Virtual Reality Landscape & market study...Virtual Reality Landscape & market study Orange Silicon...

Virtual Reality Landscape & market study Orange Silicon Valley

September 2016

2 France Telecom - Orange confidential Orange presentation

Contents

Section 1 Introduction to Virtual Reality

Section 2 VR financing – focus on North America

Section 3 Corporate VR projects

Section 4 Market analysis

Section 5 VR boom in China

Section 6 Appendices

Orange Silicon Valley - Orange confidential


Key takeaways

• There is a growing interest in VR from the general public. The Oculus Rift, the HTC Vive, and the PS VR all

repeatedly sold out in 2016, minutes after they were made accessible online.

• The very definition of VR has expanded to include 360 video. Platforms like YouTube and Facebook and low-end

hardware like Google Card Cardboard are driving the proliferation of both user-generated and branded content.

• VR funding is growing, and going global. Swiss startup Mindmaze was the first VR company to raise more than

$100M in a VC round in February 2016, from Indian group Hinduja.

• VR has become a go-to destination for large corporate players. Both software and hardware companies such as

Facebook, Google, Acer, HTC, and more are getting increasingly involved through either investments, product

launches, or partnerships with startups.

• With hardware penetration increasing, quality content might become a bottleneck in the near future. Both the

distribution platforms and the hardware manufacturers are fighting to build a loyal base of content creators.

• Entertainment today is driving the growth of VR. Content studios like The Virtual Reality Company are drawing

large amounts of money, while VR arcades offer new distribution opportunities for both the manufacturers and

the developers.

• VR is booming in China, focusing on hardware, mobile and entertainment. Players like Baidu, Alibaba and

Tencent turn to VR to drive their existing video and e-commerce businesses; meanwhile, entertainment

companies are striking large deals with US startups.



Introduction to Virtual Reality



Introduction

Definitions - Virtual Reality (VR) is an environment that simulates physical presence in places in the real

world (360 video capture) or imagined worlds (CGI-created), recreating sensory experiences.

- Augmented Reality (AR) is a live direct or indirect view of a physical, real-world environment

whose elements are augmented (or supplemented) by computer-generated sensory input

such as sound, video, graphics or GPS data.

- Mixed reality (MR) is the merging of real and virtual worlds to produce new environments and

visualizations where physical and digital objects co-exist and interact in real time.

Market of VR VR became a hot topic after Facebook acquired Oculus VR for $2B in 2014. 2016 is expected to

be VR’s “first $1B year”. VR is expected to generate $30B by 2020, according to DigiCapital.

Hardware The most common way to access VR is through glasses combined with software controlled content



Investment evolution

Amount invested in VR

(US & Canada) $351M

94

$338M

124

2015 2016

VC deals in VR

source: Pitchbook (09/06/2016)



800

In 2016

$4.8M

VR companies listed on AngelList

average valuation for VR startups

expected revenue from VR in 2016

source: AngelList (08/24/2016), Deloitte TMT predictions (01/2016)

$1B+



VR financing



VR financing VC and corporate VC



Top VR transactions - worldwide

$2B

$80M

$100M

$82M

Acquisition

Series B

Series A

2014

2016

2016

2014

Date Type Notable investors

Acquisition

$65M Series C 2015

source: Pitchbook, Crunchbase

Developer of the Oculus Rift

headset and of the Oculus platform

Live and on-demand event

broadcast in VR

VR motion capture solution

with a focus on Healthcare

Supplier of 3D motion capture

products

Developer of a high-end VR camera,

video tools and a premium VR

platform


11 France Telecom - Orange confidential

VC deals: • angels, accelerators, seed, early & later stages • corporate

Notable acquisitions: • RYOT – content – $12.50M – April 2016 – AOL

• Movidius – hardware – undisclosed – September 2016 - Intel

Orange presentation

VR deals – 2016

94

4




Top VR transactions – 2016 - worldwide

$100M; series A

$20M; series B

$80M; series B

$35M; series B

$23.6M; series B

February

February

August

January

June

Date Notable investors

Hengxin Mobile

Baofeng Mojing

Country

Switzerland

US

China

US

US

Segment

Platform

Live capture

Hardware

Content

Content


VR studio for narrative

content and experiences

VR studio and distribution

platform for premium content

Manufacturer of mobile VR

headsets

VR motion capture solution

with a focus on Healthcare


broadcast in VR



Top VR transactions – 2016 - North America

$12.6M

$23.6M

$20M

$20M

Series A

Series B

Series B

March

June

February

June

Date Type notable investors

Series A

$80M Series B August

Hengxin Mobile



broadcast in VR

VR studio for narrative

content and experiences

VR studio and distribution

platform for premium content

Inside-out 3D hand and head

tracking solutions

Live event VR platform with a

focus on sports and music



VR investments – breakdown by years

351 338

114 108

12

54

3 0 5 4 2 0 14

0

50

100

150

200

250

300

350

400

2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

am

ount in

veste

d ($

MM

)

North American VR startups

source: Pitchbook, OSV



VR investment landscape – breakdown by segments (1/2)

Content Platform Hardware Software Gaming

Video hosting

Health

Veeso

VRCinematic

Wanderlust VR

18angles Dimensional

Mechanics

Mindhive

Vrtify Woofbert

MyPad3D

VisionaryVR




VR VC investment – breakdown by segments (2/2)


source: Pitchbook (09/06/2016), OSV

146

78 70

31

18

5 3

26

15 16

19

10

1 2

0

5

10

15

20

25

30

0

20

40

60

80

100

120

140

160

Platform Content Hardware Software Gaming Video Hosting Health

Num

ber

of d

eals

Am

ount

investe

d ($M

M)


Fund specialization in VR

Corporate VC VC

$50M

launched in December 2015

$12M

launched in April 2016

$100M

launched in April 2016

$10M

launched in December 2014

$50M

launched in March 2016

$12B

launched in

June 2016

n/a

launched in June 2012

source: VentureBeat, Roadtovr



Fund specialization - focus on the VRVCA

$12B+ total deployable capital

36 VC funds involved

launched in June 2016

Notable investors

headed by Alvin Wang Graylin, HTC’s

China Regional President of VR



VC

$2.5M raised

$5M raised

$3M raised

$15.10M raised

$13.7M raised $2.5M raised

$15.1M raised

$3.5M raised

$1.1M raised

$6M raised $6M raised

$2.5M raised

$2.2M raised

$25.1M raised

undisclosed

$2.2M raised

$3M raised

$14.5M raised

$14.5M raised

$101.35M raised

$17.5M raised

$15.7M raised

undisclosed

$93.4M raised

$44.85M raised

$48.4M raised

$12.56M raised

$6.2M raised

$6M raised $6M raised

$1.25M raised

undisclosed

undisclosed

$5.25M raised

Primitive.io

$0.7M raised

$1.58M raised



Andreessen Horowitz

Based in Menlo Park, CA, USA – founded in 2009

Founded by investors Marc Andreessen and Ben Horowitz, Andreessen Horowitz (a16z) is world renowned for

supporting the growth of emerging technology companies such as Facebook, Airbnb, Jawbone, Twitter and Skype.

The firm has long been involved in VR and AR, with significant investments that include Oculus VR’s $75M Series B

round in 2013 and Magic Leap’s Series B and Series C rounds in 2014 and 2016, respectively. a16z’s latest

investments in VR are London-based Improbable, which provides the backend software to create simulated worlds,

and content studio Within (previously known as VRse).

In June 2016 the firm announced it was making VR one of its main interests. Specifically, a16z is looking at VR

content and interested in potential applications of VR to verticals such as Enterprise and Social platforms.

a16z has also positioned itself as a thought leader in the VR/AR space. In January 2015 the firm initiated a series of

articles and podcasts about AR/VR, with topics ranging from a16z’s own investments to potential applications of VR

to specific verticals. a16z’s first article about the space read: “Looking back, the movie and TV screens we use

today will be seen as an intermediate step between the invention of electricity and the invention of VR.”



GV

Based in Mountain View, CA, USA – founded in 2009

Formerly known as Google Ventures, GV is the corporate venture capital arm of Google and a subsidiary of Alphabet

Inc. The firm provides seed, early stage and growth stage investments particularly in the mobile, software, consumer

internet, life sciences, gaming, big data, financial technology and media sectors. To date, GV has invested in 505

companies.

GV has been involved in AR and VR through 11 deals in 10 companies, the most prominent of which was AR startup

Magic Leap’s $793.5M Series C round.

Google’s interest in AR and VR aligns with the company’s focus both on video through YouTube, and on mobile

through its Tango and Daydream initiatives. On August 25, 2016 GV led a $6M Series A round in Resolution Games,

a Stockholm-based VR gaming company. Joe Kraus, general partner at GV, said mobile VR will be “at the forefront”,

“because anyone with a smartphone has the core of a VR experience already in their pocket.”

source: Pitchbook



The Venture Reality Fund

Based in Burlingame, CA, USA – founded in 2015

The Venture Reality Fund (The VRF) is a $50 million fund that invests in early-stage VR, AR and MR startups. Marco

DeMiroz, former chief executive of PlayFirst, and Tipatat Chennavasin, former head of mobile game maker Big Head

Mode, are acting as General Partners. Tipatat Chennavasin lately has grown to become some sort of a thought

leader to the VR industry.

Advisors to the fund include CEOs and co-founders of prominent VR companies such as 8i, Baobab Studios, and

Jaunt VR. The VRF is a founding member of the Virtual Reality Venture Capital Alliance.

The VRF has been investing at a fast pace, with 7 investments between March and August 2016. Five of these

investments were made along with the Colopl VR Fund, another current member of the VRVCA. VR segments to

date include VR gaming (Owlchemy Labs), VR advertising (Immersv), VR worlds (SPACES), and others.



Corporate VC – tech investors

$12.98M raised

undisclosed

$125M raised

$21.6M raised

$25.2M raised

$5M raised $15.1M raised

$39.2M raised

$6M raised

$2.2M raised

$45M raised

$5M raised


undisclosed


Corporate VC – entertainment investors

$15.70M raised

$101.35M raised $25.23M raised

$6M raised

$116M raised $12.56M raised

$9.10M raised

$2.5M raised

$5M raised

$3M raised

$15.10M raised

$1.1M raised

$1.16M raised

$6.2M raised

undisclosed


undisclosed


Comcast Ventures

Based in San Francisco , CA, USA – founded in 2011

Comcast Ventures debuted in 2011 when Comcast and NBC combined their venture arms into a single unit. The

Wall Street Journal at the time reported that the fund would invest up to $75 million a year from a total fund

amounting to $750 million.

