Virtual Reality’s Missed 2020 Opportunity Was Years in the Making

Jacob Feldman
·10 min read

There was a time, months into the COVID-19 pandemic, when fads seemed to emerge Mad Libs-style: GameStop stock! Digital trading cards! Ocean Spray TikTok! And yet, amid frenzy after frenzy, a technology seemingly designed for sports’ 2020 circumstances never got its moment.

Virtual reality might as well have been custom built for the last year, when no one went to games but everyone yearned for connection. Disruption allowed leagues to experiment and viewers to accept wholly new habits. Well-off supporters had money to burn and teams were desperate to make up for pandemic losses.

So, given all that, how did diehard fans end up as cardboard rather than in VR?

The story of what hasn’t happened for virtual reality starts with something that did.

In 2014, Facebook bought startup VR hardware maker Oculus for $2 billion, double what it had paid for Instagram two years earlier. “This is the best shot virtual reality has ever had and probably will ever have,” Oculus founder Palmer Luckey said at the time. In his announcement on Facebook, Mark Zuckerberg implored users to “Imagine enjoying a court side seat at a game… just by putting on goggles in your home.”

By then, Sankar “Jay” Jayaram had been working with VR for 20 years. He had co-founded a VR lab at Washington State University, watching as the technology fueled $10,000 headsets in the 1990s and 3D experiments in the 2000s. “When the Oculus headset came out,” he said, “I went, OK, VR headsets are making a comeback.” This time, he expected them to be become affordable and commonplace.

He launched Voke VR with his wife, Uma, and two others. By 2015 they had received funding from the Sacramento Kings, which livestreamed its home opener in VR, recreating the view of sitting next to owner and tech evangelist Vivek Ranadive. But Voke wasn’t alone.

Miheer Walavalkar co-founded LiveLike in 2015 to help existing rights holders build their own VR experiences. Other companies, including Jaunt and Immersive Media, joined the race, too. NextVR, meanwhile, tried to position itself as the “Netflix of virtual reality,” in the words of co-founder D.J. Roller, pivoting from 3D TV.

Big money quickly followed. Voke was acquired by Intel. Disney lined up behind Jaunt, while NextVR received funding from Time Warner and Comcast. NextVR, valued at $800 million in 2016, also put together an impressive slate of content partnerships. Wimbledon, the Kentucky Derby, Notre Dame football and NBA games came to its platform, which neared one sporting event per week.

But then, stasis. A new way to see sports had been built; not that many people watched.

Unlike Netflix, NextVR relied on sponsorship revenue while offering games for free. However, audience sizes often ended up in the thousands if not the hundreds, according to one former NextVR employee who requested anonymity to discuss the company’s details. That was not enough to garner significant sponsorship interest, the employee said.

In 2016, Goldman Sachs analysts saw $750 million in revenue for live events in virtual reality by 2020. Though VR headsets had entered the market with a splash, interest waned in 2018 and 2019. A 2016 industry report projected over 60 million headset shipments in 2020, driven by smartphone-powered kits. Instead, fewer than 8 million sold in 2020, with basically no major smartphone-powered products released.

“I would’ve said the hardware would’ve been far better than what it is today,” Walavalkar said. “That was in hindsight pretty ambitious, but we were going by what the market was telling us.”

The early products were often bulky and expensive or underpowered. Many headsets required wires and special PCs to run. As the products improved, not everybody put off by earlier versions was willing to give them a second chance. “Software got ahead of the hardware, as it does a lot of the time,” former NextVR executive chairman Brad Allen said.

Even if you did have a headset, and there was a game being produced, the experience had to compete with TV, which had spent decades perfecting its offering as the center of the sports experience. Putting on a headset meant closing yourself off from your group chat, Twitter feed, gambling app, and whoever might be sitting next to you on the couch.

Every new technology seeks to grow via the flywheel effect, where a unique experience draws an influx of users, who attract creators and investment, drawing in more users, and so on. VR found itself unable to reach that point of escape velocity. Slow adoption meant there wasn’t a hungry user base demanding leagues offer content, or incentivizing producers to improve the experience.

After a while, the content was too expensive for its experimental purpose. Top-notch VR productions required prime camera placements, their own announcers, and an entire broadcast truck to bring them to life. NextVR’s NBA broadcasts cost as much as $75,000, according to Morning Consult. And ultimately, none of the biggest players were invested enough to hold the system up.

“I’ve spoken to just about every major league and every media partner about this,” Facebook’s director for sports media and league partnerships Rob Shaw said. “I feel as though everyone has put their foot in, per se, but no one has dove in.” COVID protocols and budget cuts only made any potential plunges less likely in 2020.

Virtual reality did get a boost last year, though it came from the world of video games. Preorders for Oculus’ Quest 2 were five times higher than they were for its predecessor in 2019. Sixty games made over $1 million last year, Facebook announced in February. “Let’s be honest,” Shaw said, “(gaming) really is the No. 1 use case for people on Oculus.”

But broadcast sports were largely unable to benefit from any 2020 bump, in part because its biggest tech advocates had moved on. NextVR failed to raise money by 2019, leading to a 40% workforce reduction. Last year, it sold to Apple for $100 million, less than it had reportedly raised.

