Depending on how old you are, when you hear the phrase “virtual reality” you either think back to the “first wave” of the 1990s or to present-time names such as Oculus Rift, Microsoft and Sony. In the 1990s, VR (virtual reality) was less about video gaming and more about shared immersive life and work experiences. Yes, fantasy world immersion was an objective, but the gaming ecosystem then did not have the common ground of a globally interactive online gaming community oriented to 2015 device and graphics sophistication.
That first wave effort failed for a number of important reasons, including very limited bandwidth, slow processors in computers by comparison to today’s processors, very costly and bulky head mounted displays and the difficulty in making a business case to senior executives whose primary exposure to VR was the cult movie The Lawnmower Man.
The ecosystem in which virtual reality exists today has overcome all of the issues that plagued the first wave except the cost of devices, but that is rapidly changing for the better.
Today’s use cases for industrial applications have a lot in common with those thought up in the ‘90s, such as virtual simulators for training and trouble-shooting problems in machines and complex infrastructures.
What is really new is the use of VR by consumer-facing companies, among which are some of the best known brands in the world, to engage customers in shared experiences that are unparalleled, such as taking a virtual tour of a store with the ability to buy the virtual item you see on the virtual shelf.
Regardless of your reference point in time, then as now, launching a company focused on non-gaming uses for virtual reality takes vision, technological savvy and guts, all in equal measure.
Phil Johnston is a young entrepreneur, a man on a mission to bring VR to consumer-facing companies, and he has these three essential characteristics. As the Cofounder of Virt Inc., a New York City based startup, he is engaging brands in beta trials of VR experiences in retail and real estate, deploying patent-pending technology that can broaden the base of smart, connected devices that can be used by a consumer for these virtual experiences.
Connected World’s Tim Lindner, who launched a startup in the mid-‘90s for virtual industrial applications—and knows well the issues surrounding virtual reality—recently caught up with Phil to have a conversation around this brave new virtual world we will immerse ourselves in.
CW (Connected World): Phil, thank you for taking time from your very busy schedule to talk with us.
PJ (Phil Johnston): Thank you very much for having me Tim.
CW: Let’s start with a bit of a history lesson. As we said in the introduction, the first commercially oriented appearance of what we call “virtual reality” came in the ‘90s, and with colorful personalities such as Jaron Lanier promoting it, VR got a lot of press. It also, basically, went nowhere from a commercial perspective. Here we now are in the second decade of the 21st century, and VR has exploded back into view, along with serious commercial opportunities. What makes VR today different from what we saw in the ‘90s?
PJ: Virtual reality is one of those technologies that we’ve been dreaming about for decades, which is a good and bad thing for people working in VR. It means that there is a lot of interest, but also very high expectations. In the 90s, the technology couldn’t meet the expectations at a reasonable price, so VR faded from the mainstream. Today the necessary technology is available at a much lower cost, thanks to advancements in smartphone technology, graphics and central processing units (GPU/CPU), and a host of other stuff.
CW: There is virtual reality and augmented reality. What is the difference between the two in your mind?
PJ: I really see VR and AR as being very similar. They’re like squares and rectangles—AR is VR, but VR isn’t AR—but I don’t think we’ll keep separating them out for much longer. We’ll have one device that is both AR/VR, depending on whether the content is fully immersive or not, so this distinction will fade.
CW: Interesting that you see a “universal” platform or device in the future. What does a consumer need in the way of hardware and software to “do” virtual reality today?
PJ: Most casual consumers will have much of the hardware and software they’ll need right in their pockets—smartphones will be many people’s first foray into VR, but the more serious consumers will gravitate towards a dedicated VR device. On the production side, the main ways to create VR experiences are with engines like Unity and Unreal or 360-degree videos, and you need a high-end GPU and lots of memory to work with.
CW: The company you cofounded, Virt Inc., focuses on the commercial use of virtual reality technology in three markets: Real estate, hospitality and retail. What were the compelling use cases you saw that motivated you to start up a company?
PJ: The most compelling use case for me was in retail. I felt that shopping online was a very different experience from shopping in a store. When you shop in the actual store, you’ll browse and see what jumps out at you, but when you shop online, you can’t browse around like you would in the store. I wanted to bring the offline experience online to make shopping more fun for consumers and to drive more sales for vendors. We then realized this technology would be a great tool for any business that is based on “experiencing a location” and started developing virtual tours for real estate and hospitality. I like to say that the internet made the world flat, but VR means the world does not have to be flat.
CW: How do you apply virtual reality to retail, or put another way, how do you develop and deploy a VR experience for a client to use for customer engagement?