Although Comcast Ventures is looking at other verticals such as Enterprise and Adtech, the fund has been involved

in multiple VR deals lately. VR deals in 2015 included investments in AltspaceVR, NextVR and Baobab Studios. In

2016 Comcast Ventures invested in Kite & Lightning, SPACES, and Felix & Paul.

Comcast Ventures’ investments are closely linked to Comcast’s core media business. Segments of interest to date

have included VR content studios (Baobab Studios, Kite & Lightning, Felix & Paul), VR worlds (AltspaceVR,

SPACES), and VR broadcasting (NextVR).

Comcast Ventures’ participation in NextVR’s $30.5M Series A round in November 2015, along with competitor Time

Warner, aligns with Comcast’s long-time involvement in live sport broadcasting. Comcast today broadcasts live

sports events through a variety of channels such as NBC Sports Live, and CSN Bay Area, a joint venture between

NBCUniversal and the San Francisco Giants.

NextVR’s VR broadcasting technology will likely enable Comcast to bring the sports viewing experience to the next

level for its viewers. Comcast Ventures invested in NextVR’s Series B round in August 2016.



VR financing Crowdfunding



Crowdfunded VR projects – overview

318 projects categorized as VR-related on

Kickstarter (August 2016)

the total amount raised by the 50 most

successful campaigns on Kickstarter

and Indiegogo to date

the share of this funding going to

headset projects

$11.9M+

52%

source: Kickstarter, Indiegogo (last consulted on 08/25/2016)



$7.9M 2016 VR treadmill

$0.5M 2015 VR headset

$1.1M 2013 VR motion platform

Notable crowdfunded VR projects

2014 VR platform

VR gaming software $0.6M 2013

VR hardware & platform $2.4M 2012

$1.5M



Corporate VR projects



Summary – VR projects (1/2)

Orange presentation

LG 360 VR

hardware hardware

& platform platform

hardware

& software

hardware &

platform hardware platform

03/2014 03/2014 06/2014 09/2014 03/2015 02/2016 05/2016



Summary – VR projects (2/2)

Orange presentation

N/A Xbox Scorpio Intel Tech

Experience Labs

Vision Snapdragon VR

820

hardware hardware hardware studio platform hardware &

platform

hardware &

platform

05/2016 06/2016 06/2016 08/2016 08/2016 09/2016 09/2016



Unnamed – 8/31/2016 – VR hardware

On August 31 Apple was awarded a patent for a “Head-Mounted Display Apparatus For Retaining A

Portable Electronic Device With Display.” The HMD would contain built-in headphones, a lightning

connector to merge the two devices, an eyeglasses-like form-factor, and custom lenses.

Apple aims to align with competitors. Samsung today dominates the western market of mobile VR with its

Samsung Gear headset; Google is moving towards mobile VR with its upcoming platform Google

Daydream. Apple can leverage iOS and the massive iPhone install base.

Asking for the patent does not mean the company intends to actually produce the headset, at least in the

short term. Patenting the invention could be a way for Apple to simply protect its IP.

Apple’s involvement in VR and AR includes multiple acquisitions in depth sensing technology

(PrimeSense), AR software (MetaIO), facial motion capture (Faceshift). In January 2016 Apple acquired

Flyby Media, an AR startup that provided Project Tango software for object recognition and 3D positioning.

In January 2016 The Financial Times reported that Apple had been building prototypes of possible headset

configurations for several months, and was gathering large teams around VR projects.

Orange presentation

Apple

source: UploadVR, The Financial Times



Project Tango – 06/2014 – VR platform

Project Tango is Google’s initiative “to give mobile devices a human-scale understanding of space and motion.”

So far, what Google has been demonstrating of Tango’s capacities has focused on augmented reality, including indoor mapping and navigation.

Whereas tethered models are using outside-in positional tracking, Tango could provide mobile VR HMDs with the same level of precision through inside-out tracking, with no additional hardware.

Orange presentation

Google

As of February 2016 Google is reportedly working on a standalone mobile headset that will be able to

dynamically switch between AR and VR modes.

source: Engadget, The Wall Street Journal



Google

Google Daydream – 05/2016 - VR platform

Google Daydream is a platform that enables high quality mobile VR; Daydream will act as a platform for all of

Google’s ecosystem.

Users will be able to access their favorite games and apps from Daydream’s homepage, as well as to navigate

through Google Play Store, watch Google Play movies in a virtual cinema, and use Google Streetview in VR; Google

photos will support VR photos.

Software: VR mode in Android Nougat will be optimized for performance and latency of under 20 ms single buffer

rendering; notifications & alerts will be able to come through properly in VR.

Hardware: Google will provide reference design for the headset and controllers to original equipment manufacturers.

Daydream-ready smartphones need to meet some minimum specifications and come with: sensors, a display, and a

System-On-Chip (SOC).

Some manufacturers have already been announcing distribution of daydream-ready phones, including: Samsung,

HTC, LG, Xiaomi, Huawei, ZTE, Asus, and Alcatel.

Orange presentation Orange Silicon Valley - Orange confidential


Google Daydream - content

Google has already announced content partners, with Hulu, Netflix, HBO and IMAX bringing their libraries to

Daydream. Users will be able to watch shows and movies in a virtual cinema or an immersive 3D movie in a virtual

IMAX cinema.

Some of Daydream’s future partners are current Cardboard content providers; this includes The New York Times,

which launched a version of its NYT VR Cardboard app, and The Wall Street Journal.

Game developers like EA, Ubisoft, and nDreams will also provide content. NDreams has two original titles currently in

development for Daydream, each built from the ground up for the platform.

Daydream is set to launch in September 2016, with original 360 content coming from star YouTubers.



Google Daydream - hardware

Original Equipment Manufacturers

Orange presentation

Very few Daydream-ready smartphones have been announced yet. ZTE was the first Android manufacturer to step

up with the ZTE Axon 7, even before Google has Daydream ready to use.

Google is using the Nexus 6P to build and test Daydream, and the Daydream DSK can be installed on the phone

running the Android N Developer preview. Still, Google has declared the Nexus not Daydream ready, saying that “the

6P's thermal performance is not representative of the consumer Daydream-ready devices that will be launching later

this year.”



HTC – Valve

Vive – 03/2015 – VR platform

The HTC Vive is a high-end VR headset developed by HTC & Valve and powered by SteamVR, a VR platform developed by Valve as an extension of its gaming-platform Steam.

The HTC Vive features a high-resolution display, a 90 hz refresh rate, a 110 degree field of view and an outside-in positional tracking system named “Lighthouse”. It brings photorealistic imagery that eliminates the jitter common to previous VR technologies, and can track room scale with an 1/10th of a degree precision.

A developer edition was made available in Spring 2015; a consumer version launched in April 2016.

Initial content partners included: HBO, Lionsgate, Google; since then, Valve has emphasized independent developer as well as user developed content.

Vive Business Edition – 06/2016 – VR platform

In June 2016 HTC announced a business edition of the HTC Vive to drive commercial applications of VR. Vive BE allows individuals and organizations to order Vive systems with additional services adapted for business and commercial environments.

Alongside the Vive system, Vive BE comes with commercial licensing, a dedicated customer support line, and a 12-month limited warranty. Businesses will be able to buy multiple units of the Vive BE system, which today is priced at $1,200.

The announcement of Vive BE builds on HTC's existing network of commercial partners. Dassault Systemes, which developed the 3DEXPERIENCE platform as a virtual environment for businesses, was announced as one of HTC and Valve’s initial partners.



HTC


Content distribution Accelerator program Funds

*See Appendix for details


Intel

Orange presentation

source: ODV, Engadget,

Intel Tech Experience Labs – 08/2016 – VR studio

On August 16, 2016 Intel announced it was in the process of opening its own VR studio named Intel Tech

Experience Labs in Hollywood, CA. Unlike traditional film studios, the lab will aim on helping create virtual

reality video content using Intel technology. No details were given regarding the lab’s opening date.

With its upcoming studio Intel hopes to build “merged reality” experiences where people will be able to

immerse themselves in animated reproductions of games and watch all of the action in a game from any

position.

Creators at the lab will be able to rely on 360 Replay, a “freeD” technology developed by Replay

Technology, a startup Intel acquired in March 2016 after a multi-year partnership. The technology enables

viewers to freeze the screen and rotate the view of action during a game. The Replay technology was used

in February 2016 for the NBA All-Star game and in July 2016 for the MLB All-Star Week.

By building a VR studio, Intel is following in the footsteps of other big players that already made the

investment. Facebook's Oculus has the Story Studio, while the YouTube spaces in LA and NYC are

equipped with their own VR rigs.



Oculus – 03/2014 – VR platform

The Oculus Rift is a high-end VR headset developed by Oculus VR, a company that Facebook acquired in March 2014. It features a high-resolution display, a 90 hz refresh rate, a 110 degree field of view and an outside-in positional tracking system.

The headset went through several pre-production prototypes before a consumer version launched in March 2016, selling out in minutes.

In June 2015 Oculus revealed it was already working on a successor to the Oculus Rift set to be released 2-3 years from the Rift release. The company also unveiled Oculus Touch, a set of controllers designed to provide an immersive hand presence experience.

The Oculus Store launched in September 2014 as a marketplace for developers to distribute and monetize content. In January 2016 Oculus CEO Palmer Luckey announced the Oculus Store would include some exclusive titles.

Orange presentation

Oculus



Oculus is betting on some level of exclusivity, both to differentiate its Rift headset and to kickstart the entire VR ecosystem with more quality content.

Oculus’s approach varies depending on the amount of time and funding it put into VR content.

• In exchange for Oculus paying the full development costs, Oculus Studios titles are exclusive to Oculus

headsets in perpetuity. The outside studios making those games still own the IP, which enables them to

take it to other platforms for new games in the future.

• Oculus Publishing gives partial development grants to VR developers in exchange for a short exclusivity

window. Grants are offered to developers who may not be able to afford development costs for extra

features such as multiplayer mode.

