Table of contents. 01 Summary & The Big Numbers What History Tells Us What Does it all Mean? Market Outlook & Economic Impact 12

Transcription

1 March 17

2 Table of contents 01 Summary & The Big Numbers 4 02 What History Tells Us 8 03 What Does it all Mean? Market Outlook & Economic Impact Who are the Big Players? How will this Impact Different Sectors? What Does This Mean for our Smartphones? A New Form of Narrative Impact for Storytellers New Zealand VR/AR Ecosystem Glossary of terms About Blackeye 35

3 1 Summary & The Big Numbers Deloitte Global s Technology, Media and Telecommunications Predictor 2016 predicted that 2016 would be virtual reality s first billion dollar year with US700 million spent on hardware, including headsets, gaming consoles and computers, and the rest on content. It predicted 2.5 million virtual reality headsets and 10 million game copies would be bought by consumers. Artificial reality technology, which includes virtual reality, augmented reality and mixed reality, is evolving and expanding at an unreal speed. Many industry commentators predict it will far exceed the incredible hype surrounding it and will transform people s experience of life in many facets. In January 2016, Digi-Capital predicted the virtual reality and augmented reality industry to be worth US120 billion by It is within cooee of New Zealand s gross domestic product for a year in 2015, it was US173 billion. It predicts augmented reality will be worth the lion's share of US90 billion by then and the rest for virtual reality. It says consumerable augmented reality global technology giants are rushing to invest billions in an industry that is swiftly transforming the way people experience the world around them. Below are some assumptions about the percentage split of uses. It is estimated that VR will be worth US30 billion and AR US90 billion. What hasn t been accounted for below is mixed reality, the area where we see the biggest disruption to come. Once the domain of gaming, it promises to spread into all areas of life. When Facebook head Mark Zuckerberg announced in March 2014 its US2 billion purchase of Oculus VR, he predicted immersive augmented reality would become part of daily life for billions of people. After games, we re going to make Oculus a platform for many other experiences. Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face - just by putting on goggles in your home. This is really a new communication platform. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures, he posted on Facebook. Artificial reality headsets used with mobile phones dominate the industry currently, but that is also changing rapidly with such developments as Magic Leap, which uses a small lens to project computer-generated images onto someone s eye that merges into the real world. The Pokemon Go craze was a perfect example of the arrival of augmented reality. Magic Leap, for example, announced in April 2016 it had raised US1.4 billion for its Florida-based start-up company that has invented a ground-breaking mixed reality platform that super-imposes 3D computergenerated images on top of the real world and is now embarking on headset manufacture from its new company-owned Florida plant. Barely as these magic head-mounted goggles or headsets hit the market, new developments are already superceding them: Apple is set to release an AR headset Tango enabled smartphones enabling augmented reality gaming and utilities are released It is also rapidly moving beyond the gaming world and has numerous social capabilities. YouTube s 360 channel for virtual reality videos had 1.66 million subscribers by September 2016, 20 months after its commencement. Virtual reality is transforming people s experience of the news. American news 4 5

4 US 35bn ESTIMATED SIZE OF THE VR/AR SOFTWARE DEVELOPMENT INDUSTRY BY Goldman Sachs Global Investment Research giant, ABC News, launched its ABC News VR in September 2015 with a video of Damascus. People with IOS or Android devices had to download JAUNT s VR app to view the 360 footage. According to Facebook, its most popular 360 virtual reality video for the first five months of 2016 was an ABC News VR clip of a snow blizzard in New York City s Times Square in January 2016, which was downloaded 18.3 million times. In 2016, for the first time, virtual reality footage of America s presidential election could be downloaded for viewing around the world. The question is whether it will transform from a novelty to mass adoption. As production values lift and the handset capability improves, we are sure that it will mainstream. THREE CATEGORIES FOR REVENUE: Revenue falls into one of three categories: Content (gaming, film and TV, health care, education, and social); hardware and distribution (headsets, input devices like handheld controllers, graphics cards, video capture technologies, and online marketplaces); and software platforms and delivery services (content creation tools, capture, production, and delivery software, video game engines, analytics, file hosting and compression tools, and B2B and enterprise uses). Leading digital media commentator Seth Shapiro s State of Virtual Reality white paper, published in March 2016, encapsulates much of the industry. Education Military Retail Real Estate Video Entertainment Life Events Engineering Healthcare Video Games 0.7bn USD 1.4bn USD 1.6bn USD 2.6bn USD 3.2bn USD 4.1bn USD 4.7bn USD 5.1bn USD 11.6bn USD Over the past few years, virtual and augmented reality have emerged as a specialty of the capital s tech and screen sectors. DAVID JONES - WREDA s Business Growth and Innovation GM 6 7

