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The Billion Dollar Year for Virtual Reality

With the technology on the tipping point of the mainstream, what does this new frontier hold – and where’s the money?

At the 73rd Venice Film Festival, there was plenty to keep the cinephiles talking. Nocturnal Animals, the anticipated new movie from fashion-designer-turned-filmmaker Tom Ford. Hacksaw Ridge, Mel Gibson’s return to directing after some career-shattering unpleasantness with the Los Angeles County Sherrif’s Department. And La La Land, Damien Chazelle’s follow-up to Whiplash, starring Ryan Gosling and Emma Stone, in a swooning throwback to the Golden Age Hollywood musical.

But there was also something else, something that threatened to steal the limelight away from even those boldface new releases. This year the world’s oldest film festival witnessed the debut of the world’s newest filmmaking technology. Filmed in 360°, Jesus VR – The Story of Christ represented the biggest investment to date into the world of virtual reality movies. Audiences were shown a “hyper-immersive” new take on The Greatest Story Ever Told, one that placed them as spectators at the nativity and took them right through to the resurrection. “The viewers truly feel they are there with Jesus and his disciples,” the film’s director, David Hansen, explained. “This is the most powerful story of all time and virtual reality is the perfect way to tell it.”

Some experts have called VR the most important entertainment development since the moving picture: as potentially revolutionary as the Lumière brothers’ 50-second silent movie of a steam train pulling into a French station that had audiences literally jumping out of their seats in 1896. Industry analysts predict VR will have its first billion dollar year in 2016, with about three-quarters of that in hardware sales, and the rest in software. They estimate sales of around 2.5 million VR headsets and 10 million games.

Industry analysts predict VR will have its first billion dollar year in 2016, with about three-quarters of that in hardware sales, and the rest in software

Virtual reality has become one of the key phrases of the year, with VR content being produced for everything from the Rio Olympics to Adult VR Fest 01, the world’s first adult virtual reality festival, held in (where else?) Tokyo. Google, Facebook, HTC and Samsung have all invested heavily in the technology that creates a computer-generated simulation of an environment that can be interacted with in an apparently real way, using a headset with a screen fitted inside. In the last 12 months Apple has filed patents, bought VR-related companies and hired a team of VR experts suggesting they too are about to push hard into the medium.

“If you think about the history of computing every 10 or 15 years a big new platform comes along,” said Facebook founder Mark Zuckerberg in August. “We had desktop computers, then browsers and the internet, now we have mobile phones and each one is better than the one before it. We are going to get to a point in 5-10 years that we are all using virtual reality.” Two years ago Zuckerberg spent $2bn buying Oculus Rift, the pioneering Kickstarter-funded VR company established by a 22-year-old bedroom boffin, Palmer Luckey. Today Oculus VR employs more than 360 staff with offices in South Korea, Japan, Seattle, Dallas and Silicon Valley.

People have been excited about the potential of VR for longer than you might think. Its earliest recorded mention is in 1935, in a short story by the American sci-fi author Stanley G Weinbaum. Pygmalion’s Spectacles considered a goggle-based VR system with holograms that provided smell and touch. In 1957 the pioneering Hollywood cinematographer Morton Heilig developed his Sensorama experience theatre – “The cinema of the future!” – a bulky contraption resembling a 1980s arcade machine that gave the user the experience of riding a motorcycle through the streets of Brooklyn via a 3D image viewer, while being rocked about and having wind and smells blown in their faces.

Throughout the 1980s and 1990s cinema, literature and the gaming industry returned to the format again and again. Films like Total Recall and The Matrix tended to portray VR as a warning from the future: dystopian worlds where humans are unwittingly enslaved or duped by the technology. Video game companies such as Nintendo bet big on VR with little success. Some gaming peripherals were so heavy they could only be used in conjunction with a harness suspended from the ceiling. Despite the magazine Computer Gaming World confidently predicting “affordable VR by 1994”, reviews were sceptical. One suggested extended use of VR would result in “sickness, flashbacks and even permanent brain damage”.

Now 2016 is the year virtual reality has become a reality. The technology required to produce smooth, enjoyable VR that doesn’t make you nauseous is here (for gaming, that basically means machines powerful enough to pump out graphics at a rate of 90 frames per second). And while TV companies like Sky and filmmakers like those behind Jesus VR have invested heavily in the new tech, it’s likely it will be video games that drive the surge in interest, at least initially. This October PlayStation launches its PlayStation VR, a headset that will transform the 43 million PlayStation 4s already in circulation into virtual reality machines. Tension VR, the UK’s first virtual reality centre, has just opened in Lincoln. Elsewhere devices like Samsung Gear VR and Google’s Daydream View and Cardboard (a low-cost set-up literally made from cardboard) are goggles that work with existing smartphones: most of us already carry a VR-ready machine in our pocket, thanks to our smartphone’s gyroscope and a high-quality screen that can divided in two for stereoscopic viewing. Websites like YouTube’s 360 channel offer an ever-expanding range of free content. At the other end of the scale, Google’s art app Tilt Brush, which allows you to paint spectacular 3D virtual worlds, works in conjunction with the powerful (and, at £770, powerfully expensive) HTC Vive headset.

“Within the next 18 months we’re going to see considerable investment,” says Andy Harris, a VR expert from the company Fifth Dimension. “Each new generation of phones has better resolution and better refresh rates. What you can do with a headset like HTC Vive now, you’ll soon be able to do on your mobiles. Everyone is attempting to make the experienced in VR seamless and real.”

The possibilities for entertainment are huge – one reason why Facebook has invested so heavily. Before long, VR companies hope, we’ll be present at the world’s greatest events without having to leave out homes.

“Imagine being front-and-centre at the Olympics opening ceremony, for instance, where you can see the audience behind you,” Harris says. “Or being on stage with Coldplay as they headline Glastonbury. Literally the next best thing to being there is going to be being on stage next to Chris Martin as he does his stuff. Any experiences where you’re able to immerse yourself in an environment are going to have key monetisation elements. We’re standing on the precipice of a real step-change in how people interact with these platforms.”