A decade ago, Virtual Reality (VR) looked like a technology that had already enjoyed its moment in the sun. After Nintendos Virtual Boy and the movie Lawnmower Man brought the concept into the mainstream in the early 90s, VR quickly fizzled out. The Virtual Boy was a commercial failure, discontinued after less than a year, and the technology which had presented itself as a cutting edge vision of the future was consigned to the ash heap of history.

Here in 2016, however, VR is undeniably back on the agenda. That turnaround began in August 2012 with the $2.4m (£1.7m) Kickstarter campaign for the Oculus Rift. Three and a half years later, Oculus first commercial model is nearly ready, due to launch this spring.

In that time, a number of techs biggest names have thrown their hats into the virtual ring. Google, Samsung, Microsoft, HTC and Sony have all since revealed their own VR headsets – not to mention Facebook, which acquired Oculus in March 2014 for $2bn. For a market that was previously lifeless, there are a remarkable range of devices on the horizon, and ABI Research forecasts combined VR shipments of 43m by 2020.

Watershed year
“2016 is going to be a watershed year for VR,” says David Anderman, chief business officer at Jaunt, a VR content producer which has worked with everyone from Budweiser to Paul McCartney. Looking at the swell of devices being shown at this years CES, its hard to argue with him.

There are plenty of individual differences between the first wave of headsets (see VR Headsets panel for a full breakdown) but broadly they can be divided into two categories. There are high-end dedicated headsets like the Oculus Rift, and entry-level mobile headsets, best exemplified by Googles DIY viewer, Cardboard.

The biggest difference between these two is simply the price. While the Oculus Rift is launching at $599, a Cardboard unit can cost as little as one or two dollars from some sources. This is a huge advantage for these mobile viewers, which ABI expects to outperform the more expensive headsets by a factor of five or even 10.

The price of Cardboard and other mobile viewers also benefits any brands wanting to try out VR for the first time. It lowers the barrier to entry, meaning brands which want to roll out Cardboard viewers in store dont have to risk too much money on a new idea.

“Its really not a huge investment for companies to get these units out, so software development is the only cost you really need to worry about,” says ABI research analyst Eric Abbruzzese. “Getting access to those inexpensive Cardboard units and handing them out at the door of a museum to give visitors a VR guided tour is a really compelling example of what companies can do, and well definitely see more of that of that, probably this year and definitely over the next five years.”

Improved performance
As with any technology, though, what adopters of the more high-end devices are paying for is improved fidelity and performance, as well as a wider range of functions. Oculus founder Palmer Luckey, when asked recently on Twitter about how his product could compete with Googles competitor selling for a tiny fraction of the price, said: “the Rift is actually good. Kind of like how fancy wine competes with muddy water.”

Of course, Luckey has a vested interest in pitching the Rift as the superior product, but according to Jaunts Anderman, the technological differences might not actually be all that great. “At the end of the day, even the Oculus Rift is based on smartphone technology,” he says. “If you take that plastic cover off the Rift, you literally have a Samsung phone in there.”

Using the Rift and Cardboard, though, there is a noticeable difference in graphical quality and the kind of experiences they can support, as ABIs Abbruzzese points out: “Google Cardboard is very inexpensive but offers a very limited experience, which isnt representative of the more high quality experiences out there. If Cardboard does dominate initial purchases, it could take a little time to convince the content producers to really dive in and start investing in VR.”

A number of brands have eagerly adopted the technology, though, from Qantas Airlines to Budweiser, Westfield to the New York Times. Right now, that generally means 360° video, which both YouTube and Facebook added to their mobile ad offering in 2015, and which retailers are able to offer in store through Cardboard or similar low-cost headsets.