5 2 Early history of Virtual and Augmented Reality What History Tells Us Heilig patents his Telesphere Mask, the world s first headmounted display to offer stereoscopic 3D video with wide vision and stereo sound. Two engineers from American electronics company Philco Corporation create Headsight, the first head-mounted display that has motion tracking capability. Virtual reality gets practical. American inventor Thomas Furness starts working with the first helmet-mounted displays for Air Force fighter pilots training. His work leads to the development of the Visually Coupled Airborne Systems Simulator in 1971 for fighter pilots training, and in 1986, he develops the Super Cockpit programme, an immersive virtual world for pilots training. He has continued to pioneer virtual and augmented reality developments since then and is nicknamed the Grandfather of Virtual Reality English physicist Sir Charles Wheatstone invents the stereoscope, which involves viewing two 2D images of the scene or object shown from slightly different angles, about 6cm apart, mimicking binocular vision. It tricks the viewer s eyes into seeing the images as 3D American computer scientist Ivan Sutherland and his student, Bob Sproull, create the Sword of Damocles, the first VR/AR headmounted display that is connected to a computer rather than a camera. The technology is used for flight simulation for pilot training. The term virtual reality is born when Jaron Lanier, founder of VPL, coins the term American inventor Edward Link creates the Link Trainer, the first commercial flight simulator for pilot training, which is used to help to train many WWII pilots. American science fiction writer Stanley G Weinbaum publishes Pygmalion s Spectacles, a short story that mentions people wearing magic glasses that immerse them into a dream world that they can interact with, see, touch, smell, hear and taste. German immigrant William Gruber invents the View-Master in America, a stereoscopic visual simulator. Its cardboard disks that are slotting into the machine hold seven pairs of images, which create seven stereoscopic images. When someone looks through the View-Master, they see a pair of slides, one for each eye, which simulates binocular 3D vision. American inventor and filmmaker Morton Heilig, who later is called the Father of Virtual Reality, invents the Sensorama Machine, a simulator for one to four people that creates the illusion of reality using 3D film with smell, stereo sound, vibrations of the seat, and wind in the hair Virtuality releases virtual reality gaming pods for arcade experiences Nintendo releases its Virtual Boy, the first portable 3D virtual reality gaming console with 3D graphics, but it is withdrawn from the market within a year because its graphics are hard on viewers eyes and causes dizziness, nausea and headaches. American inventor Palmer Luckey builds his first head-mounted display prototype at age 18 in frustration with the inadequate HMDs available for gaming. He founds Oculus in 2012 and gains 2.4 million from a Kickstarter crowdfunding campaign two months later to develop the Oculus Rift headset. Facebook buys Oculus in 2014 for 2 billion. Widely credited as the first immersive virtual reality headset for video games, Oculus Rift is launched in March Global VRARA formed. NZVRARA Inc. formed as the official New Zealand chapter. Blackeye begins collecting data on the VR, AR and MR sectors for its Blackpaper series. AR/VR Garage opens in Auckland. PROJECTR Reality Centre announced for Wellington. 8 9

6 3 What Does it all Mean? Virtual reality This replaces the real world with something digital that mimics reality. Augmented Reality This adds something digital to the real world. Viewers wear headsets that hold a screen in front of their eyes, powered by a mobile phone, gaming console or computer. It blocks out the real world and immerses the viewer into a computer-generated stereoscopic 3D environment that they can interact with or explore. It can stimulate many of the viewer s senses, including sight, hearing, touch and even smell. When viewers look or walk around, their virtual environment moves like in real life. The image or environment can be live virtual reality, created using 360 cameras for filming, or computer-generated VR content. It uses computer technology to overlay 3D visual information on top of a person s view of the real world. Viewers can still see the real environment around them at the same time, so it is an open experience, unlike VR s closed experience immersed in a simulated environment. AR technology can be delivered via mobile devices, such as smartphones, head-mounted displays that still allow the viewer to see the real world, retinal displays or haptic sensors. A prime example is the augmented reality game Pokémon Go, released in July 2016 by Niantic, which swiftly became a global phenomenon. Players can locate, capture, battle and train virtual creatures, called Pokémons, which appear on their mobile devices screens as if they were in the players real world locations. The game uses the mobile devices GPS capabilities. Mixed Reality This merges the physical and digital worlds in a more seamless way. It allows digital and physical worlds to combine, creating a new environment that is anchored to real time and allowing the virtual and real world content to interact with each other. Viewers don goggles, which superimpose 3D computergenerated images on top of the real world by shining light into their eyes, fooling them into thinking virtual objects co-exist within reality and appear life-like. Microsoft s HoloLens is widely considered a mixed reality headset. The technology giant describes it as the first fully self-contained holographic computer that enables viewers to interact with high definition holograms in the real world. By September 2016, it was only available to developers to purchase. New Zealand s first Mixed Reality Hackathon was successfully run by Blackeye director, Jessica Manins and PROJECTR in March 2017 utilising the HoloLens. Florida-based ultra-secretive Magic Leap is one of the largest technology start-ups in mixed reality, which has already attracted US1.4 billion from investors and is valued at US4.5 billion, but is yet to bring their headset to the market. Magic Leap has partnered with Weta Workshop to produce content, and Weta co-founder, Richard Taylor is Magic Leap s Arts Ambassador to China

