as their perceived direction.
Concertsappear to be the latest category about to see an upswing in VR. recently partnered with streaming enabler NextVR in a multiyear deal to streamhundreds of concerts and other events to users of selected VR headsets.
NextVRhas worked with various sportsleagues on VR elements of event coverage and recently inked afive-year contractwith 21st Century Fox Inc.'sFOX SPORTS. The company also has done some work with musicians: in late 2014,NextVR and the British rock band Coldplay released a VR video ofa concert shot in London. The video was used to help promote the roll out ofSamsung's Gear VR headset.
Threeother industries that appear to be very enthusiastic about VR are movies,advertising and news.But there are inherent challenges on how VR can be appropriately used for themost fundamental application in media — story telling.
InHollywood, most of the major studios are said to be investingdirectly in VR. The movie theaters are also exploring VR but are painfullyaware of the capitalchallenge it could require.
VRwill probably find the most upside first in native advertising, whereproduction value is crucial. All of the top-viewed branded content sites arebelieved to have a head start on using VR content, according to a recent analysisby the Poynter Institute.
VR'sinherent challenges remind me of when zoom lenses were introduced in the early1960s in television. Talk about a learning curve; America was sea sick for ayear before the networks and their affiliated TV stations figured out how toappropriately use the new zoom capability to enhance the content instead ofbeing the content.
Ifthe VR learning curve progresses, the technology can be a very big deal for allsorts of media, entertainment and other industry applications. Otherwise, a badmovie, game, sporting event, concert or news story enhanced by VR is still justthat — a bad consumer experience.