The a16z Show - a16z Podcast: Mapping the Future of Virtual Reality

Episode Date: February 26, 2016

Virtual reality is coming fast, and everyone seems to assume that it will be gamers who get to have all the fun first. But there are other applications for VR that could also bring it into the mainstream. “It could very well be business users,” says 16z’s Chris Dixon. “It’s anything where you would want time travel or teleportation.” Dixon is joined on this segment of the podcast by Saku Panditharatne and Kyle Russell, both on the firm’s deal team, to offer their perspective on how virtual reality is likely to enter all of our lives. This year promises to be the moment when more than a very small number of people will get their first taste of VR. What that looks and feels like, and what that shared experience sets in motion on this segment of the a16z podcast. Chris Dixon starts the conversation. The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Welcome to the A16Z podcast. I'm Michael Copeland. Virtual reality is coming fast, and everyone seems to assume that it will be gamers who get to have all the fun first. but there are other applications for VR that could also bring it into the mainstream. It could very well be business users, says A16Z's Chris Dixon. It's anything where you would want time travel or teleportation, he says. Dixon is joined on this segment of the podcast by Saku Punditoratne and Kyle Russell, both on the firm's deal team,

to offer their perspective on how virtual reality is likely to enter all of our lives. 2016 promises to be the year when more than a very small number of people will get their first taste of VR. What does VR look like and feel like? And what does that shared experience set in motion on this segment of the A16Z podcast? Chris Dixon starts the conversation. The first question is kind of where are we in terms of VR, you know, like Oculus and Valve are launching this year. there's gear and cardboard. Maybe Kyle, you know, can you kind of talk about the current landscape?

Yeah. So last fall we saw the launch of the Gear VR, which is compatible with Samsung phones, and it's kind of the prototypical mobile VR headset. You take your high-end smartphone, you slot it in, it provides optics that make the flat screen on your phone into an immersive screen that kind of fills your vision, and also adds some motion sensors so that its tracking of your head is more accurate. And then, you know, last month and then this month, the Oculus Rift and HTCVive were both the pre-orders were announced respectively.

Those are kind of the high-end approaches to VR. They hook up to a high-end gaming PC. They provide positional tracking, which means that it tracks not only how you turn your head, but how you move forward backward to the side, which means you have kind of a more. more immersive experience. You can see things from different angles. It feels like you're in the world because you can move relative to it. So both of those are having their initial launches this spring. Oculus, the first units will ship in March, the Vi, the Vi, the first units will ship in April. It's kind of low, I think of it as low and high end, and the high end is Oculus,

HDC, V, Valve, and the rumored PlayStation, and the low end is gear and cardboard. and eventually, obviously, these will probably converge, and they'll all have features like traditional tracking, but for this year, there's sort of a separation, right? Yeah, no, you talk to anyone, and this is one of the things where leaks are kind of slowly but surely making their way out of Apple and Google. You'll see lots of great scoops coming from, for instance,

The Financial Times has done one for Apple and Google recently, where it's clear that they have hundreds of people working on these, and when it comes to what kinds of hardware they're working on, they do want to bring the parts of the high-end experience, the things that we consider, like the differentiators that give immersion presence, how we want to describe that, bring that down to mobile. Because I think everyone understands that the mobile as a platform is, you know, 10 times larger than desktop will ever be.

And while the capabilities today of desktop VR are really impressive, if you want to become truly mainstream, you want to reach people who have smartphones. I think the feeling is the next couple of years will be the years of, VR for gamers and for prosumers. So people who are really enthusiastic about VR are the ones who have the high-end version. And the mobile's just like a teaser for the general popular.

So let's just go into some detail. So for example, we've tried all these demos. The Oculus, sort of the consumer toy box is an incredible demo. A lot of the Valve demos are really good where you have room scale.

You know, one thing I'm excited about is these demos have been available, you know, for kind of non-public trials, they'll finally be public. And even if, you know, only, I don't know, a million people get these devices this year, maybe 10 million will get to try it. And, you know, some significant subset of those might go-start companies. And so you sort of have this really interesting period happening. But maybe, yeah, maybe we can give a sort of a flavor for what these, the demos feel like in the high end and low end. I think the really critical difference between low and high-end is that the high-end VR actually achieves presence.