7 4 Market Outlook & Economic Impact US 4.6 bn PROJECTED WORLDWIDE REVENUE FROM VR/AR PRODUCTS IN 2017 Statista (USDbn) US 120bn 2 ESTIMATED AUGMENTED / VIRTUAL REALITY REVENUE IN Digi-Capital All revenue in US dollars VR 35.1bn / AR 74.2bn 2019 VR 35.1bn / AR 44.2bn 2018 VR 16.7bn / AR 15.2bn 2017 VR 2.3bn / AR 1.9bn 2016 VR 0.7bn / AR 1.2bn Worldwide, there are hundreds of companies involved with virtual, augmented and/or mixed reality, including developing hardware, software, content or in distribution. The numbers are growing very fast as the technology matures and public demand surges. Statistics on the sector s value and revenue, the investment pouring in and the numbers of customers using the technology is growing at an exponential rate. VR/AR SECTOR S VALUE AND REVENUE The virtual and augmented reality sector will be worth US120 billion by 2020, according to Digi-Capital in January 2016, including US90 billion for augmented reality and US30 billion for virtual reality. It downgraded its earlier prediction in 2015 that it would hit US150 billion by 2020, saying the change was because launches of any augmented reality to consumers was unlikely before 2017, a year later than originally expected. It predicts the market s worth will hit US150 billion by It hasn t accounted for mixed reality, which Digi-Capital says may be the area with the biggest disruption to come. Global VR software and hardware revenue was predicted to hit US3.8 billion in 2016 and climb to US4.6 billion in 2017, according to Statista. Hardware includes the headsets, computers, 360 cameras and gaming consoles; software includes games, apps and content. Global virtual and augmented reality hardware revenue will hit US7.3 billion by the end of 2018, Statista says. United Kingdom business advisory firm Deloitte s 2016 Technology, Media and Telecommunications Predictor predicted 2016 to be virtual reality s first billion dollar 12 13

8 year with US700 million spent on hardware, including headsets, gaming consoles and computers, and the US 1.1 remaining US300 million on content. bn TOTAL AUGMENTED AND VIRTUAL REALITY INVESTMENTS IN Q1, 2016 Digi-Capital Distribution Other Advertising VR HMD Services Magic Leap 800mn Goldman Sachs Global Investment Research best-case-scenario estimate is the VR/AR sector will be worth US182 billion by In terms of VR/AR applications by software, Goldman predicts that video games will receive the biggest investment by 2025, estimating US11.6 billion. Education receives the least, with US0.7 billion. INVESTMENTS Augmented reality and virtual reality investment reached US1.1 billion in the first 2 months of 2016, the first time AR/VR investment topped a billion dollars in any year, let alone 2 months, according to Digi- Capital. It includes nearly US800 million to AR start-up Magic Leap, along with another US300 million in AR/VR solutions/ services, VR hardware, advertising/ marketing, distribution, video, peripherals, apps and games. Other major investments included Mindmaze raising US100M at a US1 billion valuation to became the fourth AR/VR unicorn (together with Magic Leap, Oculus and Blippar), Blippar raised US54M in It was already valued at US1.5 billion from its previous round in In 2015, US700 million was invested in the virtual/augmented/mixed reality industry. In April 2016, smartphone manufacturing company HTC announced a US100 million fund would be used to make investments in promising virtual reality companies that join its HTC Vive X accelerator programme. The HTC-led Virtual Reality Venture Capital Alliance (VRVCA), a group of the world s top virtual, augmented and mixed reality investors, announced in July 2016 that the addition of eight new members brought its total investible capital of its 36 members to more than US12 billion. The alliance says its purpose is to foster long-term growth in the VR industry through identifying, sharing and investing in the world s most innovative & impactful VR technology and content companies. It aims to hold six funding rounds each year and its next investment meeting is due to be held in November Our network spans the entire globe, so it doesn t matter where you are, as long as you are doing something game-changing, we want to help you realize your dream, it says on its website. We are not searching for the next technology revolution because it is already here. We are searching for the next entrepreneur to lead it. CONSUMER NUMBERS: 43 million active users of virtual reality worldwide by the end of 2016, growing to 90 million in 2017 and 171 million in 2018, according to Statista. It also predicts global number of virtual and augmented reality devices shipped globally will rise to 1 billion by 2020, including 64.8 million VR devices and 45.6 AR devices. HTC Vive s Steam platform says it has 10 million gamers using its 3500 games by September 2016, of which about 30 per cent are virtual reality. United Kingdom business advisory firm Deloitte s Technology, Media and Telecommunications Predictor 2016 predicted 1.6 billion smartphones would be 14 15

