Virtual reality may not reach large audiences yet, but that hasn’t stopped traditional media companies from investing in the emerging technology.
NextVR has raised a $30.5 million Series A round led by Formation 8 and joined by cable stalwarts Comcast (cmcsa) and Time Warner (twx). NextVR specializes in broadcasting live events in wide-angle 360-degree video. While 360-degree video can be viewed on a flat screen, it really shines when it’s paired with a virtual reality headset, which makes the experience significantly more immersive.
What makes NextVR attractive as an investment is that it already has experience streaming major events in virtual reality. In the past month, it was CNN's key VR partner for streaming the first Democratic debate, and NextVR technology also powered Turner Sport's VR broadcast of an NBA game between the Golden State Warriors and the New Orleans Pelicans. In a nascent market, NextVR already has traction.
That traction matters because there's a lot that needs to be figured out in order to produce compelling broadcasts in virtual reality. VR raises issues that have long been solved in traditional video, including how to set up cameras and lights, manage cuts, and how to guide viewers' eyes to the action. Whichever company establishes itself as the best at solving these challenges could be sitting on a gold mine if virtual reality breaks through and becomes a major platform.
"Consumers and professionals need to learn a new way of shooting. Think about cameras, it's all about composition and lighting and all these things. With virtual reality, that all goes out the door. Where do you put the lighting? You can't, because it will be in the scene," Brian Blau, research director for personal technologies at research firm Gartner told Fortune in an interview. "You can use production techniques that everyone knows how to do with flatscreen video, but then you have to add the immersive aspect. Producers in Hollywood, TV-style producers, are starting to experiment with it, but is there anyone who is considered the best at 360 video production? I don't know, I don't think we're anywhere close to it yet."
NextVR may be a player in the VR production world, but it doesn't have it all figured out yet. TIME's Alex Fitzpatrick watched last month's Democratic debate using a special Samsung headset and phone, and found that although the experience was engrossing, it was basically "taking video as we know it today and slapping it onto a new medium."
So the investment is a long play — it might be a while before virtual reality starts to make money. "I think it's going to take some time, as in years, for virtual reality to be mass market, for it to get to the hundreds of millions of users and hundreds of billions of revenue. That's going to take a while," Blau says.
NextVR is closely associated with Oculus and its corporate parent, Facebook (fb). NextVR’s broadcasts use Oculus’ tech, and at the moment watching them it requires a special Samsung headset and phone. NextVR’s broadcasts don’t easily work with Cardboard, the inexpensive Google virtual reality system that was recently used by the New York Times to promote its own immersive video. Oculus' first VR headset for consumers, the Rift, will go on sale early next year.
Other investors in the round suggests content creators including sports teams and production companies are interested in the possibilities afforded by VR. The round includes Peter Guber, an owner of the Golden State Warriors; RSE Ventures, a venture firm associated with the Miami Dolphins; and the Madison Square Garden company, which owns and operates the New York Knicks as well as its iconic arena.
But the most interesting investor in the round is Dick Clark Productions, which is a Hollywood-based production company that specializes in live TV specials, including the Golden Globes, the American Music Awards, and New Year’s Rockin’ Eve. Considering the investment, it's not too difficult to imagine watching the Knicks from the sidelines or experiencing the ball drop through an Oculus Rift next year.
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