So you feel like it tricks your lizard brain is thinking actually there. I think the mobile were not quite there yet. So it's a little, sometimes. Yeah, it's kind of, so when you say presence, that's a term of art and VR, which refers to just kind of, what people have found through empirical testing is just that once you get sort of there's a threshold, a minimum threshold of kind of enough of your senses are tricked that you just, you sort of, you sort of, you sort of, you sort of, you sort of, you sort of, you. a bit flips, and your brain says I'm now in this virtual world, as opposed to I'm standing here looking at a screen. Right. So mobile VR, it's a pixelated video.

It's interactive experience that's kind of game-like and has graphics from the late 1990s video games or maybe PlayStation 2 right when it first came out. And then you work your way up the spectrum and you have these higher-end headsets that do give presence. And now kind of the discussion is around, okay, so positional tracking, you're seated, but you can move your head around and you feel like you're there. Okay, that's great. Now let's start talking about standing up experiences in room scale. And when we talk about room scale, we're talking about Oculus Rift with several cameras and it can track you as you move around in a, let's say, three by three by five foot space. And it's almost like having like you can interact with parts of the room around you.

And then you graduate up to what we would call, I guess, true room scale, which is what you have from day one on the HDC-5, which is it has sensors that you place in the corners of the room, and you can have up to 15 by 15 feet space. And you can actually walk, oh, I'm going to go look at that thing over there and actually physically walk over instead of using a controller to move your avatar. I mean, this is one of the important things. I think when you've tried these things, like some of the critics, most of whom I think haven't tried the high-end VR, compare VR to 3D TV. there's you know with the low end devices it is a little bit like 3d TV and that you have just this sort of you know you have this parallax effect but it's only for far away it's for far field objects right with the with the high end you actually are able to like literally walk around like this you know you're sculpting something like in the medium demo or in one of these um you're sculpting an object that you're actually able to walk around completely and it just feels like that object is there and and it feels like that in a very um intense and um you know, kind of Yeah, I think about it in terms of like marginal change in experience where if you're looking at mobile VR, it's a step up from the kind of video where you move your phone around you.

But it still at times can feel gimmicky. It really depends on implementation, but it's not that revolutionary of an experience. It's a teaser. But then when you move up to, okay, software as this world I'm stepping into and, you know, one of the kind of frequent things you'll see that, you know, where people who were skeptics came out impressed was they thought to lean against a virtual table

to look at something even higher or they thought to put their controller down on a virtual couch and they forgot that it wasn't real. That's kind of where you start to hear just like the hints of, oh, this is why it's so powerful. I think one thing that's interesting is that in VR, because of this threshold is so binary, a lot of the technical problems are about getting over the threshold.

So whether that's in capture or rendering or any of the, or even the headset, technology, it's really key to have, like, be over that threshold to get presence. So let's talk about the unsolved problems in VR because the, so the big companies are working primarily, it seems, on headsets. But there's a whole kind of chain of things that need to be built out, including content creation. You know, what's going on there?

Yeah. So with tools, it's like, there's a debate whether VR content is either going to be captured from a camera or whether it's going to be rendered like a video game or whether like films are today it's going to be a mix of both but despite whichever one is ultimately becomes the winner like still tools need to be built out so right now it seems like most of the people make doing VR content are using game engines like Unity and Unreal or they're gravitating towards 360 or like field video and so those seem to be like the main categories for creating but there's all sorts of I mean there's companies working on it but there's a lot of work to be done right right

Like there's a lot of opportunity for new things. Like, for example, like, you know, it's a difficult compression problem, for example. There's a ton more data than you normally have. Right. Like light field technology is like an emerging field. Can you explain what that is? So light field is, it's a way of capturing video which also takes into account the angle at which you look at an object. So it's more similar to a hologram than the video.