In May 2016 the company made the headlines after it released a DRM patch that disabled LibreVR’s

Revive software, which enabled Oculus content to play on the HTC Vive. The company retracted in June

2016 after a number of VR developers expressed concerns over undue hardware exclusivity.

Orange presentation

Oculus



Samsung

Gear VR (I) Gear VR (II)

Release date December 2014 (1st innovator edition) August 2016

Specs - compatible with Galaxy Note 4 through a microUSB connection

- motion to photon latency: <20ms - camera of the Galaxy Note 4: high frame

rate preview (60fps)

- compatible with Galaxy Note 7 through a USB C

connector; backward compatible with older models

through a micro-USB adapter

- separate Oculus Home button to travel back to the

main menu

- larger touchpad

- the new USB C port can transfer data, potentially

eliminating the need to rely on Bluetooth connections

Price now $76 $99

Look

Gear VR – 09/2014 – VR hardware & software

Co-development with Oculus VR

Contents available through the Oculus Store

From January to May 2016 Samsung sold 300K units of the Samsung Gear in Europe alone. Oculus announced on May 11, 2016 that the Gear VR had been used by 1 million people in April 2016.



Snapchat

? – 09/2016 – AR hardware ?

Snapchat on September 5, 2016 joined the Bluetooth Special Interest Group (SIG), a required step to build a

product requiring Bluetooth technology licenses and trademarks.

This has been seen as a sign that Snapchat may be building AR glasses. In December 2014 the company acquired

Vergence Labs, a startup working on AR glasses similar to the Google Glass, and is reportedly working on AR

hardware ever since. Snapchat has hired both engineers and recruiters from companies like Nokia, GoPro, and

teams like Google’s project Aura, and Microsoft’s HoloLens.

Snapchat in a way is already an AR company and has been the first company to commercialize consumer AR

through an array of filters and lenses. The company has been acquiring various AR startups to bring new features to

its own product. Acquisitions to date include:

- Seene in June 2016 for an undisclosed amount // Computer vision-based 3D photo app

- Bitstrips in March 2016 for $100M // Developer of Bitmoji, an app for creating custom emojis. Snapchat rolled

out stickers in its app soon after the acquisition.

- Looksery in September 2015 for $150M // Video chat network with real-time face modification features.

Snapchat rolled out Lenses in its app soon after the acquisition.

- Scan.me in December 2014 for $50M // Custom QR scanning system. Snapchat rolled out Snapcodes in its app

soon after the acquisition.

- Vergence Labs in December 2014 for $15M // Developer of AR goggles

AR will likely enable the company to upgrade its existing branded geofilters and lenses, which Snapchat today earns

between $450,000 and $750,000 a day from. This would be a way for Snapchat to leverage a loyal fan-base to

promote fun, non-gaming AR experiences.



PlayStation VR (formerly Project Morpheus) – 03/2014 – VR hardware

On March 18, 2014 Sony unveiled the PS VR, a gaming head mounted display that will work with Sony’s PlayStation 4. The PS VR will launch on October 13, 2016.

As part of the project, Sony on October 8, 2015 acquired Softkinetic, a tech startup whose focus includes visual depth-sensing gesture recognition, for an undisclosed amount.

Specs for the PS VR include a 1080 resolution, a 100 degree FOV, a 120fps refresh rate, and 9 positional LEDs on the surface for the PS Camera to track head movement.

The PS VR will be controlled through Sony’s existing accessories, including: the PlayStation camera, the Dualshock 4 gamepad, and the PlayStation Move motion controllers, designed for the PS3.

PlayStation Pro (formerly Project Neo) – 6/10/2016 – VR hardware

In June 2016 Sony confirmed rumors that the company would launch an upgraded version of the PS4 named PlayStation 4 Pro, designed for hardcore gamers. The new system will have an upgraded GPU for graphic-heavy and VR games, and will support 4K resolution.

The PS4 Pro will not be getting its own games or exclusive features. From October every PS4 game will come with a "base" mode and a "NEO" mode, making it compatible with either console.

This new version of the console will likely suppress the need for a secondary processing unit to power the PlayStation VR headset, a requirement for owners of the current PS4.

Orange presentation

Sony



Corporate projects Open-source initiatives



Summary – Open-source VR projects

Orange presentation

OSVR OpenVR Surround 360 Project Alloy Lighthouse

platform & hardware platform hardware hardware software

01/2015 04/2015 04/2016 08/2016 08/2016



Surround 360– 04/2016 – VR hardware & software

In April 2016 Facebook unveiled Surround 360, a high-quality 3D-360 video capture system that includes

a design for camera hardware and the accompanying stitching code. The specs for Surround 360 were

officially open-sourced on July 26, 2016 on GitHub.

Surround 360 comprises 17 cameras, each of which can export 4K, 6K, and 8K video. The 8K format

doubles industry standard output and can be played on Gear VR with Facebook's custom Dynamic

Streaming technology. Fisheye cameras at the top and bottom of the rig remove the blind spots.

Facebook’s stitching code drastically reduces the need for post-production. Operators can also watch a

live preview of what the camera is picking up.

At Facebook’s preferred configuration, the camera costs about $30,000 to build and can be constructed

in about four hours.

By catalyzing content creation, Facebook is widening the funnel into its VR distribution channels. The

Surround 360 is especially adept at making News Feed photos and videos that could attract users to

Facebook. The company rolled out support 360 video in September 2015 and for 360 photos in May

2016.

Orange presentation

Facebook



Facebook

Blueprints for Facebook’s Surround 360, available on GitHub



HTC – Valve

Lighthouse – 08/2016 – VR software

HTC and Valve jointly opened Vive’s existing SteamVR “Lighthouse” tracking technology to third-party hardware companies for free. Third parties interested in building compatible peripherals will pay for a royalty-free license that will allow them to develop and sell Lighthouse-enabled products.

Valve for now is not allowing the creation of third-party base stations, the boxes that emit lasers which are essential to making the tracking work.

The license will be granted after developers have attended a training course, which will go for $2,975. The

course will be delivered by Valve and Synapse in the US, with HTC handling the course in Asia.

Participants will receive a Licensee Dev Kit that includes a modular reference tracked object for prototype

HMDS, 40 individual sensors, a software toolkit to assist with sensor placement, and more.



OpenVR – 04/2015 – VR platform

OpenVR is an API that comprises both a software development kit (SDK) and programming interface for supporting the SteamVR platform and other VR headsets. It provides games with a way to interact with VR displays without relying on a specific vendor's SDK. It can be updated independently of the game to add support for new hardware or software updates.

The SDK was made available on Valve’s GitHub account in April 2015 as an update to Valve’s Steamworks VR API, with documentation and examples of how to build software that supports SteamVR hardware. Manufacturer are encouraged to implement the SDK in what Valve calls an “OpenVR implementation” or “runtime”.

Valve announced on May 19, 2015 that the company would be cooperating with OSVR. The extent of the cooperation was not disclosed.

Orange presentation

Valve



Market analysis



Market analysis Hardware



Head-Mounted Displays - incumbents

Price Release date HMD Available sales figures

Samsung Gear VR

$200 n/a February 2016

December 2014 $99 1M

(May 2016)

April 2016 $599 175K dev kits

(January 2016)

HTC/Valve Vive

March 2016 $799 100K dev kits

(March 2016)

mo

bile

te

there

d

Oculus Rift

LG 360 VR

June 2014 $15 5M

(January 2016)

Google Cardboard



Head-Mounted Displays - upcoming

Price Release date HMD

$99 August 2016

end 2016 n/a

October 2016 $399

mo

bile

te

there

d

Starbreeze StarVR

Samsung Gear VR 2

Notable specs

USB C port that can

transfer data

210 degree FOV

120fps refresh rate

end 2016 n/a Eye-tracking capabilities

FOVE

Sony PS VR



Head-Mounted Displays: is the future really tethered?

• Because tethered HMDs require high processing capabilities as well as a number of USB ports for accessories,

few computers today are able to power a quality VR experience.

• On the other hand, 2nd-generation mobile VR headsets are now offering an increasingly good experience, driving

vr adoption with the general public.

• Manufacturers such as Samsung and Lenovo are bundling their headsets and handsets to further push VR to

their customers.

• With PC sales declining YoY, smartphones are likely be the preferred platform for VR.

trend

Orange presentation

source: Motherboard, Immersive Technology Alliance



Head-Mounted Displays - standalone models (1/2)

Orange presentation

AMD & Sulon - Q DeePoon - M2 Pico VR – Pico Neo Idealens - K2

Announcement date March 2016 April 2016 April 2016 June 2016

Release date Summer 2016 July 2016 Summer 2016 n/a

Specs - AR/VR compatible - 2,560x1,440 resolution - Real-time mapping - Spatial redirection - Spatial audio - Wi-Fi and Blutooth

connectivity - Runs on Windows 10

- 2560x1440 resolution

- 96-degree FOV

- 60-75Hz refresh rate

- 18ms latency

- W-Fi and Bluetooth

connectivity

- 2x1200x1080

resolution

- 102-degree FOV

- 90Hz refresh rate

- 32GB of storage

- Can be used for

mobile or tethered

experiences

- Runs on Android 6.0

- 2x1080x1200

resolution

- 120-degree FOV

- <17ms latency

- 90Hz refresh rate

- Wi-Fi and Bluetooth

connectivity (4G

support to follow)

- 32GB storage

- Runs on IDEAL OS

Price n/a $599 $550 (headset and

controller), or $300

(headset only)

$525

Look




Orange presentation

Intel - Project Alloy Qualcomm –

Snapdragon VR 820

Alcatel - Vision

Announcement date August 2016 September 2016 September 2016

Release date Q3 2017 Q4 2016 n/a

Specs - Inside-out positional

tracking

- Real-time mapping

- Open-source

- Runs on Windows

Holographics

(Windows 10)

- Integrated eye-

tracking

- <18ms latency

- 6 degrees of

freedom (6DOF)

- Gyro, accelerometer

and magnetometer

sensors

- 2x1080x1020

- <17ms latency

- Gyro,

accelerometer, and

proximity sensors

- Optimized sound

quality for stereo,

surround and 3D

sound

Price n/a n/a Between $560 and

$670

Look



VR cameras and rigs

• The need for quality VR content is pushing the VR camera market forward.