9 bought in VR-capable smartphones can be used as the screens in some VR headsets. It also predicted 2.5 million Blackeye Forecast In the upcoming BlackpaperTwo, we will be preparing a local economic impact analysis, investigating the current industry, surveying regional employment numbers and detailing pockets of specialist activity such as games development, training and production services. Blackeye will explore the risks and opportunities to other sectors arising from the coming avalanche of new VR services and content. We ll also provide our view on sector impact e.g Blackeye predicts that there will be significant net benefit to local tourism from the production of local immersive content, particularly 360 video. virtual reality headsets and 10 million game copies would be bought by consumers by the end of % PERCENTAGE OF NEW ZEALANDERS THAT OWN A SMARTPHONE (2015) Research New Zealand In New Zealand, Research New Zealand s report on use of smartphones and other mobile communication devices in 2015 revealed smartphone ownership or access rose from 48 per cent in 2013 to 70 per cent in It was based on surveys of about 1000 people in 2013, 2014 and NUMBERS EMPLOYED IN THE INDUSTRY It is unclear how many people work in the virtual/augmented/mixed reality industry worldwide, but some industry commentators suggested it would be many thousands by late 2016, and that number is rapidly expanding. In BlackpaperTwo Blackeye will be auditing local staff numbers across our VR section. There are pockets of data showing employee numbers for some entities but more research is required. For instance, Facebook employs about 400 people for its virtual reality work. It owns virtual reality company Oculus, which was advertising more than 100 staff vacancies in September 2016, the bulk in software and hardware engineers plus research. Who are the Big Players? Many big players in the virtual, augmented and mixed reality industry are involved in both manufacturing computer hardware, such as headsets, gaming consoles, computers, screens, 360 cameras, haptic gloves and mobile phones, as well as software, including applications and operating systems. Many are also involved or linked with developing content and distribution. APPLE virtual reality technology company that electronics inventor Palmer Luckey The mobile phone and computer company founded in 2012 at age 19. He developed bought German augmented reality the Oculus Rift headsets, helped by US2.4 software maker Metaio in May 2015 for million from a Kickstarter crowdfunding an undisclosed amount. Earlier that year, campaign in Apple had been granted a patent for a virtual reality headset for an iphone. It When Facebook founder and chief gained another patent for an augmented executive, Mark Zuckerberg, announced reality head-mounted display. It highlights its purchase of the Californian-based that the company plans to enter the mixed company, he waxed lyrical about reality world. the Rift headsets. In January 2016, it was reported in When you put it on, you enter a American media that Apple were employing completely immersive computer-generated hundreds of people to work in virtual environment, like a game or a movie and augmented reality to develop a headset scene or a place far away. The incredible of its own that was compatible with thing about the technology is that you the iphone. feel like you re actually present in another place with other people. People who try FACEBOOK it say it s different from anything they ve ever experienced in their lives. Oculus s The social media giant bought Oculus VR in mission is to enable you to experience the March 2014 for US2 billion. Oculus is the impossible. Their technology opens up 16 17

10 the possibility of completely new kinds of experiences. He said it initially would focus on games, but planned to expand into other uses. After games, we re going to make Oculus a platform for many other experiences. Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face - just by putting on goggles in your home. He predicted a future where immersive augmented reality would become part of daily life for billions of people. Imagine sharing not just moments with your friends online, but entire experiences and adventures. This is really a new communication platform. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures, he posted on his Facebook page in March When Oculus first released its Rift headsets to the public in March 2016, its chief scientist, Michael Abrash, blogged on its website about the major milestone. Despite all the movies, books and hype about virtual reality over the decades, the dream of high-quality, immersive VR has only just arrived. Oculus Rift is the first consumer VR headset capable of delivering true presence the deeply convincing sense that you have been teleported to another place. And as magical as VR has become, this is only the beginning of a new journey, one that has the potential to change the world and our relationship with technology more than anything that has come before. It is unclear how many people work at Oculus, but in October 2016, it was advertising more than 100 staff vacancies, the bulk in software and hardware engineers plus research. GOOGLE The technology company, most known for its internet search engine, had its first foray into virtual reality with Google Cardboard, a virtual reality platform named after its low-cost cardboard head mount for VR-capable smartphones. Its motivation to help people to experience virtual reality in a fun, simple, affordable way has worked. Since Google Cardboard s release in June 2014, 5 million of the headsets have been distributed in the first 18 months. In November 2015, The New York Times and Google did a massive giveaway of 1 million Google Cardboard headsets plus a new NYT VR app with all home deliveries of its print newspaper. It also sent out 300,000 headsets to its most loyal online subscribers in April Cardboard s successor is Daydream, a headset for smartphones that was released on November 10, Google says Google Daydream is a platform for high quality mobile virtual reality. Google is also expanding into augmented reality enabled smartphones. Google s Advanced Technology and Projects lab developed its augmented reality technology, Tango, and partnered with Chinese company Lenovo to turn it into a reality. Its Lenovo Phab 2 Pro smartphones, the world s first Tango-enabled phones, were released in the Northern Hemisphere s Autumn in Google Glass was the company s earlier foray into augmented reality and the glasses were released with much excitement in However, public concerns about the devices, including privacy issues with its built-in camera, led to Google putting their sale on hold in 2015 while further development was undertaken. They have proved popular in the health industry with some doctors wearing them while treating patients, allowing live video footage to be observed by a third party elsewhere. Google has also invested heavily in virtual and augmented reality startups. It has sunk US542 million into Magic Leap to date and has also invested in Californianbased cinematic virtual reality company Jaunt VR. HTC Smartphone manufacturing giant HTC launched its HTC Vive virtual reality headset in collaboration with American video game developer and distributer, Valve, in April HTC says Vive has been designed for roomscale virtual reality and allows true-to-life interactions and immersive experiences thanks to stunning graphics, HD haptic feedback and 360 motion tracking. It is powered by SteamVR and has more than 600 virtual reality games on offer for Vive users by late September Once you put on the Vive headset, you re immersed in a world full of surprises, HTC says on its website. Walk around freely and explore everything - the Chaperone guidance system keeps you safely within the bounds of your play area. Stunning graphics make it feel so real and surreal simultaneously. In August 2016, HTC announced Viveport, its destination for VR content and experiences, which it said was due to be available to customers within a few months. Our mission is to unleash human imagination from the limitations of reality, and Viveport will be an important cornerstone in democratising access to the world s most diverse selection of immersive experiences, HTC s chief executive, Cher Wang, said at the time. Viveport will feature a wide range of VR experiences across education, design, art, social, video, music, sports, health, fashion, travel, news, shopping, creativity tools, and more. In April 2016, HTC announced a US100 million fund that would be used to make investments in promising VR companies 18 19

