V-Rtifacts

VR Companies

Business from the virtual side.

A VR Who’s Who From 1994 – uniVRsum

1994 marks the peak of what many view as the first “Big Bubble” in VR popularity. There were literally hundreds of (mostly) entrepreneurial startups taking a wild fling and what seemed to be a game-changing technology. You could strike sparks anywhere! By 1997 most had either vanished or transformed themselves. If you stood in just the right place, with the right kind of eyes, you could almost see the high water mark — that place where the wave finally broke, and rolled back. (Thanks HST!)

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Thanks to Zenka – Zenka.org – for the totally cool Sega VR sculpture.

In the first half of 1994 a group of students, with the limited support of a few industry players, known as VRASP (Virtual Reality Alliance of Students and Professionals) embarked on the uniVRsum project to integrate the diverse and incompatible VR technologies flooding the market. This was to culminate in a presentation at Siggraph ’94, the premiere computer graphics conference and trade show.

One of uniVRsum’s first steps was to compile a database of the VR company/product universe. As one of the few industry supporters, I had access, thanks to Karin August at VRASP, to a copy of this fascinating compendium. Twenty-two years later, it resurfaced in an old file box.

Here’s a fairly comprehensive survey of 120 companies active in the VR marketplace in early 1994. A few remain, but most are lost, “like tears… in the rain.”

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Click for entire listing PDF

 

 

 

Bookshelf: Sex, Drugs and Tessellation

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Hot off the press is Ben Delaney’s authoritative new book, Sex, Drugs, and Tessellation which collects 6 years of wisdom from Ben’s CyberEdge Journal, the go-to virtual reality publication from 1991 through 1996. Ben has always been both a proponent of, and realist about VR, offering insightful market insights and lucid explanations of ofttimes opaque technology. Both students of VR and grizzled veterans will find Ben’s writing to be illuminating. You may remember his appearance on the PBS series Newton’s Apple where he explains the workings of the Virtual Research Flight Helmet.

An abbreviated “book jacket” summary:

Did you ever wonder who built the first head-mounted display? Who first detailed a coherent theory of Cyberspace? Who wrote about cybersex and the challenges it creates? Who worried about addiction to VR? Did anyone ever cure cyber-sickness?

From 1991 to 1996, CyberEdge Journal covered these stories and hundreds more … … Appreciated for its “No VR Hype” attitude, CyberEdge Journal was the publication of record for the VR industry in the 90’s….

Now that VR is enjoying a renaissance, it’s time to understand where it came from, and avoid making the same mistakes that were made in the first golden age of VR, the 1990’s. It’s also a good time to remember the excitement and sense of adventure that characterized those time.

Sex, Drugs, and Tessellation describes not just some of the hot topics of VR, but also the origins, issues, and solutions that were chronicled in the pages of CyberEdge Journal. Complemented by over 100 photos and drawings, there is a surprisingly contemporary feel to these old articles. In addition, more than a dozen VR pioneers have contributed new reminiscences of their work in VR.

Why Sell Out? Oculus -> Facebook

A lot of people are fuming over today’s announcement that Facebook would be buying Palmer Luckey’s Oculus. Palmer and company produced two mainstream marketed development kit head mounted displays which became darlings of the grassroots VR/Gamer community. Starting with Kickstarter, Oculus, channeled through Palmer’s and later John Carmack’s charisma and a hacker friendly attitude, built a loyal and vocal user base, one that championed the ethos of open source and quasi-community development.

Tonight, there’s a lot of disappointment and vitrol that Oculus has abandoned the community, and worse yet (from their perspective), sold out to the Devil incarnate. How could Palmer, who just announced the deal on Reddit, have turned his back on the admiring crowds? Who would have thought the Oculus enthusiasts could be turned into a howling mob in the course of a single afternoon?

Were they betrayed? And by who?

It’s easy to forget that Oculus funding didn’t end with Kickstarter. There’s the Venture Capitalists. Unlike the Kickstarter money-for-prototype funding, the VCs were getting equity, board seats, and a preferential position in the decision making process. VCs don’t take major stakes unless they receive major control of their target.

So when Oculus was offered $400m in cash plus $1.6B in Facebook stock (plus another $300m incentive bonus), was Palmer really making that call alone? After multiple VC funding rounds and stock incentives to key employees, Palmer must have relatively small minority stake in Oculus, although even so the deal involves a considerable sum for him. But a minority share and non-preferred stock means that his vote is in no way decisive… the Venture Capitalists, led by Andreessen Horowitz, make the big time financial decisions. They invest based on their strategic relationships with potential buyers like Facebook (Andreessen sits on the board of Facebook… no small thing.)

