More than $1 billion flowed into immersive entertainment projects last year, with device-makers eager to stimulate the virtual reality market serving as a major source of funding, according to a newly released report.
A group calling itself the Leadership Council for Immersive Art & Entertainment, whose members include device-makers, representatives of film studios, talent agencies and others outside of the industry, found that much of the investment in 2017 came from players with a vested interest in VR’s success.
Those investments typically flowed to the big players — major studios, agencies or production houses — rather than to independent artists.
Backers typically offered cash in exchange for a window of exclusivity on a particular device, be it the Oculus Rift, HTC Hive, PlayStation VR or other head-mounted display. They weren’t necessarily worried about making money, but rather focused on experimenting and learning, building an audience, growing a user base, or generating buzz.
That’s likely to change this year, as hardware and software companies grow more selective in their investments, and bankroll a smaller number of high-profile projects that showcase their technology. Traditional media companies, which have spent the last year or two experimenting, similarly are expected to fund those projects that fit their definitions of commercial success.
While the VR market grew more slowly in 2017 than many analysts predicted, credible researchers such as the International Data Corp. forecast spending on augmented reality and virtual reality to reach $17.8 billion this year, nearly double the $9.1 billion estimated for 2017.
That will lure a new type of investor — one looking for projects with the possibility of turning a profit, the council predicts.
“The thing that’s really exciting is that, as an industry, we’re leaving the experimental phase and, I think, the market is finally maturing to a point where savvy artists and savvy studios can create VR content that actually turns a profit,” said Leadership Council Chairman Rene Pinnel, who is chief executive of Kaleidoscope, a company that helps secure financing, distribution and exposure for VR content.
“Up until now, all of this has been propped up by big players that have a vested interest in this taking off.”
Augmented reality, in which the digital world overlays the real one, a la Snapchat’s filters or Pokemon Go, will be the toast of 2018, the council predicts. The experimental and R&D budgets that once financed experimental VR projects will start to flow into AR.
That’ll doubtless produce plenty of gimmicks, but also some successes — since Apple and Google created software tools to streamline development of augmented reality apps on smartphones.