11 that join its HTC Vive X accelerator It had since attracted more than US100 programme. million in funding from investors, including The Walt Disney Company, Google, The HTC-led Virtual Reality Venture Capital Evolution Media Partners, China Media Alliance (VRVCA), a group of the world s Capital and Sky. top virtual, augmented and mixed reality investors, announced in July 2016 that the When Jaunt announced in September 2015 addition of eight new members brought its that it had gained US65 million from new total investible capital of its 36 members to investors, it described itself as pioneering more than US12 billion. the future of creative storytelling through cinematic virtual reality. The alliance says its purpose is to foster long-term growth in the VR industry through The media and entertainment industry identifying, sharing and investing in the is undergoing a fundamental shift in the world s most innovative & impactful VR way content is created, delivered and technology and content companies. It consumed, and VR is the next wave of holds six funding rounds each year. innovation in this space, Jaunt s chief executive, Jens Christensen, was quoted JAUNT VR by media at the time. The Californian-based company was It was working with leading creatives founded in 2013 and first unveiled its virtual from brands to artists and filmmakers reality technology in April 2014, when it to create cutting-edge content through announced venture funding of its studio arm, Jaunt Studios. It was also US6.8 million. funding filmmakers to explore virtual reality cinematography at Sundance Institution It creates virtual reality hardware, software, New Frontier, and manufactures 360 tools and applications to create cinematic stereoscopic cinematic VR cameras. VR and distribute it. The media and entertainment industry is undergoing a fundamental shift in the way content is created, delivered and consumed, and VR is the next wave of innovation in this space. JENS CHRISTENSEN - Chief Executive, Jaunt VR US 4.5 bn MIXED REALITY STARTUP MAGIC LEAP'S FEBRUARY 2016 VALUATION, INCLUDING US1.6BN FROM THREE ROUNDS OF FUNDING Tech Crunch MAGIC LEAP Florida-based ultra-secretive Magic Leap is one of the largest technology start-ups in mixed reality, which has already attracted US1.4 billion from investors, including US542 million from Google. Despite not yet releasing any products publically since its start in 2011, the company was valued an incredible US4.5 billion in February m Magic Leap describes its work developing the next computing platform that will enable you to seamlessly combine and experience your digital and physical lives. And the company s founder, Rony Abovitz, has been quoted saying: Ours is a journey of inner space. We are building the internet of presence and experience. 542m 827m In essence, viewers don goggles that superimpose 3D computer-generated images on top of the real world by shining light into their eyes, fooling them into thinking virtual objects co-exist within reality and appear life-like. Wired s Kevin Kelly has described its mixed reality developments in an article published online after he visited the company in New Zealand s own Weta Workshop has partnered with Magic Leap, with 40 staff at its Wellington workshop developing technologies for its use. In February 2016, Magic Leap announced an expanded role for Weta s co-founder and co-director, Sir Richard Taylor. A founding director of Magic Leap s board of directors, he became the company s arts (USbn) 20 21