It’s only natural that the VCs would push hard for the deal. Inasmuch as Oculus never really had a strategy to rake in 9 figure profits cash on the barrel at huge multiples of their original investment, what’s an investor to do? Let’s hypothetically (and generously) say that there would have been a 50% chance that Oculus could generate $2B in profits (or other liquid value) within the next 4 years. If the investors were to allow Oculus to remain independent they’d be giving up a certain $2B right now, in exchange for a potential payout down the road. How big would that payout need to be? Well…, in this make-believe scenario the investors are essentially deferring their $2B as a high risk loan. They should then receive interest payments on their loan (the time value of money.) But when you risk other-peoples’-money you must pay the vig. Let’s assume 20% per year (that’s low… I promise!) So… discounting for the 50% risk and the vig, the VCs need more than $5B in profit on the future bet. That significantly decreases their (50%) chance of success.

Time to take the money and run!

Does that make Palmer Luckey the bad guy? No, it just makes him the guy who took the VC money without realizing that control had also been surrendered. This is a dance that occurs with every venture capital deal; the term sheets have the control clauses permanently etched.

Is the Facebook deal a bad thing? Good thing? Oculus developed technically well conceived and implemented head mounted displays. The VR displays are/were wildly popular with a community of up to 75,000, doubtless enhanced by the ultra-low $300 price tag. They would need to sell tens of millions of units at this price point in order to realize anything like the $2B Facebook offer. Realistically, the price point needed to be double (or triple) in order to have margins comparable to normal consumer electronic gear. I don’t see them achieving millions of units sold at $600-$900/unit. Pundits have suggested other unspecified, service based, revenue streams. Lacking the clout of a Facebook/Google sized borg, I don’t feel like they could ever reach a critical mass capable of bringing in $5B+ in value (other than equity.)

While the Facebook ethic is the nightmare scenario for the highly independent Oculus community, their alternatives were limited. VCs always rely on the profitability of equity not of product. What will FB do with Oculus? Unknown. But if the Oculus product never makes a single cent, it nonetheless will not die an ugly and horrible cash flow strangulation death; what would certainly have been their fate absent being made part of the borg.

 

W-Industries Unscripted

W-Industries (Virtuality) always seemed to have a PR person riding herd on any video material that was released about the company or products. Everything the public saw was tightly scripted and edited.  But… here’s a 1992 video from inside the factory that’s more of a home movie cum operations tutorial. We are guided through some of the guts of the Series 1000, the pre-play systems, and the assembly area.

Don’t forget to turn on the YouTube subtitles, the audio track is in Swedish.

Virtual Reality (1991) – “Many Believe It Will Revolutionize The Way We Live”

ABC Primetime covers the VR scene in Sept. 1991. Although this news report conflates computer animation footage with Virtual Reality, it also features interviews with Jon Waldern, Fred Brooks, Howard Rheingold, Mike McGreevey, and C L Dodgson (virtually, of course.) With the advantage of hindsight, it’s interesting to see which predictions from 23 years ago have panned out and which are way out in left field.

… and from the where-are-they-now club, we get a brief glimpse of video footage from Symbolics Inc. (remember LISP?), a hot up-and-comer in computer graphics back in the day.

Sega VR – Mighty Barfin’ Power Rangers (we are the 40 percent)

Sega (all hail Sonic!): 1991 brought the announcement of Sega VR, a $200 headset for the Genesis console, a prototype finally shown at summer CES 1993, and consigned to the trash heap of VR in 1994, before any units shipped. Sega claimed that the helmet experience was just too realistic for young children to handle, but the real scoop from researchers showed that 40% of users suffered from cybersickness and headaches. It’s fair to say that Sega undoubtedly anticipated a sea of lawsuits; as one pundit in the industry put it: “It will be like the Pinto’s exploding gas tank.”

Perfectly capturing the annoying VR hype of the era is Alan Hunter’s (MTV) summer 1993 CES intro of Sega VR:

Money quote from a teen featured in the promo: “I thought I was going to have to wait till I was old… like 30, to get VR at home!” It’s now 2012, he’s closing in on 40, and still waiting.

Much more info can be found in Ken Horowitz’s 1994 review. Four games were produced especially for Sega VR, never to be released.

Here’s some sense of the much feared “realism” which provoked Sega to pull the plug on production:

Much to Sega’s credit, their VR fail was at least an original marketing effort, whereas later in the 1990’s, Nintendo’s Virtual Boy and Atari’s (Virtuality designed) Jaguar VR crashed and burned in much the same mode (although at far greater expense.)

Yea, though he has walked through the Valley of Silicon, he fears no evil. Jaron Lanier’s rebound…

“Inside Jaron Lanier is a precocious eight-year-old who got together with some friends and built a spaceship,” wrote Howard Rheingold in his 1991 book, Virtual Reality, the definitive history of VR to date. “Now he wants us all to take a ride in it.”


More from Burr Snider’s 1993 perspective in Wired….