Virtual Reality’s Future Kings: Major Studios or Indie Upstarts?

The first totally new entertainment format in decades is on the cusp of going mainstream, so TheWrap examines who will play biggest role in shaping it

Virtual reality is ready for its close-up. It’s the key figures behind the camera who remain out of focus.

This week, as Hollywood and Silicon Valley cavort in Las Vegas at the Consumer Electronics Show, VR is poised to be one of the confab’s top trends. CES is a yearly mecca for gadgetry, and no class of device is poised for a bigger splash than virtual reality, an immersive format that uses headsets to makes viewers feel like they are in the middle of the action.

VR is set to benefit from a gush of new headsets this year putting VR viewing within reach of mainstream consumers. But clever content for those devices is only just beginning to emerge. Although VR is often associated with gaming, virtual reality opens a frontier of new opportunity for Hollywood, one where independent filmmakers are racing to explore uncharted territory all while major studios like Fox are surveying the right areas to stake claim.

Which of those side will shape the future of VR entertainment? The likely answer: both, as the two sides work together to become one. VR content needs experimental risk married with the eye-popping resources. That sets up the scrappy indie creator who learns to make VR soar to be the rising star for a deep-pocketed studio when it needs to turn virtual reality into real business.

“It’s not going to come from on high. It’s going to come from the ground up, from new filmmakers or people dabbling in new areas,” said Lucas Foster, a producer of films “Mr. and Mrs. Smith” and “Man on Fire,” who cofounded virtual reality company Headcase. The only thing holding back that experimentation, he added, are technological hurdles that no individual filmmaker can surmount alone.

By volume alone, indie filmmakers and small VR-focused production houses have been the content leaders for VR thus far. Samsung, maker of the Gear VR headset, launched a Gear Indie channel in 2014 to showcase content for the devices and set a goal to release one video on every weekday of last year, or about 260, according to Nick DiCarlo, Samsung Electronics America’s vice president and general manager of immersive products and virtual reality.

The company ended up featuring more than 480 last year, he said. That’s a “tiny subset” of what has been made, he added, and the preponderance of it is coming from independent creators.

“What we saw at the beginning because nobody had cameras and nobody had made these films before, there was no advantage for anybody,” he said. “It was a very even playing field, and still is.”

Technology companies have rushed to advance consumer VR viewing capabilities. Three major devices — Facebook’s Oculus Rift, Sony’s Playstation VR and HTC’s Vive — are set to debut in the next six months, and will join Samsung’s $99 consumer-edition Gear VR and Google’s practically free Cardboard already introducing everyday people to headsets that display 360-degree video.

But the tools to create content for VR lag behind those to display it. Cameras to shoot the content and programs to splice the images together need to be tailor made by the people creating the footage themselves.

“To shoot 3D movies, you have to hand-build your own camera. What 2D filmmaker today does that?” said DiCarlo.

Compounding the challenges, the sheer processing power to render and distribute high-quality VR is elusive. Even VR shot in 4K ultra-high-definition image quality causes viewers to remove their headsets with complaints that the picture is too “low res,” DiCarlo said. “For VR to match 4K television experience, it needs to be more like 10K or 16K resolution. That’s a massive increase in the size of the files.”

That’s where deep pockets come in.

For VR viewing development, tech giants have taken the lead, most notably Facebook’s $2 billion acquisition of Kickstarted headset maker Oculus.

For VR content advancement, brands and studios are among the first benefactors to bestow funds on creators testing the limits of the new format, leverage VR’s whiz-bang appeal as a marketing tool. (Fox demonstrate a VR experiences linked to its movie “Wild” at CES last year and developed a VR component to “The Martian” for this year’s conference).

But studios’ marketing interest in VR has a meaningful difference from that of brands: While they both hold the resources necessarily to help untangle some snags restraining VR content, film and TV companies also have a vested business interest in shaping how the format morphs the future of entertainment generally.

VR content production will be significantly different than for traditional films or TV programs, according to Barbara Kraus, Parks Associates director of research. Viewers will not have a common central focus, and so directors and writers must design content that can be experienced in a very different way than current movies and TV programs.

However, that challenge holds opportunity, once methods to monetize VR materialize. Headcase’s Foster anticipates paid gaming will be the first paid models, but he predicts entertainment VR will move to paid experiences after a period of advertising-supported formats first.

With traditional video, Foster said, “I shoot with a camera that creates a rectangle, and that’s OK, but we make all the decisions for you about what you want to see.” When viewers make those decisions, they’ll find themselves in a piece of content they want to watch over and over again, he said.
For consumers, experiences like that hold the potential to be worth paying for. “It’s taking the rectangles and turning them into globes,” he said.

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