Virtual Reality's Tough Reality: Will Anyone But Gamers Watch?

Illustration by Lars Leetaru

By 2025, Hollywood content for Oculus and more could total $5.4 billion, as Fox and Lionsgate recently struck deals. For now, however, scripted stories just aren't there: "We haven't seen 'it' yet — the 'Avatar,' the one that defines VR."

This story first appeared in the Oct. 16 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

On Sept. 24, executives from Oculus, the virtual reality technology company that Facebook paid $2 billion to acquire last year, stood in front of a packed room at the Loews Hotel in Hollywood and made a revealing admission: Virtual reality companies like Oculus are finding top-quality content to be the most vexing challenge. Now Hollywood is ready to tackle that problem.

The gaming industry was the first to see the potential in VR's immersive, 360-degree expe­rience, but filmmakers increasingly are eying the space as the next frontier, even as VR head­set makers are waiting until 2016 to launch their products. Since Facebook bought Oculus, Hollywood funding into VR has grown, with Disney co-leading a $65 million investment in VR technology company Jaunt and Megan Ellison's Annapurna Pictures backing content company Vrse. WME even has a VR agent.

The emerging technology also has caught the attention of moviemakers including Steven Spielberg, who joined the board of advisers for Maleficent director Robert Stromberg's The Virtual Reality Co. But for all the attention that VR has received, most content still is rudimentary: first-person concert experiences, raw documentary footage or film marketing extensions. Efforts to craft narrative stories are nascent — but they're coming. Nearly everyone producing VR entertainment content says they're working on scripted or episodic projects.

"What we're seeing is a shift from when it was all about trying to understand this medium to where it feels like we're able to tell more complex stories and create a proper storyline," says Felix Lajeunesse, who along with partner Paul Raphael inked a multiyear deal with Oculus this summer to develop original VR content through their Felix & Paul Studios. They say they have three scripted "experiences" in development. In addition, Oculus has founded its own content arm, Oculus Story Studio — led by Pixar veteran Saschka Unseld — which plans to release five animated shorts this year, including Henry, a comedy about a hedgehog. Among other narrative VR projects in the works is one from director Randal Kleiser (Grease, White Fang), who tells THR that he's about to start production on 12-episode series Defrost, which will place the viewer in the role of a woman who awakens after being cryogenically frozen for 30 years. The futuristic project is "low-budget" (he won't reveal specifics). Professional content was a hot topic at L.A.'s Oculus Connect developers conference, where Facebook CEO Mark Zuckerberg made an appearance. "If Zuckerberg is going to push this, content is going to be really important and not just [footage of] flying over volcanoes; there will need to be stories told," says Kleiser.

Since headsets largely are unavailable, most people have viewed VR through low-cost Google Cardboard, which works with any smartphone. Samsung and Oculus released the $200 Gear VR in December and are planning to release a discounted $99 version in November, but the device only is compatible with certain Samsung phones. The majority of high-end headsets, including models from Oculus, Sony and HTC, won't hit retail until 2016 and likely will cost several hundred dollars (and weigh several pounds; critics complain they are too heavy for mass consumption). Still, a May report from Piper Jaffray predicts the VR market for content will reach $5.4 billion by 2025.

That's why Oculus announced in September that it had struck deals with 20th Century Fox and Lionsgate to add movies for rental or purchase in its Oculus Store, a marketplace for apps and downloadable content. Netflix, Hulu, Twitch and Vimeo also are planning to offer streaming video. In these cases, those who put on VR goggles will find themselves sitting in a 360-degree movie theater or living room. They can pick their movie or series and watch in their virtual room, but the content will be 2D.

Experts say that like with 3D movies, the distinguishing factor with VR will be the stories viewers find there that they can't get anywhere else. And early VR filmmakers agree that they haven't figured out what that will be. "We haven't seen 'it' yet — the Avatar, the one that defines VR," admits Stromberg, whose company is developing immersive projects, including a 15-minute experience for The Martian. "Things we are doing could be that. I have complete confidence that [the defining project will appear]. It's going to happen very soon."