• Most solutions come with video stitching, editing and sharing software. Features include 4K to 8K video

rendering, live-streaming, and real-time HMD monitoring.

• Most products today are aimed at a “prosumer” audience and remain too expensive for the general consumer;

high-end solutions range from $2,500 to $45,000.

• Rental offers could enable manufacturers to reach non-professional consumers. Jaunt recently announced a

partnership with hardware rental company Radiant Images.

• Some manufacturers are directly partnering with content producers: in April 2016 Nokia struck a deal with

Disney that will see Disney use Nokia’s OZO camera for future theatrical releases

trend

p

layers

Google Jump Jaunt One Nokia OZO Facebook Surround 360 Omni Odyssey



VR backpacks

• VR backpacks are fully integrated, wearable PC solutions powering a tethered VR headset to allow for free-roam

VR experiences.

• The ultimate goal is to eliminate the need for auxiliary power cables, thus increasing the level of immersion.

• VR backpacks today are still at the prototype stage and very much a “niche within a niche”. In the future they

may appeal to commercial or professional users who need high quality graphics powered by a dedicated GPU.

• On the consumer side, VR backpack could enable large-scale, location-based, free-roaming entertainment VR

experiences such as theme parks and VR arcades.

The Backpack PC Omen x Unnamed

trend

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Market analysis Content



Content distribution

• VR content stores are now offering numerous games and experiences. WEAREVR has over 1,000 pieces of

content, while Steam has 400, and the Oculus Store has 200.

• Online streaming platforms such as Littlstar, Vrideo, Pie and recently Facebook and YouTube are lowering the

barriers to entry by accepting content from casual content creators.

• Business models include: per-experience purchase, time-based solutions, and subscription. Ad-based solutions

are likely to grow as the offer and demand for quality VR content increases.

• In the future we might see more specialized platforms serve specific verticals or audiences. In August 2016 HTC

launched Viveport, a new platform that will exist alongside Steam to deliver non-gaming content; WEAREVR is

working on Bogglebox, a carefully curated VR category for children.

trend

p

layers



Content distribution – variety and pricing

• Distribution platforms today provide a variety of content. The Oculus Store, for instance, narrows its content to

only a few categories that include apps, concepts, games, entertainment, and touch, a category of games

developed with oculus’s touch controllers in mind.

• Most of the content is in the form of games. Steam offers numerous genres including: action, adventure,

strategy, casual, RPG, simulation, sports, racing and puzzle games. Games can also be filtered based on their

playing mode, i.e. single-player, multiplayer, and massively multiplayer gaming modes.

• The price of VR content varies greatly, ranging from free games to $59.99 pieces of content such as game

developer EVE’s “Valkyrie” game. HTC recently announced it was giving out 70% of its Valve sales revenue to

VR creators.

pla

yers

Orange presentation

trend



Content distribution – focus on premium content

• As creators get easier access to VR hardware and software, there is a need for premium channels to sort

through the increasing amount of content available.

• Premium platforms today are hand-picking content to select only the best experiences; the need for automated

curation may come at a later stage.

• As a way to ensure a continuous influx of quality content, platforms are engaging with their community through

incentive programs, grants, and lasting relationships with creators.

• Exclusive features on these platforms include seamless cross-device publishing, one-click user access with

“deep links”, spatial audio tech capabilities, and more.

trend

p

layers

Launched in February 2016 Upcoming


Launched in August 2016


The platform dilemma – for creators

• The increasing fragmentation of hardware today is pushing VR developers to make content-related and

economic choices when choosing a platform to build upon. Typical criteria are: addressable market of a specific

hardware, number of users on a platform, expected revenue, development costs, and more.

• The addressable market in particular is crucial. VR-compatible computers for instance today come in limited

numbers. In comparison, Sony in April 2016 had an install base of close to 40 million PS4, which ensures some

level of success for future PS VR games.

• As the total audience of VR today remains limited, creators may choose to first bet on volume by targeting

mobile users. 360 video for instance provides broad opportunities as it can run across devices agnostically. With

YouTube and Facebook now supporting 360 video, creators are able to reach hundreds of millions of users.

• When they can afford the costs, creators may also choose to leverage the various devices and their specificities.

High-end, room-scale experiences can later be turned into more accessible and available content on mobile

headsets, with both a bigger reach and new business opportunities.

• Even in a seemingly small high end market creators may choose their preferred platform based on criteria that

include: system performance requirements, primary or secondary input options, and room-scale tracking

capabilities. The StarVR’s extra-large field-of-vision could be another incentive for content creation.



The platform dilemma – for platforms

• With content as the new bottleneck, building their own community of creators provides platforms with a pipeline

of new content. Both Wevr in March 2015 and Oculus in June 2015 dedicated funding to independent

developers. On August 25, 2016 HTC unveiled the Global Viveport Developer Awards, a yearly ceremony that

will reward developers for their work with a total pool prize of $500,000.

• Exclusive content has become central to the platforms’ appeal to customers, and might play an increasingly

bigger role in attracting hardcore VR enthusiasts. Oculus for instance believes in some level of exclusivity for

some of its content, due to the amount of production and funding the company puts in them. As such Oculus

Studios titles are considered first party titles, even though they were done by external studios.

• Platforms are keeping their eyes open to prevent any unwanted content transportability. Some apps like

LibreVR’s Revive, which enabled exclusive Oculus content to play on the HTC Vive, were disabled by a recent

patch of the Oculus platform in May 2016. Oculus retracted in June 2016 after a number of VR developers

expressed concerns over hardware exclusivity.

• Some players are also striking long-term partnerships that could give them an edge on other platforms in a

developer’s mind. Bundling an Xbox One controller with every Rift sold, for instance, enabled Oculus to lower

development needs and costs for VR creators.

• Lowering the barriers to creation can help platforms attract more creators. Some independent networks such as

Wevr and Jaunt Publishing offer cross-platform distribution options that rely on an open format. Razer is using

an open-source platform to ensure perfect hardware and software portability.



The platform dilemma – for consumers

• VR consumers want to be able to access any type of content using any peripheral with any type of headset. This

situation is similar to that of traditional gaming, where any level of exclusivity can generate some frustration on

the consumer end. PC gaming for instance has long been the most modular option, as it offers the best

hardware portability.

• As platforms bet on exclusive content, this could lead to some friction by delaying the purchase of both VR

headsets and peripherals. Just like with gaming consoles, consumers today may worry that they’re going to buy

their way into the “wrong ecosystem”.

• On the contrary, increasing hardware and software interoperability could enable both manufacturers and

platforms to driver VR adoption by masses.



Market analysis VR arcades



Out-of-home experiences: arcades

• VR arcades are bringing together premium VR hardware, software, and content to offer users a premium

location-based vr experience.

• VR arcades could help manufacturers reach a larger audience by demoing their platform and help developers

find new revenue opportunities. They can provide a dedicated play space that will likely drive social, multiplayers

experiences. Space today is the one commodity that VR enthusiasts may lack at home.

• The VR arcade space sees startups striking manufacturing and content deals with larger companies: Starbreeze

Studios partnered with Acer on the manufacturing side and with IMAX on a location-based VR offering.

• Business models today include: per-experience purchases, and time-based fee.

trend

p

layers



Key players

Orange presentation

; Zero Latency The VOID Ctrl V NotionVR StarCade

Opening date August 2015 October 2015 (beta test) June 2016 August 2016 2016 (expected date)

Locations Melbourne, Australia Salt Lake City, UT, USA Ontario, Canada Washington D.C., WA,

USA

Los Angeles, CA, USA

Type Free-roam Free-roam In-booth In-booth N/A

Hardware - Alienware Alpha

computer backpacks

- Oculus Rift

- Playstation Eye for

motion tracking

- Dell servers

“Rapture” gear (headset, vest, haptic gloves, and weapons and tools)

- 16 Vive stations

- Rogue Z gaming PCs

- Logitech cameras &

headphones

- The location is

starting off with only

a single Vive station

available

- StarVR headsets

(210-degree FOV)

Available content - Zombie-themed

shoot’em up game

- Can be played as a

solo or multiplayer

game (up to 6 players)

- Solo game: “The Curse of The Serpent’s Eye”

- Multiplayer game “Research facility”

- “Ghostbusters” experience in NYC

- Future experiences will include a multiplayer FPS and “Poly Defense”, a yet undescribed experience.

- 14 VR games, up to 8

players

- More content coming

in September 2016,

including Wevr’s

“TheBlu” experience

- Developed its own

game launcher

platform

- Plans to develop its

own titles

- 14 solo and

multiplayer games

and experiences,

including “Fruit

Ninja”, “Tilt Brush”,

and “Hover Junkers”

- Will launch with

Starbreeze Studios’

“The Walking Dead”

game

- Plans to expand to

other games in the

future.

Business model - Time based: $88 for a

45-minute session

- Also selling systems to

businesses requiring

free-roam VR

applications

- Tickets for the

“Ghostbusters” experience

in NYC sold for $49.75

- Time-based: starting at

$20 CAD ($13 USD) for a

1-hour session

- Time based: $15 for a

30-minute session

- The price and

package can vary

depending on the size

of your group.

N/A



The VOID (1/4)

• The VOID operates “VOID Experience Centers” (VEC), i.e. VR theme parks that superimpose a real-time layering

of digital worlds over physical environments. Available experiences use an array of sensory “4D” FX to provide a

sense of touch, smell and temperature, creating what the company calls “Hyper Reality experiences”.

• The first VEC will include two styles of stages, a 30x30 feet ‘attraction stage’ and a full ‘dimension stage’ at

60×60 feet. The combination of wireless, large-scale tracking , modular physical environments such a moving

podiums, and redirected walking enables longer, more immersive experiences.

• The VOID’s proprietary hardware, named “Rapture”, includes a 180 degree FOV VR headset, a vest that carries

a high-grade gaming computer, haptic gloves, and the weapons and tools needed to complete the experience.

As of July 2016 the Rapture gear was not available yet, and the VOID was still using other technologies.

• The VOID’s CTO James Jensen announced in July 2015 that the company was looking at landing 10 US

locations, and hoping to get 230 locations across the US and internationally within the next 5 years. In October

2015 The VOID’s main location in Salt Lake City, UT opened for a public beta testing, selling out within hours.

• The company in February 2016 announced a partnership with Chinese company Shanda Group, to build a VR

theme park at an undisclosed location in China. Shanda today is the sole investor in The VOID.



