On The Future of Entertainment

“The goal of film has always been immersion… [to] get lost in the show.” – Mike Schroepfer, CTO at Facebook.

We spent time this week at the Cannes Film Festival talking with industry leaders about the future of film. We explored virtual reality, storytelling, empathy, and new ways to immerse audiences. Here are the takeaways from our conversations at the festival:

  • Storytellers Love VR. Filmmakers know that VR will enable new ways to engage audiences. VR will expand storytelling on three levels: First, the 360 degree experience increases the viewers sense of presence. Second, immersion promotes empathy as it puts the audience in another world – in someone else’s shoes. Third, allowing a viewer to control spatial movement in a scene opens the door for a choose-your-own-adventure framework. Any one of these three warrants a paradigm shift in film, but all three will happen in time.
  • Established Filmmakers Will Supplement with VR. Established filmmakers see VR as a tool to supplement traditional content. Content creators are increasing the availability of free 36o-degree smartphone VR experiences to, for example, dive deeper into one scene of a film. Next, free VR experiences will begin to appear in the lobbies of theaters to promote films. Last, paid branded VR experiences will command $10-$30 for a 15 minute experience; e.g., the VOID and Ghostbusters. It’s important to note that today established filmmakers are steering clear of producing VR films. Steven Spielberg’s Ready Player One would have been the ideal first VR film but several factors prevented that including cost and the time it takes to retrofit theaters.
  • Aspiring Filmmakers Will Take an All-In Approach. Cannes was filled with startup storytellers going all-in on VR, inspired by the success of once-unknowns like Pixar and Netflix that changed the film industry 15 years ago; e.g., Penrose Studios (Arden’s Wake). Separately, Facebook’s recent closure of Oculus Story Studio (launched in January of 2015) bodes well for startup studios. Facebook’s efforts will now be focused on supporting external VR content creators.
  • Gaming Will Lead The Way. The gaming segment will be a leading indicator for the ramp in VR film adoption. Gamers will be early adopters given they are the largest segment of Rift and Vive users. Many of the tools that game developers use to build VR environments will be used by VR storytellers.
  • Hardware Is The Hold Up. Loup Ventures estimates there are about 2 million high immersion VR headsets in use globally today, including game console-powered VR headsets and  computer-powered VR headsets. We expect that number to increase to 146 million in five years (2022), including game console-powered VR headsets, computer-powered VR headsets and standalone VR headsets. We see hardware as the gating factor to VR film adoption. Hardware today is: 1. Expensive – $1000 plus for Rift & Vive. Daydream from Google headset and phone is $700. 2. Uncomfortable – screen resolution causes sickness and headsets are heavy and can only be worn for 15 minutes or less. 3. Clumsy – given Rift & Vive are both tethered experiences.

Today, consumer VR behavior is marked by a try-it-and-forget-it reality. Over the next 5 years, hardware will improve and costs will come down opening the door for daily VR usage and a new paradigm in film.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

What Google I/O Means for Immersive Computing

This week Google hosted it’s annual I/O developer conference. On day one, the company focused on their innovation in the artificial intelligence space. On day two, they talked about new VR products. Here’s our take on what the latest out of Mountain View means for the future of AI and VR.

  • Day One: AI. At Google I/O, Google lived up to it’s commitment to be an AI-first company. The company announced a slew of AI innovations focused on making their platform easier to use with more natural interfaces including voice (Google Assistant) and vision (Google Lens). For example, Google Assistant now includes support for calendars, phone communication, and proactive alerts, closing a gap we identified in our work on home assistants. Proactive alerts for voice-based assistants is a big step towards a screenless future. Google Home now flashes when it has relevant and timely information. For example: [*Google Home flashes*] “Traffic is heavier than usual. Leave in the next five minutes to be sure you make it to Anna’s soccer game on time.” In the screenless future, friction-less information push represents the future of search technology. Google is still in the best position to own the category given its organization of the world’s information. Google’s progress in the fields of computer vision (Google Lens) and cloud-based supercomputing/machine learning (Google Compute Engine) positions the company for success as we transition to more natural and immersive computing. It’s no coincidence that day one ended with a tease for a standalone VR headset, untethered to a PC or a smartphone. For more, see the 10 min condensed version of all the day one announcements here.
  • Day Two: VR. The big news on day two was the announcement of a standalone VR headset untethered to a PC or smartphone for computing power. Google is partnering with Qualcomm to build a reference headset and announced partnerships with HTC and Lenovo to bring standalone VR headsets to market later this year. Google also addressed a common knock on VR: given the full enclosure of VR headsets, VR experiences are hard to share with others. Google is making VR more social with shared rooms and voice chat as replacements for the text-based comments familiar to PC users. These advancements will help make VR mainstream faster. The transition from PC- and smartphone-driven VR to standalone VR will take 3-5 years (we don’t expect real traction – 1m units – until 2019), but the transition has clearly begun.