12 ambassador to China to build deeper links between the Chinese creative community and Magic Leap. 10 years, I expect that mixed-reality technology like Magic Leap will be used as much as, if not more than, smartphones. Magic Leap holds the keys to new worlds for storytellers and creatives to play in, Sir Richard said at the time. These are not born of print or film or TV, but rather, they are images and experiences, entertainment, education and information laid into our own reality. Our design team has fully embraced the possibilities of this new frontier. The unique possibilities of Magic Leap s Mixed Reality LightfieldTM have already sparked incredible creative evolutions within our company. The ability to design and create these new experiences is not just the future for entertainment; it has the potential to be the future of everything. Renowned Kiwi film-maker Sir Peter Jackson is also on Magic Leap s advisory board and has been quoted in Kelly s Wired article saying he believes mixed reality is more exciting than virtual reality. Mixed reality doesn t take you out of this world. Instead it adds elements to our real world. And it has great flexibility. You can add as little as you want - a single tiny figure on this tabletop talking to us - or you can replace the walls of this room with a skyscape so we re sitting here watching clouds float by. If you have your Magic Leap glasses on, you can look up at the Empire State Building and watch it being built in the early 1930s, floor by floor, but sped up. Maybe while you are walking around the modern streets of Chicago you see gangsters driving past with tommy guns. It could be a form of education, entertainment, and tourism. In META Augmented reaiity start-up Meta announced in June 2016 that it had raised US50 million in funding for its work developing an augmented reality headset. Its head-mounted displays would allow the wearer to manipulate holographic objects within the wearer s visual field and the headset s field of view, the company said at the time. Our growing community is pioneering innovative ways to make AR real across an impressive range of industries and audiences. More than 1000 developers and companies are already using Meta to make their augmented reality dreams come true. We re taking it to another level and welcoming millions more into the future, Meta says on its website. Meta 2 development kit has been released for US949 making it much cheaper than the HoloLens (mentioned below) developer kit at US3000. MICROSOFT The technology giant has developed its Microsoft HoloLens, a mixed reality headset. Microsoft describes it as the first fully self-contained, holographic computer, enabling viewers to interact with high definition holograms in the real world. Microsoft HoloLens embraces virtual reality and augmented reality to create a new reality mixed reality. By understanding your environment, mixed reality enables holograms to look and sound like they re part of your world, it says on its website. Microsoft has been developing its new Project Scorpio Xbox, which it promises will be the most powerful console ever. It says it will be the first and only console to enable true 4K gaming which means extremely crisp resolution of its images - and hi-fidelity virtual reality. It plans to release the new console in 2017 and it will be compatible with its Xbox One games and accessories. SAMSUNG The technology and electronics giant has developed its Samsung Gear VR mobile virtual reality headsets, which are powered by Oculus. They were first released to the public in November Viewers use their VR-compatible Samsung Galaxy smartphones to access virtual reality. Interestingly, Samsung gained a patent for a head-mounted display a decade earlier, which was one of the first to consider using a mobile phone as the display for a virtual reality headset. However, mobile phone technology at the time made the concept difficult to progress. SONY The electronics technology giant has developed its Sony Playstation VR (PSVR), which was released on October 13, It is a virtual reality head-mounted display and is designed to be used with its PlayStation 4 (PS4) home video game console. Sony also released a new console in November 2016, the PS4 Pro. With more than 40 million PS4 consoles worldwide, many predict the PSVR s release will make virtual reality mainstream. Since Sony launched its original PlayStation console in 1994, it had developed its range of home video game consoles and accessories. Its virtual reality headset was developed under the codename Project Morpheus and work began on it in about However, Sony had been interested in virtual reality prior to that, including designing its PlayStation 3 Move peripheral as a virtual reality controller, despite the technology not yet being available

13 6 How will this Impact Different Sectors? EXAMPLES OF POTENTIAL AND CURRENT USES FOR VIRTUAL AND AUGMENTED Healthcare Growth Gaming Real Estate VR/AR Marketing Travel Education Live events REALITY Education and training: beyond virtual reality simulators for the military, pilots and astronauts, VR training allows employees who may not have access to computers, to undertake headset based workplace training. Travel and vacations: virtual trips will stimulate greater travel through experiential introductions to new places Healthcare and medical: health professionals learning to perform operations using augmented reality, as well as virtual reality phobia treatments. Real Estate: take a virtual walk through homes for sale or buildings for lease. Marketing/advertising: immersive advertisements will engage and delight viewers. Construction/engineering/architecture: virtual reality computer-aided design and viewing virtual prototypes. Entertainment: gaming, movies, live action 360 degree video. Live events: concerts, sport, news, personal events, awards, shows, collaborative and remote working and meetings. Retail: virtual shopping, such as clothing or furniture, plus remote viewing of big ticket items. Heritage: virtual walks inside heritage buildings and unsafe sites. Charity: using virtual reality to bring donors closer to a charity s work, such as immersion in a povertystricken village

14 7 Smartphones What Does This Mean for our Smartphones? 5.0m GOOGLE CARDBOARD HEADSETS DISTRIBUTED WORLDWIDE SINCE THEIR JUNE 2014 LAUNCH Phys.org are widely credited with driving the boom in virtual reality in 2016 because they have allowed it to reach a massive range of people. Blackeye Forecast We believe consumer smartphone choices will be partly driven by headset quality and functionality as the technology becomes ubiquitous. Telecommunications companies will seek to capture consumer sales by providing walled-garden content to their subscribers and in turn driving consumer adoption and stimulating demand from domestic and international story-tellers exposing more local content. There are two kinds of head-mounted displays for virtual and augmented reality. One contains its own technology and can either be tethered to a computer or untethered. The other type of headset uses virtual reality-capable mobile devices as the technology. Loading smartphones into headsets, which are worn on the viewer s head, is also a much cheaper way for people to access virtual reality, compared to the more expensive stand-alone headmounted displays, such as HTC s Vive and Oculus Rift. Smartphone users can download apps, which give them the capacity to view virtual reality content. Google Cardboard and Samsung Gear are two headsets on the market that use VR-capable smartphones as the screen. By early 2016, five million Google Cardboard viewing headsets had been distributed worldwide since their launch onto the market in June Cardboard s successor is Daydream, a headset for smartphones that was first released on November 10, Google was also expanding into augmented reality enabled smartphones with its Tango technology. It had partnered with Chinese company Lenovo and its Lenovo Phab 2 Pro smartphones, the world s first Tangoenabled phones, were predicted for release in the Northern Hemisphere s Autumn in Apple has registered several patents to develop augmented reality headsets for smartphones. The number of smartphones worldwide is rising rapidly. Deloitte Global s Technology, Media and Telecommunications Predictor 2016 said 1.6 billion smartphones would be bought in It has been predicted that 360 cameras will be also built into smartphones, which will allow users to record events in their own lives that can be viewed in an immersive way by themselves or others