The VOID (2/4)

• The VOID develops its own content. Available experiences today include “The Curse of The Serpent’s Eye”, a

deep exploration into a temple in a jungle, and “Research facility”, a multiplayer game where teams track down

aliens. Future experiences will include “The VOID Unreal Tournament Arena”, a multiplayer FPS built around the

Unreal Tournament franchise, and “Poly Defense”, a yet undescribed experience.

• The Void is also creating branded content. As of July 2015 The VOID was in discussion with National

Geographic to create VR experiences for the network. In May 2016 the company partnered with Sony Pictures

to create a “Ghostbusters” VR experience that debuted at Madame Tussauds in New York on July 1st. Tickets

to the “Ghostbusters” experience started at $49.75.



The VOID (3/4)



The VOID (4/4)

Orange presentation

The VOID – “Rapture” gear



VR boom in China



$136M+

Some figures

estimated revenue from VR

in China in 2016

internet cafes in China being retrofitted

into VR cafes

listed companies investing in consumer

VR hardware and software since July

2015

400K

60+



Expected VR revenues in China – 2014-2017



Top Chinese investments in VR – 2016

$12M

$80M

$34M

$30M

Series A

Series B

Series B

January

August

January

June

Date Type Notable investors

Joint venture

*CITIC invested $20M

Baofeng Mojing

*Tencent was the

only investor

Manufacturer of mobile VR

headsets


broadcast in VR

Developer of VR and MR-based

fully dimensional spaces

VR content production for

the travel industry



VR in China - overview

VR in China hasn’t attained mass public

validation beyond gaming enthusiasts

Hardware offers a world of opportunities

for Chinese players

VR will most likely be introduced to the

general public through arcade

experiences and mobile headsets

China could lag on the content, software

and UI side in the future



Hardware first

• Today’s most prominent VR players are almost absent in China. Facebook is banned in China, which prevents

both Facebook from selling the Oculus Rift and Samsung from selling its Gear VR headset, which relies on the

Oculus Store. Google has also long been absent in China to avoid the country’s censorship requirements, and

therefore isn’t officially promoting Google Cardboard.

• This leaves room for high-end headsets. Various companies today are working on standalone handsets,

including Pico VR’s Pico Neo and Idealens’s K2.

• Multiple startups are leveraging the VR arcade boom by building context specific hardware that includes VR

motion platforms, suits, guns, bicycles, and other accessories that pair with custom software.

• Chinese companies are partnering with US startups on large distribution deals. Virtuix is set to sell 5,000 to

10,000 units of its Omni system to UNIS, a supplier of arcade machines, as part of a deal with Hero

Entertainment.

trend

p

layers



Online video turns to VR

• With hardware booming, there is a need for compelling content to drive mass VR adoption.

• China’s biggest tech companies – Baidu, Alibaba, Tencent – are striking content deals through their video

distribution subsidiaries. Ali Baba-owned Youkou Tudou will acquire VR content from Digital Domain Holdings.

• Big players are trying to ensure a continuous influx of VR content. Baidu’s iQiyi introduced a partner incentive

program to turn 10 existing online films and dramas and 100 games into VR productions.

• Tech & entertainment companies will likely leverage existing IP catalogues owned through either their film

production subsidiaries or their stakes in game publishing companies.

• International partnerships are also fueling the content market: Shanghai Media Group partnered with Jaunt to

form Jaunt China and has plans to develop 500 vr productions in the next 2 years.

trend

invested in partnered with pla

yers



Entertainment is driving everything tr

end

p

layers

• Discussions around VR in China are focused on entertainment and haven’t reached the Enterprise, healthcare,

communications, or education verticals yet.

• VR is coming to existing live entertainment businesses: in June 2016 Songcheng Performance Development and

US startup SPACES formed a $30 million joint venture to bring VR and MR attractions to Songcheng’s theme

parks.

• Most investments coming from China are focusing on Entertainment, including: CITIC’s investment in NextVR

and Hengxin Mobile’s investment in The Virtual Reality Company.

Hengxin Mobile



VR arcades



VR arcades tr

end

p

layers

• Chinese urban culture gravitates towards indoor entertainment in the winter, including theaters and malls. VR

comes as a whole new category of entertainment in this context.

• The VR arcade market is leveraging existing infrastructures: over 400,000 internet cafes in China are being

retrofitted into VR cafes.

• Chinese VR companies are pushing the cost of hardware to the retail VR arcades and making it pay-per-use for

consumers. Chinese consumers are already used to this model from time spent at internet cafes.

• The market allows for very large deals between manufacturers and arcade owners: HTC is partnering with

Shunwang Technology to bring its Vive platform to internet cafes, which Shungwang today operates 100,000

locations of.

Shunwang Technology


Thanks

Orange, the Orange mark and any other Orange product or service names referred to in this material are trade marks of Orange Brand Services Limited. Orange restricted.


Appendices



VR landscape

source: VR landscape – 06/2016 (Tipatat Chennavasin // The Venture Reality Fund)



VC and corporate VC Others



Rothenberg Ventures

Based in San Francisco, CA, USA – founded in 2012

Rothenberg Ventures (RV) is a venture capital firm that invests in the VR/AR/MR, 3D printing, Robotics, Drones,

Space, and Enterprise sectors. Rothenberg Ventures was founded by angel investor Michael Rothenberg, and has

raised $47 million across four funds dating back to 2013.

While VR is not the only area of interest for Rothenberg Ventures, the fund has been strongly involved in the space.

As of August 26, 2016, VR accounted for 21 of the fund’s 137 investments. Rothenberg Ventures typically invests

anywhere from $100,000 to half a million.

Many of the fund’s VR deals originated from River, an SF-based accelerator that RV launched in December 2014.

River focuses on frontier technology, with a focus on VR/AR/MR, drones, and AI. As of October 2015 27 companies

had received investment from River. Several of these companies went on to raise funding after they went through the

program, including FOVE and The Virtual Reality Company, which raised $11M and $23M, respectively.

As of August 19, 2016 Rothenberg Ventures is reportedly under investigation from the SEC regarding matters that

include wire fraud and breach of fiduciary duty. RV’s latest known investment was made on that same day in

InsiteVR, the provider of a VR optimizer platform.

source: Pitchbook, TechCrunch, VentureBeat



2020 Ventures


2020 Ventures invests in the global consumer technology, media, retail, finance, and social mobile web sectors in

the US & China. The fund to date has made 10 investments.

2020 Ventures recently got involved in VR, investing in hardware companies such as Virtuix and FOVE, as well as in

AR, investing in Atheer in November 2015.

source: Pitchbook, CrunchBase



KPCB Edge


KPCB Edge invests in seed-stage startups across sectors such as Blockchain, VR, Digital Health, Drones and

Aerospace, Computer Vision, Mobile, Future of Work, and Robotics. The fund presents itself as a “full-stack VC”; its

team both invest in startups and support them on topics like recruiting, financing, and operations.

KPCB Edge launched in June 2015 as a new initiative of Kleiner Perkins Caulfield & Byers (KPCB), a Menlo Park,

CA-based VC firm founded in 1972 and one of the “largest and most established” VC firms, according to The Wall Street Journal. As of August 26, 2016 KPCB has invested in 677 companies including Apple, Google, Twitter, and

more. KPCB announced that it would allocate $4 million to KPCB Edge, with the latter to back 15 to 20 companies

over the following 12 months.

To date, KPCB Edge has invested in 13 startups, 2 of which are VR companies. The fund backed Envelop VR in

January 2016 and TheWaveVR in August 2016. KPCB’s parent fund backed AR startup Magic Leap in October

2014 and later in February 2016.

source: Pitchbook, Crunchbase, VentureBeat



Presence Capital


Presence Capital is an early-stage VC firm that seeks to invest in VR and AR startups, with a focus on software. The

firm launched in 2015 with a first fund of $10 million. It was founded by Amitt Mahajan, co-creator of casual game

Farmville, former HTC executive Phil Chen, and Paul Bragiel.

Being focused solely on AR and VR, Presence Capital has been able to invest in multiple companies in a short

amount of time, with already 18 investments in the space to date. Most of the firm’s investments were made in

content companies, including The Rogue Initiative, Baobab Studios, with a focus on game companies such as

Harmonix Music VR, Experiment 7, Resolution Games, and Radd3. The firm expects gaming to be central to the

future of VR, and is also actively looking to invest in enterprise-focused companies to keep balance in its portfolio.

The founders of Presence Capital believe that promising companies will emerge by building their technology on VR

platforms. “Whenever there is a new platform that comes out, there will be multiple billion-dollar companies built

natively for it,” Bragiel says. “The key thing for us was to start investing before Oculus, Vive, and PlayStation VR were

launched. The plan is to raise a larger fund in the near future once early numbers start coming in terms of sales,

metrics, etc.”

source: Pitchbook, Crunchbase, Fortune



Boost VC

Based in San Mateo, CA, USA – founded in 2012

Boost VC is both a specialized early-stage startup accelerator and a VC firm. It was founded by Adam Draper, a son

of entrepreneur and investor Tim Draper. Initially focused on Bitcoin, Boost VC in June 2015 announced it was

diversifying its next cohorts of startups to invest in companies working in VR and AR.

Boost does not back teams working on VR hardware. Instead, the firm is looking for companies building a software

infrastructure around the creation and consumption of experiences in VR.

On August 25 Boost announced its 8th batch of startups. Boost VC’s portfolio to date stands at 162 companies with

50+ Blockchain and 40+ Virtual Reality, making Boost VC a leading investor in both sectors.




DFJ Venture

Based in Menlo Park, CA, USA – founded in 1985

Draper Fisher Jurvetson (DFJ) focuses on early- and growth-stage investments in Enterprise, Consumer and

disruptive technologies. The firm was founded by businessmen and business angels Tim Draper, John H.N. Fisher,

and Steve Jurvetson.

DFJ Venture is one of the most recognized VC firm, having invested over $5 billion, deployed in more than 300

companies. DFJ Venture today invests through DFJ Venture XII, a $350M fund, which closed in 2016 and DFJ

Growth’s second fund of $470M, which closed in 2014. In 2006 the firm initiated DFJ Growth, a growth-focused

fund investing in companies seeking $10M and more.

