(The following is an excerpt from the upcoming, May 1995 issue of "Virtual Reality Monthly," an industry newsletter of VR.) VR A $6 Billion Industry By 1999 by Joe Dysart Shirking the trappings of infancy, VR is poised to become a $6 billion industry by 1999 - and redefine the computer industry in the process - according to Perth Ventures, an emerging technologies think tank based in Manhattan. The reason? VR is the ultimate "high touch" technology, Perth says. Today's Nintendo generation is hungry to integrate the gripping, interactive impact of VR's communicative powers into every facet of their lives. And the baby boomer generation that precedes them - reared on the images of TV and video - is not far behind. "This new generation is decreasingly influenced by character-oriented and literary modes, and increasingly influenced by theimmersive, compulsive modes of electronic computer games," says Dr. E. Ted Prince, Perth's president. "Market drivers for high touch are powerful, at their peak, and culturally and socially highly appropriate. Companies that resist will not survive." Perth makes these bold projections in its most recent VR report, "New Business Applications of Computer Games and Virtual Reality: Opportunities and Markets." It's a 68-page analysis of technical, cultural, social, and economic variables expected to impact the world market through 1999. The report drew on a staff of leading thinkers to make its predictions, who relied on a myriad of published sources, as well as contacts in corporations, technology development companies, universities, and other academic institutions. Essentially, the Perth report concludes that VR represents nothing less than the new literacy. And Prince predicts that virtually every facet of society will be rushing to embrace that new paradigm by the close of the century. Businesses will be using VR as a powerful tool for product development and promotion. Schools will be latching onto to VR's "supragraphics" to entice student interest in the most arcane of subject matter. And software gaming companies will be turning to the medium to give already successful titles a second life - and new titles a fresh spin. Indeed, given the coming plummeting costs associated with content production - and the inevitable mass entry of small companies and individuals into the VR market to follow - the technology's impact will be nothing less than pervasive, Prince says. "The tools are now here, developed over ten years by computer gaming, and now virtual reality companies," Prince says. "In sum: we can tell you that VR's impact will be powerful, immediate and global." Undoubtedly, the industry's biggest winners initially will be "horizontal software and tools" companies, which will claim $1.7 billion of the market by 1999, Prince says. Virtual reality peripherals, which will initially weigh in as a close second, will bring home $1.6 billion by the same year. But after the turn of the century, look for peripherals to lurch ahead and become the market earnings leader. Says Prince: "Although the second largest segment, virtual reality peripherals has the highest growth rates wand. We see torrid growth in this area over the next two years, settling down to a lower but still very high growth rate over the longer period." Perth is also projecting another $1 billion market to emerge by 1999 for manufacturers specializing in VR conversions for today's PCS. "But this growth rate will slow as newer platforms and operating systems designed specifically for gameware and virtual reality are released, and the PC platform becomes obsolete," Prince says. Indeed, by 1999, the market in VR conversions will have peaked, he adds. Other substantial winners Perth is projecting by 1999: an $800 million market for systems software designed specifically for gameware and VR; a $400 million market in vertical software; a $200 million market for VR technical skills; and a $100 million market for off-the-shelf VR software. Of course, the coming Age of VR will not be a complete cakewalk. As with any new technology, VR will be resisted by more conservative sectors of the population - especially seniors, Prince says. Many people simply will not be "turned on" to the concept of "flying through" new worlds in which there are no established rules of interaction. In a phrase: the intimacy factor may be a bit too "up close and personal." Meanwhile, Prince says some businesses will undoubtedly fret over the security issues posed by interactive, VR exchanges of data within the company - as well as over mass communication mediums like the Internet. And other businesses will be taking a hard look at product liability concerns, especially if they are planning to use VR as a training, sales and/or promotional vehicle. Says Prince: "Businesses will be questioning whether VR may be perceived as overly persuasive and influential." Moreover, projections about dropping production costs may turn out to be overly rosy, Prince says. There is a possibility that high content development prices in the film, video and computer games sectors may hang on longer than anticipated, Prince says. The pace of deregulation of the long and short distance telephony market - which is expected to presage the mass entrance of entrepreneurs into VR - could hit an unforseen logjam. And the projected standardization of the PC market, which is expected to serve as a foundation for a new VR standard, could become snagged. But on balance, if the emergence of VR has its skeptics, Prince is not among them. He is advising corporations to begin retrofitting their existing applications right now with a VR spin, and to use VR gameware techniques in building any new application. "Indeed, this may be more effective in some cases than rewriting or downsizing," Prince says. Businesses should also look for every legitimate opportunity to "VR enable" current and future applications with VR peripherals such as goggles, helmets and advanced controllers. And other opportunities should be unearthed to