So, you know, as you can imagine, if you capture more than just, you know, your view, you have to capture an object from all different views. That's a lot of data. And so that's really overwhelming for the current video streaming infrastructure that we have. So it's going to be a way to make that smaller, easier to capture. Also edit because it's very different from what we have. And then there's like, so for example, like you mentioned to have movies today are a combination of filmed and rendered content.

Like one of the demos I saw was you're at a basketball game and they're real basketball players and it's filmed and it's filmed and ideally in lightfield. So you have a full 3D and you can move around and it feels like you're there. then you're sitting next to your virtual friends, right? Instead of sitting next to strangers, you're sitting next to your friend who actually is in, you know, my friend's actually in Moscow and Chicago and whatever. And but we're all sitting there. And so there's part of it is sort of this real thing and part of it is virtual.

Right. It's like the space jam type mixture. And how do you do all of that? It's a very hard problem to mix all of that and use lots of different tools. There aren't tools yet. I mean, even the other thing with, you know, creating VR, movies and films and games is that performance is so important because we have to be above this presence threshold. So you need a really, really high-end game engine to be able to be.

Which is basically 90 frames per second, like this is what Oculus is running right, which is higher than most game consoles, for example, in movies. So it's just a higher threshold. So if you're doing a film, you know, you can take as long as you want to render it. So it's like a different type of tool chain, which will probably be needed there. And even if you're not talking about light fields, if you're just talking about traditional video, but you're stitching together 360 degrees worth of footage, captured on what are essentially, you know, old-fashioned commodity cameras. Right.

Yeah. Yeah. So Google Jump was a collaboration with GoPro where you're taking a set of, you know, let's say 15 gopros and then sticking them to a rig and then stitching the video from all of them together. One, 15 cameras worth of 4K footage is a ton of data. The tools for stitching them together in a way that doesn't have really stark lines between the different cameras they capture. That is actually a pretty tricky to problem solve. And then when it comes to, as Saku mentioned, streaming, even streaming one 4K video is really intensive for most people's data connections. So you're starting to see really clever solutions where, you know, you look at how people transcode video today.

They'll have, let's say, high and low end versions of views. Like, say you have a 360 degree video, they'll break it up into 30 different views. and as you look to different places, it'll switch to the high resolution stream for that specific way you're looking. And so you have to have on the back end stored all 30 of those different views and then have a system that can switch between them

quick enough that your connection can keep up. And that's, you know, Facebook has recently open-source their efforts on it. Next VR has done some really interesting stuff for their live streaming of sporting events, but there's still a lot more work to be done in terms of tools to do that for live events and also just to continue to improve the quality and make it so that you don't actually have to be connected

to your home Wi-Fi on a gigabit connection to have like a perfect experience. I thought one of the coolest things I saw lately was at Unreal Video, which was a demonstration of using VR to actually create 3D content. Right? Because I think the metaphor, the assumption people had made before was you would use a 2D screen with Unity or Unreal,

create 3D content the way we have, always have, and then export it to VR, right? And this idea actually inverts that, right? And you're creating in 3D, maybe even for a 2D, maybe even for content that's ultimately consumed on a screen, or maybe something in the real world, maybe you're making an airplane wing, right? And if you think about using AutoCAD today, like, it's a very difficult thing for people to learn who aren't experts in 3D modeling because you're having to work on a 2D screen. And so the idea, kind of Iron Man style, that you can work in a 3D environment, I thought

was a very, very exciting possibility. That's what's interesting. In terms of talking about input, it's a new paradigm and it's tricky to develop for, but you look at a mouse and it's a motion tracking hand controller that only works on a plane. And so if you put it in those sense, it's like, well, actually, that's kind of a really awkward way to interact with lots of free and software. And the thing is you've got millions of people who use AutoCAD using this 2D hand controller, the mouse, this primitive 2D hand controller, right?

and they've learned over years going to school and everything else how to do it. And those people, by the way, would be happy to pay, they pay thousands of dollars per, you know, for their rigs, tens of thousands of dollars for their machines and their software and everything. Like, they'd be very happy for a high-end, I think CAD, for example, just no-brainer is going to move to VR in the next couple of years. So to help visualize what this looks like for people, again, who haven't seen these videos or tried these experiences, imagine, you know, you're building a replica of your living room and you have a selection of couches, and sofas and TVs and fireplaces that you could drop into a room to build it up to look like your room. And you want it, maybe the scale isn't quite right.