In 2015, DFJ as a whole was identified as one of the top investors of billion dollar startups. DFJ created the “DFJ

Ultimate Club”, a group of 24 companies that have achieved more than $1 billion in value through an IPO or an

acquisition. Members of the Club include: Twitter, Box, Tesla, Baidu, Solar City, Tumblr, Skype, and more.

DFJ’s involvement in VR today remains moderate, with only a few investments. In March 2016 the firm invested in

Visionary VR, an LA-based story creation software company. DFJ Growth led a $181 million Series C round in game

engine developer Unity in June 2016.




Colopl VR fund

Based in Tokyo, Japan – founded in 2016

Colopl, a gaming-focused Japanese company, and Colopl next, a wholly owned subsidiary, launched a $50 million

VR-focused fund to support virtual reality developers in Japan and around the world. The fund plans to invest in

companies working on VR HMDs, games and 360-degree content, development tools and equipment, distribution

platforms, and input devices.

Colopl and Colopl will provide the investment together, while Colopl Next will manage the fund. Colopl will also

provide technological support to recipient companies with 360Channel, a new subsidiary that specializes in 360-

degree video.

Colopl created the Colopl VR Fund “to provide support for the industry in time for the head-mounted displays to

reach the global market in 2016”, the company said in a press release. The fund is investing at a very fast paste:

According to its website, the fund has already invested in 13 VR companies in 4 countries.

This is Colopl’s first big move out of the gaming space. Colopl was the first mobile game developer in Japan that

started VR development and built up an internal team of engineers focusing on the field. The company has already

produced an Oculus Rift version of its Rune Story game.



Intel Capital

Based in Santa Clara, CA, USA – Founded in 1991

Intel Capital is a division of Intel Corporation, set up to manage corporate venture capital, and M&A. The firm makes

equity investments in a range of technology startups and companies offering hardware, software, and services

targeting enterprise, mobility, consumer Internet, digital media and semiconductor manufacturing.

As of July 2015 Intel Capital was the second-most active venture capital arm of any American business, having

made 299 investments. The company notably invested in companies such as VMWare, MongoDB and Maginatics.

Intel’s interest in VR has seen the company invest in hardware companies like Razer and Eyefluence, which aligns

with Intel’s initial core of business. Intel also invested in Worldviz, a VR visualization software that likely appealed to

Intel because of its focus on Enterprise businesses. Some more surprising choices include Intel’s leading investment

in Voke VR in March 2016. Voke VR is a live event VR platform that focuses on sports, music and entertainment.



Disney

Based in Glendale, CA, USA – founded in 2000

Most of Disney’s investments until June 2015 were being done through the company’s dedicated venture arm,

Steamboat Ventures, a fund that typically invested in the US and Asia with a focus on China. The Wall Street Journal announced in January 2016 that Steamboat Ventures was seeking up up to $100 million for its sixth fund. Some of

Disney’s investments have been made through some of Disney’s

Disney’s involvement in VR to date has been focused on high-end VR creation, namely through an investment in VR

camera maker Jaunt VR in September 2015. Jaunt later joined the Burbank, CA-based Disney Accelerator, which

Disney launched in 2014, and received undisclosed additional funding from Disney.

Other VR companies that have gone through Disney’s accelerator involve: distribution platform Littlstar, and

holographic company OTOY.

On April 25, 2016, Disney announced it would be using Nokia’s OZO camera to create cinema-quality content for its

future theatrical releases. The two companies have already been working on a VR experience derived from Disney’s

The Jungle Book movie.

On May 26, 2016 Disney released its app Disney Movies VR on the Steam platform. The app centralizes all of

Disney’s VR properties across three Disney-themed worlds, including Disney, Marvel, and Lucasfilm.



HTC

Based in Taipei, Taiwan

The co-developer of the HTC Vive technology, HTC has invested in multiple startups that all develop some sort of

VR content. Some of these startups to date include game developers such as Owlchemy Labs, Radd3, and

producers of narrative VR content such as Wevr and Baobab Studios. On August 31, 2016 HTC was the only

investor in a $5 million round in Steel Wool Studios, a VR game studio created by veterans from Pixar and Lucasfilm.

HTC’s involvement in VR content strongly aligns with the needs of HTC’s Vive headset. As hardware sales increase,

accessing a solid pipeline of content is central to the success of manufacturers such as HTC.

HTC’s involvement in VR has grown in the last months. In April 2016 HTC announced a $100M fund as part of its

Vive X program. With already 3 locations in China, the Vive X accelerator program is looking closely at China and

Asia in general. Vive X is likely to act as a pipeline of promising startups for HTC and Valve’s Vive technology.

In June 2016 HTC launched the Virtual Reality Venture Capital Alliance, along with 30+ other VCs and corporate VCs

working on VR. The Alliance has made no official announcement as to how much money it will actually invest in the

space. Together the funds in the Alliance represent a total $12B in deployable capital.

The VRVCA today is headed by Alvin Wang Graylin, China Regional President of VR at HTC.



Details on crowdfunding



40%

26%

8%

8%

4%

4%

4% 4% 2%

Headsets Content Motion tracking Hardware (non Headset) Audio Accessories Camera Software Drone

Orange presentation

Crowdfunded VR projects – overview

• Crowdfunding has become an effective way to promote, fund and commercialize VR products. As of August 2016 there

have been 318 VR-related campaigns on Kickstarter, 238 of which were not successful. The 50 most successful

campaigns on Kickstarter and Indiegogo VR campaigns raised a combined $11.9M+ from 2012 to 2016.

• The rise of VR crowdfunding debuted with Oculus VR’s successful campaign on Kickstarter, which brought the company

$2.4M.

• Successful campaigns have helped companies develop products across multiple segments that include: headsets, motion

tracking systems, audio, cameras, accessories, content, software and drones.

• VR headsets ranging from goggles to high-end untethered headsets represent 40% of all successful VR-related Kickstarter

and Indiegogo campaigns from 2012 to 2016. Headsets accounted for 52% of the total funding.

• Some audio-related projects have been leveraging VR although VR is not their only potential application. OSSIC X raised

$2.8M in July 2016 for immersive 3D audio headphones that can render sound by using spatial objects.

50 most successful VR

projects – per segment

50 most successful VR projects -

Share of total funding

per segment

52%

3%

11% 4%

24%

1%

3% 1%

1%



Based in Redwood City, CA, USA – founded in 2012 – VR headset

Provider of wearable eye displays that mimic how people see. It's a headphone with eye-display integrated to integrate video, employing micro-mirror technology.

$37M in 5 rounds

Other investors: 500 startups, Crunchfund, DN Capital, Kaiwu Capital, NHN investment corporation

Based in Irvine, CA, USA – founded in 2012 – VR platform

Creator of virtual reality hardware, software and services for online gaming. The company‘s flagship product is the Oculus Rift, a VR headset that creates a stereoscopic 3D experience.

$93.4M in 3 rounds before being acquired by facebook for $2B

other former investors: Andreessen Horowitz, Formation 8, Kickstarter, Matrix Partners, Spark Capital

Orange presentation

Based in Los Gatos, CA, USA – founded in 2007 – VR gaming software

Developer of modular motion tracking technologies.

$0.6M by individuals from the crowdfunding platform Kickstarter

Notable crowdfunded VR projects (1/2)



Based in San Francisco, CA, USA – founded in 2014 – VR headset

Developer of virtual reality hardware and software solutions; the company’s flagship product is FOVE, a VR headset with gaze tracking capabilities.

$11.1M in 3 rounds

Other investors: 2020 Ventures, Colopl VR Fund, Foxconn Technology Group, Microsoft Accelerator, Rothenberg Ventures, Samsung Ventures.

Orange presentation

Based in Austin, TX, USA – founded in 2013 – VR treadmill

Developer of the Virtuix Omni, a virtual reality treadmill that enable users to walk, run, and jump in 360 degrees in VR.

$16.1M in 6 rounds

Other investors: 2020 Ventures, Black Green Capital, Radical Investments, Scentan Ventures, Scout Ventures.

Notable crowdfunded VR projects (2/2)



Corporate projects Others



StarVR – 06/2016 – VR hardware

Acer partnered with Stockholm-based startup Starbreeze to design, manufacture, promote, and sell the

StarVR, a high resolution VR headset featuring unique 210 degree field of view.

The partnership includes a $9M investment in Starbreeze through a 2-year bond, as well the establishment

of a joint venture. The new company is provisionally named Acer Starbreeze Corporation, with an

authorized capital of up to $25 million shared equally between the companies.

Starbreeze focuses on cinematic VR experiences & entertainment-based applications such as VR arcades.

On August 31, 2016 Acer started shipping StarVR – specifically to IMAX, which plans to utilize them for its

upcoming Los Angeles-based IMAX VR Center.

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Acer



Vision – 09/2016 – VR hardware

Alcatel on September 1, 2016 unveiled Vision, a standalone VR headset. A suggested price tag for the headset could be anywhere between $560 and $670.

The headset comes with two 1080x1020 screens, a <17ms latency and a 120-degree FOV. It also includes 32GB of storage and a set of sensors, including an accelerometer, gyroscope, and a proximity sensor. The battery is expected to allow for 3 to 4 hours of usage between charges. Alcatel is using German company Fraunhofer’s Cingo software to optimize sound quality when playing stereo, surround and 3D sound.

On the platform side, Vision is not plugged in with Oculus, Stream, or Google Daydream. Alcatel is reportedly working on its own Unity-based SDK and app payment system.

Alcatel is working with several companies including Janus VR to bring content to its headset. The company announced 100 VR-ready videos and north of 50 games will be available at launch.

Alcatel also unveiled a 360-degree camera named Alcatel 360 that comes equipped with dual 210-degree fisheye lenses. The camera reportedly works by plugging it into one of Alcatel’s Idol 4, Idol 4S or Pop 4S phones. It’s expected to launch with a $110 price tag.

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Alcatel

source: Engadget, Mashable



Asus VR – 05/2016 – VR hardware

On May 30, 2016 Asus unveiled a VR headset at its Zenvolution press event. The Asus VR is a mobile

HMD meant to be used with Asus’s own line of Zenfone smartphones. As of today specs for the headset

are still undisclosed.

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Asus

source: Engadget



HTC (1/2)

Vive X fund – 04/2016 –$100M fund

HTC launched a $100M initiative as part of its Vive X program. Vive X has invested in 16 startups to date.