integrate VR into advertising and promotion, repairs and product service, and distribution and logistics. Now is also the time for venture capitalists and investment companies to jump into the game, Prince believes. Software companies specializing in or migrating to VR gaming are ripe for the picking - as are any companies developing VR-enabled applications for business. "Invest in companies licensing tools, software and/or content from consumer video game/VR companies for key business applications," Prince says. "And try to find consumer finance simulation applications in the areas of retirement and investment planning." Software companies honing in on VR scenario construction for the legal community will also be hot properties, according to Prince - as will service companies focusing on VR and VR techniques. "Invest in companies using augmented reality (an approach that combines VR with more conventional media) for repairs and servicing of products in specific verticals," Prince says. "And identify, winnow out, and invest in new types of controllers, peripherals and biofeedback sensors for VR business applications." Still other high growth prospects: PC add-on boards, ASICs, and accelerators used to run VR gaming and business applications, and companies that are currently working to develop the new VR operating systems destined to become the computer platform standard of the late 1990s. Says Prince: "There are intense efforts and investment in the consumer-oriented computer games and multimedia effects areas. At present most of the investment has bypassed the business and virtual reality areas - but we predict this will change. Shortly, there will be a scramble to find promising new business application and VR companies, as well as companies with VR potential." Contact: E. Ted Prince, President, Perth Ventures Voice: (212) 681-6400 Fax: (212) 681-6410 Email: 74073.1236@compuserve.com -30- ("Virtual Reality Monthly" is edited by Joe Dysart, a high technology journalist with 15 years experience whose work has appeared in more than 40 publications, including "The New York Times." Currently, Dysart's work in VR appears primarily in "VRWorld," where he serves as Business/Entertainment Editor, and at "VR Metropolis," (http://www.mecklermedia.com), Mecklermedia's new VR cybersite on the World Wide Web., where he serves as Site Coordinator. For a free sample copy of "Virtual Reality Monthly," kindly send your email address, phone, and fax number to dysart@delphi.com.) From DYSART@delphi.com Wed Apr 5 14:31:14 1995 Return-Path: Received: from mx4.u.washington.edu by stein2.u.washington.edu (5.65+UW95.02/UW-NDC Revision: 2.32 ) id AA23446; Wed, 5 Apr 95 14:31:14 -0700 Received: from hitl-new.hitl.washington.edu by mx4.u.washington.edu (5.65+UW95.02/UW-NDC Revision: 2.31 ) id AA19965; Wed, 5 Apr 95 14:31:11 -0700 Received: by hitl.hitl.washington.edu; id AA16190; Wed, 5 Apr 1995 14:26:48 -0700 Received: from delphi.com by delphi.com (PMDF V4.3-9 #7804) id <01HOZKTGBU0695OQ0X@delphi.com>; Wed, 05 Apr 1995 17:31:03 -0500 (EST) Date: Wed, 05 Apr 1995 17:31:03 -0500 (EST) From: DYSART@delphi.com Subject: That persnickety correction To: scivw@hitl.washington.edu Message-Id: <01HOZKTGBU0895OQ0X@delphi.com> X-Vms-To: IN%"scivw@hitl.washington.edu" Mime-Version: 1.0 Content-Type: TEXT/PLAIN; CHARSET=US-ASCII Content-Transfer-Encoding: 7BIT X-Status: Status: OR Toni, Here's the absolutely, positively last version of this article. (Most likely.) Much thanks. -Joe Dysart (The following is an excerpt from the upcoming, May 1995 issue of "Virtual Reality Monthly," an industry newsletter of VR.) VR A $6 Billion Industry By 1999 by Joe Dysart Editor, Virtual Reality Monthly Shirking the trappings of infancy, VR is poised to become a $6 billion industry by 1999 - and redefine the computer industry in the process - according to Perth Ventures, an emerging technologies think tank based in Manhattan. The reason? VR is the ultimate "high touch" technology, Perth says. Today's Nintendo generation is hungry to integrate the gripping, interactive impact of VR's communicative powers into every facet of their lives. And the baby boomer generation that precedes them - reared on the images of TV and video - is not far behind. "This new generation is decreasingly influenced by character-oriented and literary modes, and increasingly influenced by theimmersive, compulsive modes of electronic computer games," says Dr. E. Ted Prince, Perth's president. "Market drivers for high touch are powerful, at their peak, and culturally and socially highly appropriate. Companies that resist will not survive." Perth makes these bold projections in its most recent VR report, "New Business Applications of Computer Games and Virtual Reality: Opportunities and Markets." It's a 68-page analysis of technical, cultural, social, and economic variables expected to impact the world market through 1999. The report drew on a staff of leading thinkers to make its predictions, who relied on a myriad of published sources, as well as contacts in corporations, technology development companies, universities, and other academic institutions. Essentially, the Perth report concludes that VR represents nothing less than the new literacy. And Prince predicts that virtually every facet of society will be rushing to embrace that new paradigm by the close of the century. Businesses will be using VR as a powerful tool for product development and promotion. Schools will be latching onto to VR's "supragraphics" to entice student interest in the most arcane of subject matter. And software gaming companies will be turning to the medium to give already successful titles a second life - and new titles a fresh spin. Indeed, given the coming plummeting costs associated with content production - and the inevitable mass entry of small companies and individuals into the VR market to follow - the technology's impact will be nothing less than pervasive, Prince says. "The tools are now here, developed over ten years by computer