For home users, 360° videos work like any other video ad, but with the ability to pick which direction they want to look in as the video plays. This kind of video was used to great effect in promoting Star Wars: The Force Awakens – Facebook debuted its 360° ad offering with a video which put users in the midst of Jakku, one of the films settings.
These videos are cheaper to produce than full interactive experiences, and can be watched even if the user doesnt have a VR viewer, navigating by dragging on the screen rather than moving their head. Jaunts Anderman says 360° video is “a fantastic on-ramp to VR” – the implication being that theyre not a true example of VRs full potential.
“360° video is definitely made better by VR, especially with head tracking, but its not an integral part of what VR is,” says ABIs Abbruzzese. “Interactivity will probably be the key to differentiating full VR experiences. In 360° video you could argue that the interactive element is panning your head around, but thats more of a passive than an active experience.”

Some marketers are exploring full-fat VR experiences, though. Alex Lambert is creative director of Inition, a production company which has crafted bespoke VR experiences for the likes of Topshop, Selfridges and Nissan. After walking me through a selection of Initions work – dropping me in the middle of an orchestras practice session; out of a plane, with the help of a huge motion platform and computer-controlled fans; into a “totally trippy experience” created for a gin brand, meant to capture the sensations of mixing a cocktail – Lambert tells me about the power of telepresence, “being able to put people in places theyd never be able to go”.

Holy crap moment
Jaunts Anderman has a rather more earthy term for this. “We call it the holy crap moment,” he says. “You put on the headset and suddenly youre stood four feet from Paul McCartney on stage, youre base jumping or climbing the moutanins of Nepal. The feeling of presence and the emotional impact that it has is tremendous.”
Theyre not the only ones to see this opportunity. In one of Facebook Q&A sessions last September, CEO Mark Zuckerberg described Oculus as a way for wearers to “literally teleport to a scene and look around, and it feels like youre actually there”.

It sounds like a perfect fit for travel and tourism brands, something which Virgin Holidays showed nicely last year with its Virtual Holidays campaign with Manning Gottlieb OMD. Visitors to its physical stores could virtually visit locations using a Google Cardboard headset, pushing up sales of trips to those places and landing it a raft of gongs at the 2015 Effective Mobile Marketing Awards.

“We think travel is probably the number one vertical for VR,” says Jaunts Anderman. “You can do everything from visiting a city that youve never been to or going to the top of the Himalayas, to seeing what its like inside the hotel room or sitting by the pool. That kind of content actually stimulates travel far more than videos or guidebooks.”

Fictional worlds
Its not only travel brands which can benefit from transporting users to other places, though. The possibilities stretch far beyond holiday destinations – whether taking them to fictional worlds or shrinking them down to see the world from a whole new perspective.

“One of the most effective ways weve used VR is making the user tiny and putting them inside an engine as it pumps around them,” says Initions Lambert. Its an experience that has been adapted for both energy and automotive companies. These verticals arent the most obvious fit for VR, perhaps, but theyve been some of the biggest adopters so far, according to Lambert. “At the end of the day, every brand wants to be seen as technologically innovative,” he says. “The technology might not have any tangible link to your product, but its more about the impression you create with the public.”

Cutting edge
This is the other big sell for brands getting on board with VR – the opportunity to show that theyre on the cutting edge. As Jaunts Anderman puts it: “If youre the first to give someone a VR experience, the consumer is going to remember that.” However, theres a thin line between innovative and gimmicky, and brands need to be sure theyre not just doing VR for the sake of it.

“Theres a land grab going on right now,” Lambert says. “Companies are rushing to make sure that peoples first exposure to VR is through their brand. That can create some poor quality content, and it risks people having a negative experience of VR that turns them off it completely.”

“Right now, the technology is novel enough that youve going to get away with a lot,” says ABIs Abbruzzese. “But very shortly, people are going to become more exposed to it, which means theres less and less opportunity to create shoddy content.”

Of course, this is equally true of marketing delivered via any kind of technology, whether its an ad on the mobile web or a branded app. The early days of mobile saw a lot of bandwagon-jumping, as did the early days of the web.
“Once youve got the concept correct, the technology disappears, and its just about the experience,” says Initions Lambert – an idea that should sound familiar to anyone whos spent the past few years working in mobile. “VR is just another tool, and it can be tailored to how you want to represent your brand and distribute your message. Thats what brands – and agencies – have to remember.”