LiveLike started prioritizing its live social features over its immersive video efforts. Jaunt pivoted to augmented reality, while Sayaram left Intel to found Quintar, which is also focusing on AR.

Virtual reality had lost its luster. But it didn’t vanish.

Last week, I put on an Oculus Quest headset to “meet” the team still broadcasting NBA games in VR for Oculus’ Venues app.

The Venues app drops its users into something like a virtual train station, where each platform represents a different live event, like a game or concert. Step into the NBA area, and you are teleported into a cartoon-version of a stadium suite. In my case, it was in Madison Square Garden. I could look down and see the actual court, up and see the real rafters, left and right and see a bunch of other digital avatars. One of them was MediaMonks director of creative solutions Lewis Smithingham.

As I “stood” (I was actually on my couch) “next to” Smithingham (we were actually 200 miles apart), he explained why now was VR’s moment, and why it hadn’t come earlier.

Smithingham is not a neutral party. After NextVR’s sale, Oculus turned to Verizon arm Ryot and Yahoo! Sports, which brought in MediaMonks, a company with nearly a decade of experience working on the technology for brands, to manage the VR experience. His team produced 13 games last year, and was brought in for another 10 this season.

One problem with VR is that it’s basically impossible to take notes, but his argument went something like this.

With the newest consumer-grade headsets, he said, evangelists no longer need to give caveats when handing a headset to a VR newbie. They’re often cheaper than their predecessors, too. At the same time, streaming tech has matured to make high-quality presentations increasingly feasible. A brief stutter or loading bar on a TV is one thing; in VR, physical revulsion comes into play. Smithingham said his team was able to deliver 4k, 60 frames-per-second video at a higher bitrate than before in 2020, just as cloud technology proved capable of handling complex broadcasts. MediaMonks found it didn’t need to send an expensive truck to broadcast 4k signals, something that’s still a rarity for major sports networks.

Only two staffers were on-site managing the production I watched. The rest were spread across continents, from play-by-play caller Adam Amin in Chicago to behind-the-scenes folks in Florida and the UK.

MediaMonks also eschewed the 3D-inspired camera technology NextVR employed. Instead, the Knicks game was shot with three shoebox sized Sony cameras with fish-eye lenses—one behind each basket and another at midcourt. The director cut from camera to camera to keep the action in front of me as I bounced from courtside seat to behind the backboard and back.

As we watched the Knicks cruise to another win, Smithingham said the goal was to mix the niceties of broadcasts (like graphics and replays) with the joys of interaction. Amin and analyst Richard Jefferson often visit with fans between quarters. Smithingham mentioned how 5G could benefit the workflow, but for the most part, there was little talk of waiting for some future breakthrough. MediaMonks is building VR for today.

“The eventual ‘killer app’ for VR sports won’t just take current viewing paradigms… and stuff them into a headset”

—Kyle Bunch, the managing director of R/GA’s Global Sports Venture Studio

Part of the small footprint is due to the NBA’s COVID-19 protocols. But Smithingham said that he’d like to stick with a similar plan in future years. There’s no need to spend more.

A smaller budget means a lower threshold for success. MediaMonks isn’t trying to sell sponsorships like NextVR did. Instead, their weekly games are now simply a perk of owning an Oculus headset, and an opportunity for the NBA to engage VR fans. Viewership often reaches the high triple-digits (much like NextVR did), which Smithingham said was “a great number for VR.”

So, about the experience. It’s engrossing. Two hours flew by as I talked to MediaMonks team members, with the game in front of us. But it doesn’t replicate the feeling of being there. Instead, it feels more like renting a movie theater with friends. Partly, that’s due to the current camera setup. The fisheye lenses create a more flat-feeling display than NextVR’s stereoscopic capture promised. When Knicks coach Tom Thibodeau wandered towards the sideline cam, he seemed to tower over everything else because of the camera’s distorting effect. MediaMonks also borrows its court audio feed from the TV production, meaning the soundstage doesn’t travel with you.

“The eventual ‘killer app’ for VR sports won’t just take current viewing paradigms like sitting courtside next to friends… and stuff them into a headset,” argues Kyle Bunch, the managing director of R/GA’s Global Sports Venture Studio. “They’ll be tailor-made to take advantage of new possibilities made possible by the medium.” And most likely, those new experiences will be created by people who grew up with VR like what Oculus Venues currently offers. The experimentation is critical for future success.

For now, the offering continues to highlight what VR lacks. The Quest’s screen is not quite good enough to make out players’ eyes at a distance, and there are no close-ups packing emotional punches. Oculus’ social features have come a long way, but it’s still an isolating experience, being left to wonder whether that knock you heard was at your apartment door or was the pizza guy showing up to someone else’s house several states away.

After the game ended, my fellow avatars began to disappear. There was no communal filing out, no jesting or debating down the escalator, no mass of kinetic energy piling up for cabs or filing into nearby bars.

I took off my headset and blinked. Then I instinctively reached for my phone, anxious to see what I’d missed while I was gone.

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