gaming, and now virtual reality companies," Prince says. "In sum: we can tell you that VR's impact will be powerful, immediate and global." Undoubtedly, the industry's biggest winners initially will be "horizontal software and tools" companies, which will claim $1.7 billion of the market by 1999, Prince says. Virtual reality peripherals, which will initially weigh in as a close second, will bring home $1.6 billion by the same year. But after the turn of the century, look for peripherals to lurch ahead and become the market earnings leader. Says Prince: "Although the second largest segment, virtual reality peripherals has the highest growth rates wand. We see torrid growth in this area over the next two years, settling down to a lower but still very high growth rate over the longer period." Perth is also projecting another $1 billion market to emerge by 1999 for manufacturers specializing in VR conversions for today's PCS. "But this growth rate will slow as newer platforms and operating systems designed specifically for gameware and virtual reality are released, and the PC platform becomes obsolete," Prince says. Indeed, by 1999, the market in VR conversions will have peaked, he adds. Other substantial winners Perth is projecting by 1999: an $800 million market for systems software designed specifically for gameware and VR; a $400 million market in vertical software; a $200 million market for VR technical skills; and a $100 million market for off-the-shelf VR software. Of course, the coming Age of VR will not be a complete cakewalk. As with any new technology, VR will be resisted by more conservative sectors of the population - especially seniors, Prince says. Many people simply will not be "turned on" to the concept of "flying through" new worlds in which there are no established rules of interaction. In a phrase: the intimacy factor may be a bit too "up close and personal." Meanwhile, Prince says some businesses will undoubtedly fret over the security issues posed by interactive, VR exchanges of data within the company - as well as over mass communication mediums like the Internet. And other businesses will be taking a hard look at product liability concerns, especially if they are planning to use VR as a training, sales and/or promotional vehicle. Says Prince: "Businesses will be questioning whether VR may be perceived as overly persuasive and influential." Moreover, projections about dropping production costs may turn out to be overly rosy, Prince says. There is a possibility that high content development prices in the film, video and computer games sectors may hang on longer than anticipated, Prince says. The pace of deregulation of the long and short distance telephony market - which is expected to presage the mass entrance of entrepreneurs into VR - could hit an unforseen logjam. And the projected standardization of the PC market, which is expected to serve as a foundation for a new VR standard, could become snagged. But on balance, if the emergence of VR has its skeptics, Prince is not among them. He is advising corporations to begin retrofitting their existing applications right now with a VR spin, and to use VR gameware techniques in building any new application. "Indeed, this may be more effective in some cases than rewriting or downsizing," Prince says. Businesses should also look for every legitimate opportunity to "VR enable" current and future applications with VR peripherals such as goggles, helmets and advanced controllers. And other opportunities should be unearthed to integrate VR into advertising and promotion, repairs and product service, and distribution and logistics. Now is also the time for venture capitalists and investment companies to jump into the game, Prince believes. Software companies specializing in or migrating to VR gaming are ripe for the picking - as are any companies developing VR-enabled applications for business. "Invest in companies licensing tools, software and/or content from consumer video game/VR companies for key business applications," Prince says. "And try to find consumer finance simulation applications in the areas of retirement and investment planning." Software companies honing in on VR scenario construction for the legal community will also be hot properties, according to Prince - as will service companies focusing on VR and VR techniques. "Invest in companies using augmented reality (an approach that combines VR with more conventional media) for repairs and servicing of products in specific verticals," Prince says. "And identify, winnow out, and invest in new types of controllers, peripherals and biofeedback sensors for VR business applications." Still other high growth prospects: PC add-on boards, ASICs, and accelerators used to run VR gaming and business applications, and companies that are currently working to develop the new VR operating systems destined to become the computer platform standard of the late 1990s. Says Prince: "There are intense efforts and investment in the consumer-oriented computer games and multimedia effects areas. At present most of the investment has bypassed the business and virtual reality areas - but we predict this will change. Shortly, there will be a scramble to find promising new business application and VR companies, as well as companies with VR potential." Contact: E. Ted Prince, President, Perth Ventures Voice: (212) 681-6400 Fax: (212) 681-6410 Email: 74073.1236@compuserve.com -30- ("Virtual Reality Monthly" is edited by Joe Dysart, a high technology journalist with 15 years experience whose work has appeared in more than 40 publications, including "The New York Times." Currently, Dysart's work in VR appears primarily in "VRWorld," where he serves as Business/Entertainment Editor, and at "VR Metropolis," (http://www.mecklerweb.com), Mecklermedia's new VR cybersite on the World Wide Web., where he serves as Site Coordinator. For a free sample copy of "Virtual Reality Monthly," kindly send your email address, phone, and fax number to dysart@delphi.com.)