VR Headsets
Google Cardboard – Launch: June 2014. Price: $20 (or free, if the user is willing to do some assembly)
When it was first announced, the Cardboard almost sounded like a joke at the expense of Oculus and co. A VR headset literally made out of cardboard, selling for less than a single per cent of the price? But Cardboard has already succeeded in putting the technology in the hands – or on the heads – of many who wouldnt otherwise have tried VR, one of the main reasons it was awarded Most Innovative Use of Mobile at our 2015 Effective Mobile Marketing Awards.

Samsung Gear VR – Launch: November 2015. Price: $99
Building on Cardboards foundations for cheap mobile-compatible VR, the Gear offers a more robust plastic casing, with a built-in touch panel for controlling apps, and a smoother overall experience. Though it only works with Samsungs top-tier handsets, the success of the Galaxy and Note ranges mean the potential install base isnt limited too much by that. The Gear VR also represents a first foray into mobile for Oculus, which provided the technology behind the device.

Oculus Rift – Launch: March 2016. Price: $599
The VR company that started it all, Oculus has the advantage of brand name recognition, at least in enthusiast circles. Facebooks acquisition of the company raised concerns among fans that the Rift would no longer be a gaming device. But with two games bundled in with the first model, an Oculus Touch gaming controller following later this year, and some hefty system requirements for compatible PCs, the companys focus seems to be unwavering – for now.

HTC Vive – Launch: April 2016. Price: Currently unknown
If there remains any doubt about Oculus intentions, then the Vive – the result of a partnership between phone manufacturer HTC and Valve, the PC gaming giant behind the Steam distribution platform – is definitely shooting directly for the core gaming audience. Its big USP is the ability to track users movements through the accompanying Lighthouse devices, enabling them to explore virtual environments by stomping around their real-life living room.

Sony PlayStation VR – Launch: H1 2016. Price: $400 (reported)
Previously known as Project Morpheus, this headsets biggest advantage is most likely its association with the PlayStation brand. While the Vive and Rift require users to have a high-end gaming PC, Sonys offering is compatible with the PlayStation 4, which has shipped 35.9m units since launch. Partnerships with the big-name developers who make games for the PS4 also meanits more likely to score VR gamings first killer app.
Boxout – Content, Content, Content
“I think the hardware is pretty much sorted for now, so watch for content as the next big focus in VR,” ABIs Abbruzzese says. “Jaunt has got in early, but I think well see a lot more companies dedicated to making VR experiences starting to pop up.”

Jaunts stated goal is becoming “the Netflix or HBO of VR”. The company is currently offering its content for free, often with sponsors attached, but it intends to start charging for VR experiences this year. That might be on an individual basis or, ideally, through a subscription model, though Jaunts Anderman concedes, “it will take building up both the content library and the userbase to get to that point.”

“Big name content producers will soon start getting involved as well,” says Abbruzzese. “Well see a few big sports leagues, whether its the Premier League or the NFL, getting involved in VR in some way. The NBA is one of the first – its already put out a couple of tech demos and is looking to integrate VR more into the 2016 season – but even if theyre not discussing it publicly, Im sure all major sports associations and networks are looking into it.”

Outside of sport, the biggest opportunity for VR in traditional media right now is news. The New York Times recently distributed 1m flatpack Cardboard units with its weekend edition so readers could access its NYR VR project, starting with a film on the refugee crisis. “A lot of the news media look to the NYT for an idea of what they should be doing next, so that was a big deal,” says Mark Challinor, CEO of Media Futures and president of the International News Media Association.

ABC News has worked with Jaunt to launch its own VR content, with stories from Syria and North Korea. “It revolutionises the way in which you can tell stories,” says Anderman. “Weve found that in news pieces and documentaries like the ones weve done with ABC News, the feeling of empathy people get when they put on the headset and feel like theyre stood right next to these people in these situations is truly profound.”

“The interesting thing about it for me is that the NYT piece was sponsored by GE and Mini,” says Challinor. “If this actually catches on, news media could have a powerful new revenue stream on its hands.”

This article first appeared in the February 2016 print edition of Mobile Marketing. You can read the whole issue here.