PJ: We use a patent-pending method of combining multiple 360-degree videos to create a user-navigable virtual environment. It’s like Google Street View but with videos instead of pictures. We can capture an average store in under an hour, and we are seeing retailers test this not only as a customer engagement tool but also as an internal management tool. When you have multiple retail locations, maintaining a consistent brand image can be a hard job with a lot of traveling, so being able to check in “virtually” can be a big time and money saver.
CW: Who are you presently working with?
PJ: We are working with large, New York based beta-customers in real estate and retail to refine our virtTour and virtStore products. On the real estate side, we are working to provide virtTours at the same cost as normal photography, which makes them an absolute no-brainer. Who will want photos when you can have a complete virtual environment for the same price? For our retail partners, we’re working to maximize their brick & mortar investments. Retailers are facing a difficult and changing landscape, and physical retail stores have had to evolve to stay relevant. By bringing these stores into virtual reality, we’re helping retailers jump forward into this new landscape instead of being left behind.
We chose to focus on a small but high quality beta group because we knew that if we could provide some of the top companies in NYC exciting business solutions, they would certainly trickle down the chain. It can be just as nerve-wracking to approach a small business with your new idea as a Fortune 1000 company, so why not aim for the top?
CW: In a recent blog that you wrote, you said that nearly $3 billion in funding from venture capitalists, with about another half a billion dollars from internal R&D funding, was devoted to virtual reality development in 2014. You went on to say that about 95% of this funding went to hardware development. Is this investment specific to the head-mounted devices that Oculus and others are developing, or does it cover additional hardware devices?
PJ: The majority of this investment was specific to head-mounted devices with Oculus and Magic Leap leading the field. Getting HMDs just right is the main technological hurdle left for VR, and whichever company figures it out will have a head start on a lucrative and growing hardware market.
CW: VR looks to be most effective when it can engage someone in a shared environment. Do you agree with this, and how would Virt’s applications in retail support, as William Gibson once said when he coined the term “cyberspace,” a “consensual hallucination?”
PJ: I definitely agree that some of VR’s most effective uses will be to connect people in shared environments—after all, our mission is to make the world a closer place using VR. Applying this to retail specifically, being able to shop in a virtual store with your friends halfway across the country or the world was one of the first benefits I pitched.
CW: From your perspective, how can retailers, hoteliers and other consumer-focused businesses use VR at its current state of development, and then leverage it forward? Put another way, can they get into the VR game now with the assurance that their investment can be built upon as VR improves?
PJ: This is a great point as VR is still at least two to three years away from seeing major consumer adoption. The solution is to create virtual experiences that also work well on 2D screens. Research has shown that navigating through a 3D virtual space, even without wearing an HMD, is much more engaging than clicking through 2D pictures.
CW: We know just how difficult it is to sell new technology to senior executives with no experience with it. How much of your sales cycle is “missionary” work compared with solution design and business case development?
PJ: Even over the last eight to nine months, the general receptiveness to VR has really shot up. When I was first pitching, a good portion of it was focused on selling the idea of VR in general. Now that VR is becoming more and more accepted, I can just focus on the specific problem and solution we are working on.
CW: How do you build a business case for these executives and based on a return on investment assessment, what would a realistic payback period be for a VR solution?
PJ: Some VR solutions can run well into the six-figure range, so the payback period and ROI really depend on the sort of project you are doing. Virt’s solutions were designed to provide high-value at a low cost, so the payback can be anywhere from a few weeks to a month.
CW: Who is Phil Johnston, and how did you come to be so involved with virtual reality?
PJ: I’m a problem solver and have always known I wanted to be an entrepreneur. In high school, I learned about a memorization technique called “The Roman Room.” It’s essentially a way to turn 2D information into 3D, making it much easier to recall. This made me realize the potential of VR—allowing us to store, communicate, and analyze data in 3D instead of 2D. Fast forward a few years and the technology is nearly there, so I decided this was the perfect time to give it a shot.
CW: If you looked into your virtual crystal ball for the near term, let’s say 12-18 months from now, where will the VR industry be, and specifically, Virt?
PJ: Some 12-18 months from now, VR will have made some significant headway into the consumer market, led by Oculus, Sony, and Samsung. While not all households will have an HMD, most people will know someone who does have one. Virt will have produced hundreds of virtual stores and tours and will be introducing new VR innovations in our target verticals of commerce, communication, education, and entertainment.
CW: Phil, thank you again for sharing such an interesting story with us. Best wishes for success and we hope to catch up with you a year from now.
PJ: Thank you so much for having me. It’s been great speaking with you, and I look forward to speaking with you again.