You could pick up your couch with these motion tracking controllers and then use essentially 3D pinch to zoom to rescale. And it feels much more naturalistic than messing with parameters or using a mouse wheel to adjust how big something is, pressing command plus plus until it looks kind of right. Yeah, and I think it might be the right time now for these kind of prosumer tools, because real VR isn't going to reach most people for a couple of years. And so it's not going to be a mass market thing until then. So it might be the specialists who have a real need for these tools who might want to use it in the next coming years.

People, this assumption that it's all going to be gamers, I think, to me it's highly questionable. It could very well be business users like this at first. So one question is, are the problems that need to be solved? Are we on a clear trajectory to solving them? Or are there like, is there a fundamental science to be done? Or is it just kind of like Moore's Law and bandwidth? will get better and devices will get better.

Are we on a clear path to these things getting much better? I'd say there's two sets of problems. There's the ones that we've been talking about, which I would say are very much so just engineering the snot out of them until you have this, an interface that actually is preferable to what we're all used to. There is. And that's going to happen. I mean, it's a lot of work involved, not to diminish that,

but it's a standard hard engineering problem that the community has solved before. Right. I mean, you know, we are constantly looking at the space, and no matter what category of problem you're looking at on that side of things, it feels like we're seeing regular improvements. Yeah, I would say, like, a lot of the problems in VR are tied to the performance of GPUs, and those are on a Moore's Law-style exponential curve. So that's everything from processing light field video, which is a big problem,

to just the performance of games and just, you know, rendered experience in VR. And that kind of speed is also part of it. If you want to talk about problems where it is actual hard, science. That's kind of where you're talking about the treating virtual reality in terms of actually a reality where it's tricking your brain and making you think it's a real one even though it's fake. So that's things like having a field of view that fills your entire vision and doesn't just look like kind of a box like or, you know, looking through a pair of swimming goggles and seeing this virtual world, but making it look like it's an entirety of your

world. Or things like how, to what extent do we need to trick the brain to have interesting haptic feedback to make it feel like when you touch something in the virtual world, you know, you yourself can feel it, whether it's gloves or a body suit or if it's a clever trick, you know, we've seen some things where it's, you wear kind of like a bracer on your arm and it taps you in different places. And because of the other sensory input of sound coming in, things that you're seeing, having that extra tap, your brain kind of fills in the rest of what that sensation was and, you know, makes you think that you interact with something it brushed against you. that really is a hard science problem

and that's where you see Michael Abrash come on stage and talk about illusions and how we trick the brain those are things where over the next 10 years it's kind of hard to predict where we'll go but it's probably going to be really transformative and go way beyond really what we're expecting today. That's true, but I think those things

are kind of outside the really important problems that need to be solved. I think if you just had VR very high-quality headset with good visuals and good controller I think people would, you know, like, I think they could live with that without having the haptic feedback, but that's just my... I think that's very true, especially for these early use cases. I think that the hard science things are going to be what lead to the totally unexpected use cases that we're all going to be used to 10 years from now. One obvious use case for VR is games, and we've seen a lot of companies that are making games, and there will be a lot of great games on VR, and that might propel some of the early adoption.

what are some of the other potentially interesting apps? Yeah, I think live streaming of events is going to be like a really popular use case. Sports and music. Sports music. It might even be that after this becomes popular, you have events just thrown for a mass audience at once. So it's kind of like participation. We saw a demo which is like a point cloud capture of mixed martial arts. So you have like you can basically rewatch the mixed martial arts.

fight and walk around in the arena, like you're the ref and like rewind it and see the whole thing. Same thing in extreme sports. Like, you know, you ski down the mountain. Yeah, yeah. I'm not personally into sports, but I could imagine people that are. It's pretty awesome. I mean, you see like the, you watch like the Super Bowl and just like the new camera angles they have and things. It's just like that times 10x.