15 8 A New Form Of Narrative - Impact for Storytellers Virtual, augmented and mixed reality is a new form of narrative because it is more immersive. It is predicted to transform many industries far beyond gaming and entertainment, and includes both computer-generated and live content. A prime example is Oculus Story Studio s Emmy journalism. In January 2016, ABC News VR award in September 2016 for outstanding released a virtual reality clip of a snow blizzard original interactive programme for Henry, a in New York City s Times Square, which has been virtual reality animated short film about a viewed on Facebook more than 18.4 million hedgehog trying to make friends. times since it was posted. Facebook deemed it the social media site s most popular 360 virtual At the time, Facebook founder and chief reality video for the first five months of executive Mark Zuckerberg said Henry was a great example of how VR is going to change When ABC News VR launched in September storytelling. 2015, the company s president, James Goldston, told staff it was bringing virtual reality It was the first time in history an original virtual storytelling to the news division and beyond. reality movie had won an Emmy. Its inaugural project was an immersive When you watch Henry in virtual reality, you experience captured in Syria, where a news feel like you re actually in his world, looking team travelled to Damascus to explore the around and interacting with him, Zuckerberg secret holding rooms where curators were posted on Facebook. working tirelessly to protect and preserve Syria s Facebook bought virtual reality company Oculus endangered antiquities. in 2014 for 2 billion. Oculus Story Studio is This rare access also included the streets and the company s in-house virtual reality film historical sights of Damascus, now largely cut production arm. off from the outside world, Goldston said. Virtual reality is having a major impact on They used one of Jaunt s stereographic National Parks. cinematic virtual reality cameras to create Music is another area being transformed by the footage. The result, he said, was a depth virtual and augmented reality. of reporting and a personal guide that was unlike anything the company had done Take British superstar Paul McCartney. He before. partnered with Jaunt in 2016 to film a sixpart documentary series, Pure McCartney The collaboration between (American virtual reality company) Jaunt and ABC News takes our storytelling to a new frontier, Goldston said. And I can t wait to see how you use this new technology to engage our audience in thrilling new ways. For the first time, virtual reality footage about the lead-up to America s 2016 presidential election could be downloaded for viewing around the world. And in August 2016, Oculus VR launched its first virtual reality journey with United States President Barack Obama, Through the Ages: President Obama Celebrates America s VR, in which he discusses his life and singing career, including his early days with The Beatles, the iconic 1960s band that rose to fame decades before virtual reality technology existed. The cinema industry is also in the midst of massive changes to harness virtual and augmented reality technology. The Walt Disney Studio, for example, has launched the Disney Movies VR app, which it says places users inside the themed worlds of Disney, Lucasfilm and Marvel movies. In July 2016, it said virtual reality would play an important role in bringing the magic of Disney in new ways to virtually every corner of the world. When virtual reality company Jaunt announced in September 2015 that it had gained 65 million from new investors, it described itself as pioneering the future I thought we had arrived when I experienced VR in 01. But 2016 is when everything really came together. MICHAEL GREGG - Director, Blackeye 28 29

16 of creative storytelling through cinematic virtual reality. The media and entertainment industry is undergoing a fundamental shift in the way content is created, delivered and consumed, and VR is the next wave of innovation in this space, Jaunt s chief executive, Jens Christensen, was quoted by media at the time. It was working with leading creatives from brands to artists and filmmakers to create cutting-edge content through its studio arm, Jaunt Studios. Itwas also funding filmmakers to explore virtual reality cinematography at Sundance Institution New Frontier and manufactures 360 stereoscopic cinematic VR cameras. Sundance says its aim is to merge virtual reality filmmakers into Story Labs - the Sundance incubator - while developing cinematic VR The entertainment sector is naturually the first to embrace the VR and AR mediums for storytelling in Wellington this can be seen at local game company PikPok who have produced the VR game, Into The Dead, For Oculus then later for Gear