Bottom line: Google’s investments in AI and VR will accelerate the transition from computing on PCs and touchscreen devices into the future marked by immersive computing.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Apple Acquires AI Company Lattice Data

Apple recently acquired Lattice Data, a dark data mining company. Lattice Data takes “dark data,” meaning unstructured text and images, and turns it into structured information that can be used by traditional data analytics tools. Lattice Data began as a Stanford research project called DeepDive, which was also an attempt to process dark data on the internet.

An estimated 70-80 percent of data on the internet is unstructured, dark data. Artificial Intelligence can be used to structure this data, making it more useful. While Apple has not made it clear how it will use Lattice Data’s technology, we expect the company to leverage Lattice technology to improve Siri. For example, by accessing this dark data that is currently unusable, Siri could become much more effective in our daily lives. Siri would be able to answer our obscure questions about odd historic events, have a better understanding of which movie theater we are talking about, or even find the exact hot dish recipe that we are looking for. Eventually, much of the user-generated content on the web could be accessible to digital assistants.

Lattice Data falls right in line with Apple’s acquisition playbook: Buy companies that have a kernel of something special that Apple can put its significant resources behind to build into something even more amazing. They did it with P.A. Semi to build better processors for the iPhone. They did it with Siri to build Siri. They did it with Authentec to build Touch ID. They used Beats, both the executive team and the technology, to build Apple Music. In these instances, Apple took new technology and incorporated it into its platform soon after. It was clear that Apple was making an investment in a core technology. And with Lattice Data it’s clear that Apple is making an investment in AI.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Snap’s Pain is AR’s Gain

On Wednesday, Snap reported earnings for the first time. Most investors saw Snap’s results as a disappointment, primarily because they missed on revenue and didn’t meet DAU expectations. Investors expected Snapchat to reach about 168 million DAUs, but they only reached 166 million DAUs. That’s bad news for Snap, but good news for the field of Augmented Reality.

Competition is Heating Up in AR. Facebook is going directly at Snapchat with Instagram Stories. Since launching in August 2016, Instagram Stories has eclipsed Snapchat in DAUs. Facebook and Instagram understand the importance of AR in the future, and made a commitment to invest heavily in the area.

At F8, Mark Zuckerberg threw down the gauntlet, making it very clear that AR was an important area for Facebook and Instagram in the future. Facebook has taken an open approach to its camera, giving developers a set of tools with which they can create apps that run on Facebook’s camera platform. By opening this up, Facebook will see more, and better AR content within its application. Snapchat will likely follow suit and open up its camera for other developers as well.

Ultimately, the increase in competition between Snapchat and Facebook will push AR forward faster.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

An Update on Commercial Drones #AUVSI2017

If artificial intelligence is the brains, then robots are the brawn in the future of work.

Earlier this week, we attended the AUVSI XPOENTIAL trade show in Dallas, the largest global gathering of unmanned systems providers, robotic software developers, and industry experts.

We sat down with 13 executives from some of the leading commercial drone companies. Here are the takeaways from our meetings:

  • We’re Still in the Early Innings of Drones. Overall demand for drone hardware, software, and services continues to see strong momentum domestically and internationally. Industry leaders are confident that the market potential in core verticals remains deeply unsaturated. Increasing customer awareness around the efficiencies of drone technology represents a catalyst for accelerating industry growth.
  • Ground Robots and Drones are Complementary. Terrestrial robots and aerial robots (i.e., drones) should not be considered competitive offerings. Some of our favorite strategies in the space couple ground robots with drones for autonomous services.
  • Drone Delivery is Real. Throughout our meetings, robotic delivery of packages was identified as one of the largest untapped markets. Most industry leaders do not expect regular drone delivery to be viable for 5+ years; however, that’s a meaningful uptick from last year, when a similar group did not expect drone delivery to be realistic for 10+ years. Amazon is leading the way in the drone delivery space, but will likely acquire enabling technologies to make it a reality.

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