Yeah, no. And this is something where you'll talk to people in the NBA or NFL. And you see on TV when you watch broadcasts, they'll do every hour or two, you'll see they'll take a really impressive play that happened and zoom in really close and turn around with like a matrix when Neo dodges the bullet that scene where you go around and you zoom in and see like the interesting angle and how intense the face was on the guy who did it. And right now that takes like an hour of processing to get one second worth of footage. And you know over the next couple of years as volumetric capture kind of, you know, it's invested in more. You know, new breakthroughs happened because people are really paying attention to it because of VR. arising, you'll start to see just events entirely recorded that way.

Other interesting things in terms of content, and this is where, again, the blending of real world via light fields and rendered content and something that lives in a video game but looks real. The idea of, and this is something that's also talked about with augmented reality, though, is recording someone doing a task, and you get to observe them doing it also in a virtual space and you could have that for repairing a car, let's say, where people today will set up their iPhone and record them changing the oil on a car and then put it on YouTube. Now you could set up a VR camera right under the hood and say, here is exactly what you

need to be doing and here's the perspective that you'll have as you're doing the task. And, you know, I think that that kind of thing, again, like maybe in terms of user-generated content, we're a couple of years away just because. there's not quite really great, you know, pro-sumer tier couple hundred dollars or a few thousand dollar cameras that make that easy. But I think that that's going to be a big use case is not so much like, hey, here's, you know, a video of me out at the park with my dog, you know, random things that people put on YouTube, but things where, you know, you want to share an experience, whether it's something cool you did or, you know, a skill you have that you think

is worth sharing with the world. That seems like something for VR where it'll make a a lot of sense as that capture becomes more available. It's funny, you know, if you go back and you read about, like, early PCs, everyone was trying to figure what would you do with them, and they always talked about recipes for some reason. That was always the thing, which turned out to be kind of useful on the web, but, you know, not like the only use case for computers for sure. And then with mobile, it was always these things where you could check the stock market and the weather.

That was what people thought would be the use case. And so I think games are sort of that version of VR, where everyone went. thinks is games and we'll kind of look back and laugh. I mean, I think it's basically, my view, I mean, this is the obviously optimistic view is that it's basically anything where you'd want time travel or teleportation, you can now do in VR, right? So for example, I think like Ocean Rift is a really cool app in, you know, you can use on Oculus, which as a, in the old paradigm of staring at a rectangle across the room would have been really boring. You're just swimming around the ocean, right? But in VR, it's like, I'm under water. I'm in the ocean.

there's a shark. And like it's, when they show you a shark, for example, they, they, you can only see the shark when you're in a cage because it's like super intense and scary if you weren't in cage. And so, um, um, there's an example of just like the kind of thing, which, you know, I think, for example, instead of kids reading a really boring textbook about ancient Rome, like, hey, let's go watch them build an aqueduct or something. And like, it's just so much more interesting if you could go visit it, right? Like school education will be just vastly more interesting, hey, instead of talking on the phone or whatever, you know, texting each of your friend, like let's go virtually sit together and watch. I mean, that's actually one of the

problems of you are, right, is that like from the outside, it looks so antisocial yet from the end. It's one of the technologies that the, the contrast between what you're experiencing and how you look from the outside is, is more heightened than anything else. Because it looks like you're, you know, the zombie sitting in a, you know, in a, in a, in a, like a, in a chamber or something. But in fact, inside of it, you're like, it's the opposite. it? Yeah, I think one thing's really exciting is what the descendant of like MMO games will be in VR. So it's like, you know, in World War War Corps, like, half of the attraction for a lot of people was like going around with that guild and like being a team. And, you know, in VR, you take that to the next level.

