Virtual Reality Industry Rapidly Gaining Investment - and Momentum

So the VR world is upon us. But haven't we been here before - wasn't Second Life supposed to be the harbinger of untold wealth for retailers, with consumers happily jumping online and trying on the latest trends, products and fashions before parting with their hard-earned cash?

Last week, it was announced that Disney has put $65m into Jaunt, a virtual reality (VR) start-up, while last month, Andy Murray showed his hand by investing in three start-ups as part of his role on the advisory board of crowdfunding platform Seedr. These investments included Trillenium, a company that builds 3D shops for retailers to use within VR worlds, while at IFA - the international consumer electronics and trade show in Berlin, further movement was evident with products such as HTC's Vive and Sony's Morpheus headsets approaching 'store-shelf readiness' according to industry analysts CCS Insight.

So the VR world is upon us. But haven't we been here before - wasn't Second Life supposed to be the harbinger of untold wealth for retailers, with consumers happily jumping online and trying on the latest trends, products and fashions before parting with their hard-earned cash?

The key part of how the opportunities measure up is how they're experienced - VR solutions such as Facebook's Oculus Rift fully immerse the user in the worlds being created, whereas Second Life was always reliant on the quality of experience afforded by the rendered world on the PC - an experience further constricted by the poor quality internet connection it was reliant upon. Granted, the bandwidth issues of 2003-era Second Life are more or less obsolete, but a legacy perception remains that it belongs in a different internet era.

Yet while some retailers and global brands invested into a presence in Second Life, (Cisco, Dell, Toyota, Adidas to name a few), these are outliers among their peers. So why should the new virtual reality platforms change this situation? Hrvoje Prpic, founder of Trillenium, explains, "VR allows users to feel shopping while today's online stores just do the task. For some people shopping is fun, it's not just a job that should be done. It's not about buying, it's about browsing, discovering - customers want to find beautiful shoes that nobody spotted before, somewhere in the corner of the store."

This 'discovery' element could inject fresh lifeblood into incumbents; "Once VR has become mainstream, it may allow Second Life to become more popular, as it will deliver what Second Life was lacking, namely being a truly immersive experience that feels real," comments Raphael Seghier, co-founder of Homido, a company which produces VR headsets.

However, Christopher Dring, editor of gaming mag MCV, errs caution, "There is a conflict between the excitement and the reality of VR. It's an excellent piece of technology, and there are some huge companies behind it, but it needs to run before it can walk. For all the billions of dollars being thrown about, and for all the games that are being built for it, VR isn't out yet. Consumers haven't played it. VR headsets won't be cheap and - at least in the gaming space - will require expensive hardware"

The drive that gaming, and mobility-led gaming, brings to emerging technologies is huge - witness Candy Crush Saga to see how viral a game can go once it's shared across social platforms and monetised through in-app incentives. King, the company behind Saga and its stablemates, may not be seeing the levels of in-app purchases it once did, but it still raked in over $250m in the final quarter of 2014 through them.

Real-world currencies could be a crucial factor in monetising VR worlds afresh. Second Life relies on users spending 'Linden dollars' which are exchanged for real money, a crucial step outside trusted, daily currencies which may raise doubt in the minds of some. Today's VR platforms circumvent this by integrating known payment gateways as VISA or PayPal, building trust along the way.

That's not to count out nascent currency technologies, suggests James York, financial tech specialist and founder of Worry & Peace; "Linden dollars just weren't robust enough, but crypto-currency and blockchain offer good alternatives. Bitcoin's model, whilst still being proven, has undeniably addressed the main problems with de-centralised currency, representing the birth of parallel digital assets - commodities that can be invented. It's a new land grab, and early adopters of VR are likely to be more receptive to disruptive thinking."

If VR does become the mass market, immersive experience it promises, then the opportunity for brands and retailers is huge. MCV's Christopher Dring sums it up - "This isn't going to hit billions of consumers right from day one or even year one. But there's a huge amount of potential here, and I believe that over the course of five years, it could be a major part of not just the games business, but multiple industries throughout the globe." With consumers queuing up for hours to try out the VR headsets on offer at IFA demonstrating the appetite for the technology, then the VR opportunity may be one which proves a lot livelier second time around.

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