At the end of last year, I shared five things I learned about building VR apps from a hacking project. Building the app was essential in building an investment perspective on VR. This is something we try hard to do at DFJ and I am very thankful for the culture we’ve built to encourage our team to explore and become knowledgeable about new technology areas. Spending the last year figuratively and literally immersed in VR led me to believe the following as an investor:
100 million people are going to use VR sooner than anyone expects. I expect that my son will be using VR on a regular basis by the end of the year because of Google Cardboard. Google Cardboard-style VR viewers are going to be the hottest stocking-stuffer of 2016. They will also replace the USB stick as the de facto corporate gift. Proponents of VR delivered using desktop PCs and head-mounted displays such as the Oculus are blind to this because they think great apps can’t be built, but they are similar to race car drivers critiquing 99% of cars. I loved my Prius and I love my View-Master! As an investor this means the time to invest is now, before it’s obvious to others.
Mobile VR apps have an unfair distribution advantage, thanks to the App Store and Google Play. In the process of building a VR experience we ported it from the Oculus Rift to Cardboard because demoing it only at the DFJ office, where we had access to all the necessary gear, was limiting. We were able to make an experience on Google Cardboard that was of a much higher quality than I thought was possible on current mobile devices. What surprised me even more was the amount of consumer demand for mobile VR apps. The positive reception as evidenced by downloads is mind-blowing to me in today’s insanely competitive mobile app stores. There is clearly pent-up consumer demand for mobile VR.
Desktop head-mounted display owners are going to be ravenous content creators. Early adopters of desktop HMDs like the Rift, Vive, and Morpheus will consume all VR content that has been created to date within three months of owning their devices. Due to enthusiasm (and frankly invested dollars into their HMDs) they will turn their attention to using their VR systems to create content. Applications like Tilt Brush will dominate people’s time spent in VR, and startups focused on content creation will be able to break out. Someone will build the YouTube of VR, and just like when YouTube launched, there will be many competitors in this space.
Unity and Google are the two most underestimated VR players on the scene. The desktop HMD vendors, killer games, and heart-tugging stories of VR tend to dominate the press narrative, but while this has happened, Unity and Google have quietly gone about building the most used VR assets by every part of the VR ecosystem. These two are obvious powerhouses to anyone deeply involved in VR, but not yet to the general public.
Briefly, and unscientifically, 80%+ of VR apps are built using Unity’s software and tools, and it now supports all major platforms to enable any developer to reach the maximum-sized user base. Unity acts as the linchpin in the VR content ecosystem with an incredible amount of leverage on all sides. When you have all the developers and creators using your tools, and all the killer apps built against your platform, enormous value is captured (examples: Microsoft and Adobe).
VR hardware and infrastructure are very hard areas to invest in right now. Normally picks and axes are great places to invest early in the creation of new markets. I’m now convinced that is largely untrue in VR. All of the major hardware platforms are well capitalized, but they have also arrived at similar version 1.0 products. VR developers are largely using Unity which has deep hooks into development tools and runtime. Finally, Apple and Amazon haven’t shown all their cards yet. In short, many things that seem like independent companies with strong business models are one press release away from being commodity components offered by various platform players. On the flip side, it does make me wish I could do corporate development and dealmaking for one of the big VR players right now!
With the massive amount of consumer time and attention shifting to VR over the next decade, I’m confident that the next Google or Facebook will be focused on VR.
This article was written by Valley Voices from Forbes and was legally licensed through the NewsCred publisher network.