This is the first of three articles written by Chris Sutcliffe from The Media Briefing. Part 1 discusses what is currently being done in this nascent phase of 360 video publishing. Part 2 looks at how 360 video and virtual reality are huge opportunities for publishers and finally Part 3 explores how publishers can monetise the new medium.
Over the past couple of months there has been an appreciable bump in the amount of talk around the potential of virtual reality for publishers.
The potential of ‘presence’ and the demonstrable effect of 360 degree videos such as ‘Hong Kong Unrest’ on those who have experienced it on a virtual reality platform are strong arguments in favour of publishers adopting VR as the first truly immersive method of storytelling.
Once the hyperbole has been set aside, though, there are serious questions about when it will be worth publishers’ time to start producing stories for those platforms on a regular basis.
It’s one thing to do experiments, and quite another to make virtual reality one of your regular means of distribution. Issues of investment are certainly one consideration – though the cost of entry is lower than you might assume – but the real questions are these:
When will there be enough of a user base for it to be worth publishers’ time producing content for VR users?
And how can they monetise them?
A coalescing user-base
The rate of adoption for new technology is increasing. An article on Pew Research Centre summarising research from the Economist and singularity.com makes it plain that, in the US at least, the number of years before a new technology is adopted by one quarter of the population is ever-decreasing.
Additionally, this piece on journalism.co.uk summarising a talk by associate professor Robert Hernandez of LA’s USC Annenberg School makes it plain that the amount of time it takes for a technology to hit a user-base of 50 million users is also falling extremely rapidly.
And while there have, obviously, been technologies that failed to reach that lower limit of users required for an industry to support them, the fact that so many of those that have are tools for communication and media delivery suggest that VR is a strong contender to be the next success.
Next year will see the launch of the big players, like Facebook’s Oculus Rift platform, the HTC Vibe and Sony’s Project Morpheus, high-spec VR platforms that are being primarily marketing at the hardcore gaming crowd.
But though initial focus might be on gaming, there are far broader implications for the technology, and Oculus CEO Brendan Iribe is on record saying as much:
“Most don’t spend the majority of their time playing games now, and I can’t see that changing with VR – gaming is not the end game.”
Crucially, though the first “true” VR platforms won’t launch until next year, there are proof-of-concepts available now in the form of Google Cardboard and its many imitators, which can run pseudo-VR experiences like immersive 360-degree videos using a smartphone as the major tech component.
Tim Merel, founder of Digi-Capital, has argued that in the short-term we’ll see strong competition among those players – possibly similar to the console wars between Microsoft, Sony and Nintendo that allowed the Wii to succeed as a more mainstream-friendly platform while the other two tech titans battled it out.
Essentially, we’re likely to see the early adopters whittle down the early glut of platforms to two or three favourites – and it’s these players who publishers are likely to focus their attention on.
Making it worth your while
VR consultancy firm KZero is predicting there’ll be over 40 million active users of VR by 2016. That puts it well on track to be a member of the 50 million user club by 2020, the year in which Digi-Capital predicts the VR market will be worth $30billion.
The issue in the meantime is monetisation of those users.
For instance, it’s competing with the mobile industry that could ultimately make or break the VR industry, according to Digi-Capital:
“There are more than 4 billion smartphones and tablets today, and this is set to hit 6 billion by 2020.In contrast, AR and VR hope to go from a standing start in 2016 to hundreds of millions of units in the same timeframe. So while $150 billion AR/VR revenue by 2020 is a really big number, the trillions generated by mobile put it in perspective.
AR and VR companies should have nightmares about Apple, Samsung, Huawei, Lenovo and Xiaomi, not each other.”
KZero’s forecasts that only hardcore gamers and early adopters – around 20 percent of VR buyers – will choose to pay for apps until at least 2018. That’s going to make it difficult for VR developers to make money from VR, let alone publishers, and suggests monetisation could hew more closely to the situation on mobile than many publishers would like. But publishers are already ahead of that situation in one key respect:
While many publishers are still grappling with the issue of what a successful ad looks like on mobile, brands and advertisers are already experimenting with marketing services using VR platforms. In an article for AdWeek about the potential of advertising on VR platforms, Christopher Heine provides the following example:
“The 360-degree videos will live on an Oculus content platform that’s set to go live early this year. Destination B.C. also plans to distribute the clips via a partnership with Thomas Cook, a U.K.-based travel agency that will outfit its U.K., German and Belgian locations with the Oculus Rift.
‘You don’t have to simply lean on telling consumers things like, ‘The trees are this big.’ That sense of being there is such a powerful tool,” notes Janice Greenwood-Fraser, a representative for the tourism authority. “It brings it to life in a way that no photo or regular video can.'”
When you consider that many publishers are looking to move away from display ads that demonstrably don’t work in favour of providing experiential sponsored content already, and that many brands are excited about the potential of VR for getting their message across, it suggests that publishers are well placed to be the ones to create that immersive content. While it might take one or two years for the user base on VR platforms to become substantial enough for publishers to create editorial content solely for them, that audience undoubtedly will appear.
And if they can take advantage of brand enthusiasm to reach that user base in a truly immersive way, publishers could have a powerful new revenue source on their hands.