You can go have like a whole village and you can all live in the game and just have like, I don't know. Well, it's for people to dream up what's going to be in that game. And people, you know, you look back a decade and a half ago when like Second Life first came out and people were on really. bad broadband connections were dial-up and they had really basic-looking avatars and still hundreds of thousands of people, you know, were living virtual lives. They had virtual currencies. They were making different virtual objects that they would share with each other and pay real money for. And it's just not even a step change. It's a huge exponential change compared in terms of experience with what you could get, even with today's VR hardware.

if you really had the back-end infrastructure to support it and came up with a couple of use cases where that would bring you back every day. It's also interesting to think of even business use cases where I think we've all had difficulties with Skype or Google hangouts or any telepresence experience where either the connection was bad or you could see the other person like checking their Gmail window while they were talking to you. And I think we're only a couple years out from having things where it's tracking the muscles on your face, tracking your face, tracking the movement of your eyes, where your avatars could really reflect what you look like at that time. And you could do things like have an entire meeting where eight different people are in, you know, different locations, but they all feel like they're in the same conference room. And they're looking across the table and matching each other's eye contact. And you can just have meetings that are much more effective than you would have over the phone or over, you know, video over IP.

It's interesting because, you know, the Internet supposedly was going to make distributed teams work so well. yet, you know, still so many teams are not distributed and find that doesn't work. And one hypothesis is that it's just because we haven't been able to sufficiently recreate all the important things of kind of interpersonal communication that happen in real life, but might be on the threshold of being able to do that. Sort of the intimacy is you made, like making eye contact. And, you know, you think about why do salespeople fly across the country to close a multi-million dollar deal? Because people don't write multi-million dollar checks until you make eye contact and have this dinner and there's sort of this emotional component to a lot of

a lot of work activities that just can't be captured with current communication technologies. Yeah. And I think, you know, you mentioned Toy Box earlier, which is an Oculus Rift demo where it's you with the Oculus Rift and the two touch controllers which track your hand movement and another person in another room maybe down the hall or in a different building or wherever. And just with today's tracking plus the microphones built into the headset and the fact that their headphones built into the headset that are pretty high quality, even without an avatar that looks like you, it's just like a translucent head and the hands that pretty much approximate how you just articulate while you talk, it feels like you're there with the specific person you're talking to. That was one of the most surprising things to me about the demo.

how it really felt like the person was there. And you just can't, and fortunately, you just have to try it to feel that, right? It's just you can't convince skeptics without trying it, but. It's actually quite amazing how little you need to convince someone that, the death. So,

like, I remember saying one Oculus then it was called like Nightclub or something. It was really just you were a cube, your friend was a cube, and like you could just move your head and then their cube would rotate. But even then. Because the motion was so accurate. Right, because the motion was so accurate.

And the sound matters a lot. You know, that's one thing we can replicate. perfectly is three-dimensional sound, right? The technology is there for that. And so, right, those things matter so much. Right. And then the big technical problem for social VR is this kind of back-end infrastructure, the same technology they do use in multiplayer games, which has become really important now.

Right. If you're going to have this metaverse from science fiction, how do you have tens, hundreds, thousands, maybe millions of people simultaneously in a world? Do you have instances like in World Warcraft where people are, you know, could reach each other, but for the most part, you're in like an area that only has 100 people total. And, you know, if you go to this other area, then, you know, you load onto a different, like, part of the server. And, you know, or do you have, you know, something where it's simulating all of it and there's, you know, different shards where you're breaking it down to smaller bits? We have, yeah, we have an investment here improbable, which is, I think of as, you know, if you read Ready Player 1, which hopefully the listeners have read, is a canonical VR book.

There's a section where they describe the system called Oasis that's featured in the book. And there's two parts of the system. There's the headset and there's the back end infrastructure, which lets you create these kind of unlimited virtual spaces. And that's something which needs to be created. There are other facets that are maybe less pressing, but will also lead to really interesting possibilities. For instance, IBM just announced that they're going to try to use Watson to provide basically an AI interaction system. for a game based on an anime about a VR MMO. So the idea there is you'd be able to interact with characters in the game,

kind of like how in games, let's say, from BioWare, where you can choose different dialogue options and get different reactions based on how your response was, you know, was it aggressive or were you trying to be conciliatory? You could have things where you actually talk to that character and it tries to read what you're saying. Yeah, this is probably why Amazon actually just released the game engine which has connections to AWS.