HTC also launched, and is part of the Virtual Reality Venture Capital Alliance, a $12B fund of over 30 VC funds and corporations to invest in VR. The Alliance comprises multiple Asian funds including Sequoia Capital China, CRCM Venture Capital, CRU Capital, and Qiming Venture Partners.

The VRVCA is headed by Alvin Wang Graylin, China Regional President of VR at HTC.

Viveport – 08/2016 – VR platform

Viveport is a VR distribution platform for non-gaming VR experiences like education, travel, shopping, sports, news, and 360° video content.

Viveport will exist alongside the Steam platform and will offer developers various monetization opportunities

including: pay-to-download, in-app-purchases, subscriptions, and more.

Viveport is live in China. HTC plans to bring Viveport to the rest of the world in Fall of 2016. The platform will be

available on Vive headsets, in web browsers, and as a PC and mobile app.

On August 25, 2016 Viveport announced the Global Viveport Developer Awards (VDAs), which will reward

developers yearly for their VR creations. The Viveport Community already includes over 7,000 registered developers.

Vive X – 04/2016 – Accelerator program

Vive X is a VR-focused accelerator providing startups with education, investment and mentorship in exchange for equity. On July 29, 2016 the program announced its first batch of 33 companies.

Vive X operates in San Francisco, Taipei, and Beijing, with more locations to come. A hardware-focused location is set to open in Shenzhen, China.



HTC (2/2)

In December 2015 HTC partnered with Hangzhou Shunwang Technology, China’s largest internet cafe operator, to bring the Vive Technology to internet cafes all over China.

The pilot program is live in Hangzhou, charging players from $2 to $5 for 10 minutes.

On August 10, 2016 HTC partnered with Alibaba Cloud to develop innovative solutions to “tackle bandwidth allocation, data transmission and data processing needs in areas such as VR video production and VR broadcasting.”

Partnerships

Orange presentation

source: HTC, RoadtoVR



LG 360 VR – 02/2016 – VR hardware

In February 2016 LG unveiled the LG 360 VR, a lightweight virtual reality headset powered by a LG

smartphone, and the LG 360 camera.

Unlike Samsung’s Gear VR headset, the smartphone is not attached to the headset, but rather connected

to it via a USB-C cable. The headset then uses its own internal screens.

Critics have mentioned poor immersion due to light leaks, insufficient screen surface, and lagging.

The headset and the camera were released with a launch price of $199.99 each. In April 2016 LG announced a bundle offer with LG’s G5 headset, 360 camera and 360 VR headset for pre-order at $750.

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LG



Microsoft

Xbox “Scorpio” – 06/2016– VR hardware & software

Microsoft revealed in June 2017 that the company will release a more powerful Xbox in late 2017. The new model will come with an upgraded GPU and will support 4K and high-quality VR. The announcement came after Sony announced the launch of the PlayStation 4 Neo, an upgraded version of its standard PS4.

Although Microsoft hasn’t announced which VR headset the console will be compatible with, a logical option would be the Oculus Rift. In June 2015 Microsoft partnered with Oculus to: bundle an Xbox One controller with every Oculus Rift, to enable Oculus users to stream Xbox One games to the Rift, and to make the Oculus Rift compatible with the Xbox One. Players can use the Rift as a secondary screen after connecting it to a Windows 10-equipped computer through a dedicated adaptor.

The deal with Oculus allows Microsoft to push its Windows 10 OS and to make the Xbox line of products a go-to destination for future VR developments:

- Since Microsoft’s Xbox wireless adapter only works on Windows 10, Oculus Rift owners will need to use the latest version of Microsoft’s operating system to take full advantage of the Rift.

- With the Xbox One controller being bundled with every Oculus Rift, the controller will probably become a standard device for creators developing content for the Oculus.

Microsoft made its game “Minecraft” available on GearVR in April 2016, and on Oculus in August 2016.

source: Kotaku, Thisgengaming.com



Qualcomm

Snapdragon VR820 – 09/2016– VR hardware & platform

Qualcomm on September 1, 2016 unveiled the Snapdragon VR820, a standalone VR headset anticipated to be available in Q4 2016.

Features include: integrated eye tracking with two cameras, <18ms latency, dual front-facing cameras for six degrees of freedom (6DOF) and see-through applications, four microphones, gyro, and accelerometer and magnetometer sensors.

The Snapdragon VR820 uses some of Qualcomm’s existing technologies, including the Snapdragon 820 processor. It is built upon the Snapdragon VR SDK, which Qualcomm announced in March 2016 to help developers create VR hardware, software, and content.

Qualcomm aims to use the Snapdragon VR820 as a reference platform for other manufacturers to build upon. The plan is to demonstrate what can be done with Qualcomm’s chips, a strategy that is similar to Intel’s. Chinese company Pico VR is already using Qualcomm’s the Snapdragon 820 processor for its Pico Neo headset.


source: TheVerge, Variety


The processing unit required for the standard PS4 to power the PS VR headset is used for:

- Carrying out object-based 3D audio processing

- Displaying the social screen - undistorting the VR output for display on TV. Quality is lost in this

process, so it scales the image up and crops it so you don't see edges

- "Separate mode" - a completely separate audio and video stream you can send over to TV, as

opposed to the mirrored social screen. This allows for new gameplay options.

- Displaying PS4's system software interface in cinematic mode, handling the display of traditional 2D

content

Orange presentation

Sony – PlayStation VR

PS VR Current setup, including the standard PS4, the PS VR headset, and the

external processing unit



Open-source projects



Project Alloy – 08/2016 – VR hardware

Intel presented a working prototype of a standalone VR headset. Project Alloy uses Intel’s Realsense camera to integrate objects of the real world into the VR experience in real time. This removes the need for complex sensor setups and hand controllers. Intel will make Project Alloy open source next year to let third parties build headsets.

The headset will work with Windows Holographic, Microsoft VR-focused operating system. Intel is partnering with Microsoft to make “mixed reality ready PCs” to solve computer compatibility issue in producing holographic media.

In August 2016 Intel also unveiled a 3D camera designed for the HTC Vive; the camera will bring depth-sensing capabilities to the headset and complement HTC’s “Chaperone” mapping system.

Intel on September 5, 2016 acquired Movidius, a startup working on computer vision. Intel announced it aims to integrate Movidius’s high-speed, low-power chips in its RealSense cameras to power depth-sensing capabilities. Movidius to date has been powering Google’s Project Tango 3D sensor tech.

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Intel



OSVR – 01/2015 – VR platform & hardware

OSVR (Open Source Virtual Reality) is an ecosystem designed to set an open standard for VR input devices, games, and output. It comprises an open platform for VR devices and games, and a VR headset that is open-source hardware and uses open-source software.

OSVR addresses 3 key issues:

- Hardware & software fragmentation. With OSVR, each device and software is able to connect on a single open standard and become compatible with each other, reducing development efforts. The platform today runs on Linux, Android, and Windows.

- Industry adoption. OSVR today is supported by over 100 VR companies, including Valve, Razer, OTOY, Leap Motion, and Sixense.

- Lack of access to VR development platforms. OSVR provides the OSVR Hacker Development Kit, an open source kit that enables hardware hackers to connect their devices, and software developers to develop for VR immediately.

Being open-source, the OSVR kit is accessible to any one with a 3D printer and the required materials. Razer and Sensics have also developed a ready-made Development Kit that sells at $399. The kit started shipping in November 2015. It is now in its 2nd generation.

Orange presentation

OSVR (1/2)



OSVR (2/2)



Market analysis Hardware




• Standalone HMDs aim to combine the best of both the tethered and the mobile worlds: high-quality processing

capabilities and a cable-free experience.

• Adding the necessary processing, storage, and cooling systems as well as mapping gear and cameras will likely

cause weight issues, as even current tethered headsets remain heavy.

• Major players are working on standalone models, including AMD, which partnered with Sulon, Intel, Alcatel and

Qualcomm. The companies each have already revealed working prototypes of their headsets.

• Some large companies today are working in stealth mode; as of February 2016, Google is reportedly working on

a standalone VR/AR headset, while Samsung is working on a standalone VR headset.

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Unnamed Odyssey Project Alloy Sulon q

&

Vision Snapdragon VR820



• Most of the standalone headsets already available today come from China, including Pico VR’s Pico Neo,

Idealens’s K2, and DeePoon’s M2.

• The quality of the experience may vary greatly from one model to another. DeePoon’s M2 model for instance is

expected to offer a refresh rate of anywhere between 60-75 Hz, while the Idealens K2 will provide a 90Hz refresh

rate.

• Manufacturers plan to provide content to go along their headsets. Idealens will provide 100+ VR games, 1000+

VR videos and 10,000+ videos. DeePoon’s VR platform 3D Bobo today has over 150 VR games and 10,000+

hours of video content.

• Positioning and pricing today remain issues. The Deepoon M2 sells $599, which is the price of the Oculus Rift,

but doesn’t need a dedicated gaming PC, which can start at $1000. It also delivers a better experience than

what a bundle of the Gear VR and a Samsung smartphone of equivalent capacities would cost.

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pla

yers

Idealens K2 Pico Neo Deepon M2



VR cameras and rigs – Nokia OZO (1/2)

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source: Nokia, CNet

Release date Q1 2016

Specs - 195 degree FOV lenses, with significant overlap from one lens to another for more control at the stitching stage

- 2Kx2K sensors - 8 microphones - Shoots both monoscopic and stereoscopic video, at 30pfs, the live video standard - Instant video feed stitching for real-time VR preview - Wireless operation through Wi-Fi - OZO Creator, a VR creation software with real-time stitching and a number of export options

such as creating an MP4 image or a DPX file for a cinema experience.

Accessories - Digital cartridge for both the battery and 500GB of storage. The cartridge sells at $5000. - Docking station that acts as a charging hub for the cartridge and as a transfer device to get

footage to a computer - SDI and Thunderbolt cable - Computer - BlackMagic UltraStudio Mini Recorder

Price $45,000 as of August 18, 2016 (down from $60,000 in December 2015). The camera comes

without the additional required components.

Look



VR cameras and rigs – Nokia OZO (2/2)

Orange presentation

source: Nokia, CNet, WIRED UK

• Vesa Rantanen, head of R&D at Nokia, said that OZO was inspired by the first rumors of the Oculus Rift's

development.