17 9 New Zealand VR/AR Ecosystem The number of companies involved in virtual, augmented and mixed reality in New Zealand is quickly growing as the technology develops. A range of start-ups have emerged in New Zealand over the past few years, covering VR and AR production, creative services, equipment rental, consulting services, games and content creation and project-centred service offerings. These companies include startups such as Mixt, Polytronik, Conical, Imersia, Blackeye VR, PointZero, Immersify, GeoAR Games. Boutique agencies such as Rush Digital in Auckland plus Traverse and Wrestler in Wellington have been quick to expand their digital offerings to incorporate virtual reality, and more recently the multinational advertising agencies have started to adopt creative VR/AR solutions in delivering consumer messages. Beyond the raft of emerging starts up, there are two significant globally focused companies with staff operating in Wellington, New Zealand, Magic Leap and 8i. Mixed reality company Magic Leap, valued at US4.5 billion, has close links with Wellington-based Weta Workshops. In 2016, Weta had about 40 staff working on creative possibilities for Magic Leap at its Miramar headquarters. 8i, a Wellington-based VR/AR technology company was founded in Wellington in May Its aim is to show humans via holograms for the first time in virtual and augmented reality. In October 2015, it revealed it had attracted US13.5M in funding from investors, including Samsung, Dolby and American movie star Ashton Kutcher. In September 2016, 8i had 46 staff and four advisors listed on its website, and was advertising a further 11 vacancies for various roles. The company has more recently completed a Series B funding round of US27M led by Time Warner to bring holograms to consumers. There are two co-working and collaborative venues being established to support the VR/AR sector. The AR/VR Garage in uptown Auckland, funded by ATEED (Auckland City Council s economic investment arm), opened in late 2016 and houses a range of startup and VR production businesses including Staples, New Zealand s leading VR equipment rental supplier. In the Wellington CBD, the privately owned PROJECTR venue is currently undergoing an extensive fit-out before opening in early THE NEW ZEALAND VR/AR ASSOCIATION INC. NZVRARA ( is the not know each other and would benefit national association of participants and from connecting, sharing learnings and practitioners in the virtual, augmented comradery, with the inevitable business and mixed reality (cross reality) sector in partnerships, mergers and business growth New Zealand. resulting from the engagement. Incorporated in September 2016, the Still in its infancy, the NZVRARA is governed NZVRARA aims to support the local by a sixteen-strong executive committee industry to scale up, be a voice for their VR/ of founding members spread across AR members and to provide an agnostic Auckland, Wellington and Christchurch and channel to offshore markets for local startups who choose to be part of the NZVRARA Michael Gregg. The society has built an is chaired by Blackeye founding director, Inc. The Association is the official New online directory to expose its members and Zealand Chapter of the global VRARA their specialty skillsets to customers, and ( has delivered a series of meetups in its first six months and is planning for its first The association is comprised of over AGM in June of this year. In its coming first 120 individual, research and corporate full year ( ), the association plans members, including academia, industry and to employ an executive director, secure a interested business users, and was formed range of beneficial partnerships to provide to build capability by deepening industry resources to execute on its annual plan, to linkages across this fast-growing sector. sponsor and partner on industry events, and It was evident to the Blackeye founders to build deeper offshore links, particularly that many of the new businesses trying to through the global VRARA. generate business in this new sector did 32 33

18 0 11 Glossary of terms About Blackeye Blackpaper Similar to a white paper, a blackpaper is an informative document/guide which informs readers of a complex topic. Environment (in VR terms) A computer-generated environment that can be experienced through sensory stimuli. Hardware The physical parts of a computer system. Headset An object which is worn over a person s eyes to display an immersive experience. Hologram A 3D image formed by a photographic recording of a light field. Immersion Completely absorbing one s attention. The perception of being in an environment that isn t actually there. Mixed reality This merges the physical and digital worlds in a more seamless way. Objects (in VR terms) Items which appear virtually that the user can see and interact with. Platform A base on which processes or technologies are developed and run. Real time (in VR terms) What the user can see once the input of data has been processed. Resolution (in VR terms) The number of pixels contained in a headset/display. Software The operating information and programmes which are used digitally. Virtual reality This replaces the real world with something digital that mimics reality. BLACKEYE VR LIMITED Based in Wellington, New Zealand, Blackeye is a Our fast-expanding in-house capability for content newly established VR consulting organisation, and is capture, post-production, animation and rendering progressively expanding into a virtual and augmented is compelling for agencies and brands seeking to reality production studio. commission virtual reality content. At Blackeye, we are in a unique position to Blackeye understand the local and international VR/AR/MR has deeplyconnected sectors, as the directors, Michael Gregg and Jessica Manins are founding members of the New Zealand industry experts providing thought leadership in this VR/AR Association and both on the NZVRARA exciting field. Experience virtual and augmented Executive Committee, with Michael currently serving reality or explore the future of mixed reality. Please as Chair. contact us if you would like us to host an Immersion Workshop, deliver a presentation or advise on At Blackeye, we believe in the power of storytelling opportunities for VR/AR in your sector. through the exploration of new immersive, narrative and interaction techniques. Our focus is Blackeye is a founding shareholder of Projectr on the production of international 3D and crossreality content. national virtual & mixed reality centre. VR Limited, which established New Zealand s PROJECTR: NEW ZEALAND NATIONAL VIRTUAL & MIXED REALITY CENTRE Billed as a home away from home for the New allowing access to the latest exciting technology Zealand VR/AR sector, PROJECTR provides a neutral and applications where New Zealand content can be venue for collaboration about virtual, augmented and showcased. mixed reality. PROJECTR intends to work closely PROJECTR is currently working closely alongside with industry startups Victoria University on the identification of and the NZVRARA where collaborative industry-academic research and possible to provide a venue for regular meetups and development projects through an Open Lab workshops to be held for Association members. partnership. Alongside a shared meeting space, PROJECTR is 34 35