So I guess the plan is to have that as the back end, or at least be part of it. So let's talk a little bit about augmented reality, which there's things like Microsoft has the HoloLens, and then there's companies like Magic Leap. And some people are more excited about AR than VR. I think you could argue that there's a spectrum, right, that they're not as sharply distinguished as people say,

in the sense that you can, you know, VR will very soon sort of scan the room around you and put you back in the room and add things onto the room. And so really it comes down to sort of there's a mixture in what you're viewing between what's real and what's virtual. And the one extreme is it's all virtually. The other extreme is nothing and it's all real. And then there's stuff in between. And so what do you guys think about what's going to happen in the near future?

Well, Microsoft actually at TED just announced that they're delaying the consumer release of HoloLens. So they, I think, realized. Did they get a date just to win? No. So they're going to continue with their basically like for enterprise slash people who want to develop early augmented reality applications. They're going to sell a $3,000, you know, the equivalent of the Google Glass, you know, Explorer Edition, one to just experiment with. And then I think they realized that they needed to have kind of, at least one killer app for consumers.

You know, a use case where you buy this thing, whether it's $1,000 as a consumer product, or actually goes all the way up to 3,000, who knows. But something where you'd actually want to use it as a consumer. I think that that's kind of reflective of the rest of the space, and that it doesn't quite feel like there's any applications today for regular people where it makes sense. There are some things that feel compelling. Well, it's a harder technical problem, too, though, because you have to, to be able to put a virtual object in the real world,

you have to interpret and understand the real world, right? Which is a hard machine vision problem. Right. This falls into kind of the class of technology, slam, simultaneous localization and mapping, where you have to be aware of exactly what the room looks like around you and then constantly be checking where is the headset and therefore the viewer in relation to that.

Well, and where is the, and if I have this virtual soda can, I have to know it's a real table and the table can support it and the physics are right and there's a whole set of problems that are, that are in addition to what you need to do for regular VR. Right. So you're doing the compute of rendering what that virtual object looks like, and then you're also doing that slam work of figuring out where it should all be. And those are both really hard.

But that said, it feels like there are some potential enterprise use cases. Again, going back to the training example, while training in VR is compelling, the idea of being able to have something overlaid on top of the task you're trying to do, pointing out how you're using. So you're fixing an airplane engine and overlay, on the engine is like the instructions for how to do it or whatever the diagram. Right. Or maybe it has, for instance, with the whole Internet of Things trend, there's sensors on everything.

Maybe it's constantly giving you a readout of different sensors. So you know, oh, I just turned this crank and it actually, you know, raise the pressure too much on that dial. I should actually probably bring that back. And you can not know all of that in real time. I think one interesting thing about AR versus VR is if, you know, VR is you can only spend like a small fraction of your day in VR, perhaps. So, but I guess with AR the potential is you can have it on all the time. And perhaps that's what gets people more excited about AR and VR. But whether that's actually going to happen, that's actually how it's going to play out is really debatable. And then there's certain things where at first glance it seems like something is a use case, like the idea of 3D modeling, but having it, the model flows next to you in the real world and you can look at it from different angles.

That is kind of compelling, except for the way, you know, what's nice about editing that all in VR is you get to see the final context of what you'd have. have that model in. So if you're building a game world, for instance, you could see how that model fits in with lighting and, you know, the particular shaders that you're using, does it match the rest of the environment? Whereas just having an arbitrary 3D model floating around may not actually be that useful. Right. Another thing is, like, the upper bound for how much time you can spend in VR is how much time you spend looking at screens anyway. And that's, I would say, like, maybe 20% of your waking hours is not unreasonable. And you could say that, you know, what makes mobile devices like smartphone so powerful

as it can fill kind of the empty times throughout your day. You're not sitting down for okay, now it's Facebook time. I've got an hour free. I'm going to go on Facebook. It's no, okay, I'm between task. I was walking to the bank, but it turns out there was 20 people in line, so I'm going to go