• The camera is aimed at professional content makers such as filmmakers and broadcasters. Launched on March

17, 2016, the OZO Pioneer program provides hand-picked creators with a $15,000 discount in exchange for

sharing footage in the first 90 days following purchase. Nokia is leveraging its first-mover advantage to build a

community of professional VR creators.

• On April 25, 2016, Nokia announced a multi-year partnership with The Walt Disney Studios. Disney will use the

OZO to create “special VR content” for upcoming films. Since then, Disney has used OZO to film 360-degree

videos based on “The Jungle Book,” to livestream a live performance at the “Alice Through the Looking Glass”

premiere, and to create a VR experience that blends live action and CGI effects for “Pete’s Dragon.”

• On August 18, 2016 Nokia announced OZO will be launching in the Chinese market, with a scheduled ship date

of October. Nokia is partnering with online video company LeEco to distribute OZO content via LeEco’s VR

division, LeVR.



Market analysis Content



Branded content tr

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• With VR described as the next frontier for advertisers, brands from all verticals are producing VR content to

promote a new product or service or engage with their customers.

• Most content is aimed at mobile and distributed across platforms. Heavily dedicated players, including media

companies, are building dedicated apps (The Guardian VR) and websites (Huffpost RYOT) for VR journalism.

• Publishers are partnering with platforms like Samsung VR and Littlstar for their own branded channels.

• Some of the VR experiences published include buzz-worthy content meant to quickly spread in the media,

including The Guardian’s “6x9” experience on solitary confinement

• Past branded experiences have enabled the viewer to either visit a location (McDonald's) or experience a new

product. In April 2016 Honda used VR to let viewers experience what it would feel like to drive the company’s

new “Dallara” model. Both McDonald's and Coca Cola have distributed mobile VR headsets.



Derived VR content

• Studios and networks are partnering with VR content studios to produce cross-platform VR content derived

from big budget films and series.

• VR is being used mostly as a marketing tool for fan activation & engagement.

• Content today is mostly short-form but is leaning towards longer-form, standalone experiences: the “Mr. Robot”

experience was 13-minute long; “The Martian VR experience” was 20+ minute-long.

• Hollywood studios are launching in-house VR initiatives : in 2015 Fox created the Fox Innovation Lab; in June

2016 Sony Pictures appointed a VP of Virtual Reality.

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January 2016 July 2016 July 2016 July 2016



Content distribution – user experience (1/3)

• Platforms aim to provide a rich, clean browsing experience. The profile of a specific piece of content will typically

include screenshots, and technical info such as the minimum recommended specifications.

Oculus Rift Store - screenshots




• As the amount of VR content available increases, distribution platforms are adding various filters to enable users

to browse through their content more easily. WEAREVR enables users to sort content based on filters that

include headsets, OS, upload date, rating, and others. With over 1,000 pieces of content, the platform also

divides its content into 30 categories.




WEAREVR - screenshot



Out-of-home experiences: theatres

• Studios are offering in-theater derived VR content to help promote their feature film releases: in October 2015

Paramount Studios released a VR experience that debuted along with “Paranormal Activity: Ghost Dimension”

- the experience was made available on HTC Vive headsets in 15 AMC theatres in the US through a

partnership with VR startup VRwerx

- in June 2016 Paramount also released a cross-platform “Paranormal Activity” game available on the

Oculus Rift, HTC Vive and PS VR

• Theaters can leverage existing venues to offer high-end video and audio experiences; as of May 2016 IMAX is

planning to bring VR experiences to multiplexes, malls and other commercial destinations using Starbreeze’s

StarVR HMD.

• The future of theatrical VR may lie in movie theater lobbies, i.e. VR stations available to walk-by visitors; as of

August 2016 AMD is partnering with Awesome Rocketship on a VR pod that will provide immersive VR

experiences in commercial locations.

• Players such as AMC and IMAX cannot provide a truly innovative collective VR experience yet. Viewers who

gather in “VR cinemas” today each are wearing their own HMD and headphones.

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Market analysis VR arcades - others



Zero Latency (1/2)

• In August 2015 Zero Latency opened its first venue in Melbourne, Australia with “Zombie Apocalypse”, a free-

roam, zombie-themed, single or multiplayer shoot’em up game that can be played with up to 6 players. As of

July 2016, Zero Latency’s Melbourne venue has hosted over 10,000 players.

• Zero Latency in February 2015 partnered with Dell to bring Alienware hardware to its Melbourne location.

Participants to the experience are equipped with a backpack that contains an Alienware Alpha Factor PC

powering an Oculus Rift. Dell also provides Poweredge servers and switches to power the backend.

• The company’s warehouse enables free-roam experiences. Redirected walking provides a greater sense of

immersion and ensures that multiple users can participate in the game without bumping into each other.

• A camera-based optical tracking system ensures players’ body motion tracking and room-scale location

tracking. Location tracking is processed thanks to an array of 128 PlayStation Eye cameras.

On July 20, 2016 Zero Latency announced a partnership with Sega Japan and its Sega Live Creation subsidiary

to create a permanent hi-tech entertainment facility in Tokyo. Zero Latency is building a shorter, more arcade-like

version of its zombie game that will have a competitive point system and new hardware. The company plans to

open up game development to third-parties later this year

• Zero Latency has also received some interest from investors. In December 2015 raised $1.5M in a seed round

led by Sydney-based Carthona Capital.



Zero Latency (2/2)

Orange presentation

Melbourne, Australia location Multiplayer shooting game



Ctrl V (1/2)

• Ctrl V launched in June 2016 in Waterloo, Ontario, as the first VR arcade in Canada. The Ctrl V venue has 16

individual booths where users can experiment a variety of VR games.

• Content at Ctrl V today only includes games divided in three categories: Action, Casual, and Experiential which

together comprise 14 games. More content is coming in September 2016, including Wevr’s “The Blu: Whale

Encounter” experience.

• Instead of using the SteamVR platform Ctrl V has developed its own in-VR game launcher. Named “Control

Rool”, the platform provides a 3D interactive UI developed on the Unreal game engine. Ctrl V plans to expand it

to allow players to use it for matchmaking and as a lobby for multiplayer games.

• Ctrl V provides a comprehensive list of all the hardware used at its venue. The equipment as of August 2016

includes HTC Vive headsets and controllers, NCIX Rogue Z gaming PCs, Logitech cameras & headphones, and

more.

• CtrlV has put an emphasis on the social aspect of VR.

- Some games such as “Hover Junkers” enable a shared VR experience with up to 8 players.

- The company displays leaderboards on its website and offers free VR sessions to the best-scoring

players as a way to have players come back to the venue in order to beat other people’s scores.

- Screens in the venue enable by-passers to watch as others experience VR.

- CtrlV also established its own Twitch channel to build a community around its venue.

• The Ctrl V space can be booked for a fee during non-open hours for developers to use.



Ctrl V (2/2)



NotionVR (1/2)

• NotionVR is a VR arcade developed by Notion Theory, a Washington DC-based product development and

design company. The venue opened in August 2016 with only a single Vive station available for renting;

NotionVR aims to introduce more units as the demand increases.

• As of August 2016 NotionVR’s content offering includes 14 solo and multiplayer games and experiences,

including “Fruit Ninja”, “Tilt Brush”, and “Hover Junkers”. These games were selected based on their popularity

among users of the SteamVR platform.

• Users can book 30-minute sessions on the NotionVR website at $15 a session. The price and package are

scalable depending on the size of the group.



NotionVR (2/2)

Orange presentation

NotionTheory - booking screen



StarCade

• Starbreeze Studios, a Swedish game developer, in January 2016 unveiled StarCade, a location-based VR

arcade set to open in 2016 in Los Angeles. The location will serve as a pilot program for the company to better

set the pricing and nature of content for future locations.

• Participants will first be able to play the studio’s “The Walking Dead” game, using Starbreeze’s proprietary

headset StarVR, a 210-degree FOV HMD. The company plans to add more experiences in the future and will

likely leverage its portfolio of games.

• The studio will also be using third-party franchises. In January 2016 Starbreeze partnered with Korean game

developer Smilegate to develop, publish and distribute a new FPS game on Smilegate’s “Crossfire” franchise for

Western markets. Starbreeze will distribute its “Payday 2” and “The Walking Dead” games on Smilegate’s

platform to expand its properties to Asian markets. Starbreeze received $40M in funding from Smilegate.

• Starbreeze’s StarVR headset is expected to be central to StarCade. In May 2016 Acer announced it would

provide manufacturing support to Starbreeze on its StarVR headset; IMAX also partnered with Starbreeze to

leverage Starbreeze’s headset and existing library of content.



VR boom in China



In the news

*Beijing-based iResearch Consulting Group expects the Chinese VR market to reach 55 billion yuan

($8.5 billion) by year 2020



Hardware: focus on mobile

• Most HMDs are low-end mobile models and copycats of the Google Cardboard or Samsung Gear VR that sell at

a very low price. Xiaomi’s Mi VR Play model sells at only $0.15.

• With over 100 VR headset manufacturers in China today, the market is driven by big players like Xiaomi, Huawei,

Lenovo and Baofeng Technologies, with the latter alone distributing over 5 models.

• Chinese players are selling at scale: Baofeng Technologies sold over 1M of its mobile HMDs in 2016 though a

network of 20,000 brick-and-mortar VR stores.

• The market is progressing through constant iteration: some models are already in their 5th generation.

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Xiaomi Mi VR Play Huawei VR Unnamed Baofeng Mojing 4



VR arcades - content tr

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• VR content in Chinese arcades today comprises a variety of experiences including VR rides, first-person

shooters, sports games, immersive experiences, and VR versions of existing arcade games. One of the most

popular experience at the Famiku VR arcade is a Mount Everest game where users virtually walk across a rickety

bridge.

• Content is typically displayed on both the headset for the viewer to experience and nearby screens for viewers

to see. This allows for a more social experience that could help turn VR into a group of family activity instead of

the solitary activity it’s often thought to be.

• Arcade owners are working with content providers to keep control of the experience. Games available through

Valve’s Steam platform tend to be unsuitable for offline operations, as their running time is too long, being

developed for home use. Future content will likely be custom-made to ensure higher user rotation.

• Various business models exist today, including transaction-based and time-based models.

Shunwang Technology


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