check my updates and maybe send a snap. Whereas, you know, with VR, you're not going to fill empty time. AR, you know, the case could be made that you could use it in that way. As fans of VR, what do we hope happens in 2016. Well, a recent announcement that got me really excited for what's going to happen in VR in 2016

is the idea that Samsung is going to be providing gear VRs to the first 300,000 people who order a Samsung Galaxy S7 through their site. They're going to be doing a similar offer for people who buy it through other channels. So we're going to see potentially millions of people get a VR headset for free in the next couple of months. And again, while that's not a new. not kind of the ideal of what we consider, you know, what VR experiences should be. Your VR is enough of a taste of what VR can be like at the, you know, at the high end when you have a comfortable headset that you're not holding up, that, you know, sits on your

head and you can play some games, you can watch some videos and be pretty comfortable. That's exciting just because people will understand, oh, this is possible. I would say at the higher end, what I'm really excited for is to see both. how Oculus Rift and Vive do. They're launching at a fairly high price, $600 for the Rift, $800 for the Vive. But they're coming, as if you've already tasted VAR, it's a pretty compelling bundle.

Rift coming with a game that satisfies some hardcore people with EValkyrie, but also you'll be able to show it to your kids with Lucky's Tale, which is like a Mario-style platformer. But then on the Vive, they're going to have these experiences that really take advantage of room scale. So things like Job Simulator, where the idea is you're in an office and you can do a bunch of silly behaviors.

But it's basically, you know, if you went into an office and could do anything and there were no repercussions. It's like Grand Theft Auto for offices. Yeah, it's mundane Grand Theft Auto. And just looking at the different, you know, the doors that will open up in people's minds and understanding what's possible, I don't think that either of them has to do particularly well. You know, we won't have to see a Connect style 10 million units in 60 days.

I don't think that's going to be the case, but it's going to make a lot more people understand where it could go. I guess the main thing is that I was like what kind of games are going to be on VR, because that is the initial market, right? And so this year it's going to be all about gamers. And I mean, I'm just curious to see what the VR content will be like and whether, you know, people are going to get really excited about games. And I think that would be really good for VR if people really want to play these.

I think for me the key metric is not number of units sold on the high end. It's the number of demos given kind of like it's how many people get to try high in VR, which I just think will create a whole new wave of excitement and new companies and new content. And so, you know, this is the year people finally get to try what we're talking about. and I have yet to see anyone. I've seen a number. I love the ones that just went in Gizmodo last week, and there was one time before of, like,

the most skeptical people on Earth who finally try the high-end stuff, and they universally get converted. And so... The third paragraph is generally an apology for all the other things they've said. I made fun of everybody. I thought it was so dumb. It was 3D TV, and I just tried it, and oh, my God.

Yeah. That will be, I think, I hope 10 million people will be saying that this year. That's my hope. So this is where, the fact that it'll be in, you know, the Oculus Rift will be in Best Buy starting in April. That's really exciting. The challenge there is having a quality demo

in terms of, you know, these are brand new experiences and people generally need a little bit of guidance when they first bring on. You need to train the salespeople and everything else. Yeah, and that's where, well, you get salespeople that truly understand, like, here are the pros, you know, here are the best kinds of experiences you're going to have, not overselling it and, you know,

convincing people they're buying a Matrix rig, but saying, you know, you're going to, it's going to be like a gaming-ish experience, but more immersive than anything you've ever tried before. Having this practical kind of balanced approach to selling it, that's kind of a big unknown about how well that'll be executed on. But even the fact that it'll be available, there's going to be a whole new class of early adopters

who just haven't been able to go to E3 or the game developers conference or Oculus Connect, who are finally, like, they will go out there and they will find an Oculus Rift and they will try it on and they will be sold. The other thing is this year that creates is going to figure out what exactly they do with VR. We've already seen a lot of progress in the film and gaming community of how to tell stories, you know, how to edit good music videos

or games or like short film. And I think we're just going to see more of that. And that's just another thing which is going to convince people of the potential of VR and figure out the medium. All right, Sacco and Kyle, thanks a lot. Thanks.