Here we go again. A decade ago, it was online video that changed everything. Now virtual reality is set to change the world once more. As we approach the Q1 2016 Oculus Rift release date, you can literally see and feel the excitement build on a weekly basis.


ben smith winnick and coGuest Article by Ben Smith

Ben is a Venture Partner at Winnick and Company based in Los Angeles. Ben was an early Google and YouTube exec, and has founded and led multiple venture backed video startups. His monthly profiles on “why people are great at what they do” are found here


As an early Google and YouTube businessperson, I had the great fortune to help build the online video ecosystem from the very beginning. Most people don’t believe me when I tell them that in 2006, a small Google team including George Strompolos, Adam Relis, and I used to call up video owners and ask them to mail their videos to Google in the U.S. mail. That’s right—we were mailed videos, and we uploaded them ourselves.

Right now, Virtual Reality feels very much like mailing videos did back in 2006. VR is messy. Watching and delivering content takes effort. We have unsightly tangled wires. A premium experience looks like it will require a $1500 or more investment between the headset and a computer to power it. If someone wants to create and distribute VR content, it requires advanced skill. There are no real business models or best practices.

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Yet this is the pivotal moment. This is where platforms, careers, and groundbreaking companies are made. The future is equal opportunity right—wait for it—now!

It’s fascinating to see some of the same online video investment patterns emerge in VR ecosystem investment a decade later. Early venture capital in both industries have been deployed in extremely similar ways. Take a look at how investment has flowed into virtual reality courtesy of CB Insights:

deals and dollars into VR AR companies

If you look through the same CB Insights reports for the online video space back in 2006, you’ll see exactly the same chart. A climbing wave of excitement. The amounts invested quarter over quarter are becoming real and substantial. Make no mistake, it’s time for VR to have its big moment.

How the dollars are being deployed in both ecosystems is very similar as well. Naturally, huge amounts of capital have been invested in search of finding virtual reality’s YouTube. When we look at the competitive landscape back in 2006, there were no less than thirteen companies all vying to be the go-to distribution platform for video. Like how most ecosystems pan out, we saw a very binary outcome occur with YouTube. Platforms either became YouTube, or they became the companies we don’t remember, like Metacafe.

It’s not just platforms though. Online video saw a rash of investments in new content companies that promised to create the best-in-class content specifically for online video. Back then it was companies like maniaTV, and NextNewNetworks. Now it’s companies like Jaunt, who have raised huge amounts of capital.

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See Also: Disney Leads $65 Million Investment in Jaunt’s VR Camera & Content Business

Flash forward a few years, and YouTube had become the giant we all know today. And then, in perhaps a sign of things to come for VR, the YouTube ecosystem experienced a cold winter. All of the capital invested from 2005-2008 had been deployed, and the ecosystem struggled to expand business models, find new funding, and generate actual revenue.

It was not until the industry embraced the unique characteristics of the medium that we began to see it expand and start to sustain itself. Online video finally stopped trying to look like television. The ecosystem finally embraced and became proud of the UGC content creators (‘influencers’) that made the platform a smash success. Since that critical coming of age moment, we have seen online video companies like Maker Studios and Fullscreen sell for hundreds of millions of dollars. We have successful public market companies like Tubemogul. Online video is growing up.

A decade has now passed since online video started. I’m now an investor in Los Angeles, investing in virtual reality in the same way online video investors did a decade ago. It’s helpful for me to know we can look to the last wave of video excitement to help interpret the virtual reality patterns and signals we’re seeing today. I’m thrilled to be announcing a series of virtual reality investments in the coming months. You can be sure that we’ll be looking at a decade of online video history in helping us make key business decisions today.

  • kalqlate

    You can be sure that we’ll be looking at a decade of online video history in helping us make key business decisions today.

    Sure, video is passive, and there will be lots of solo, non-interactive VR experiences. But VR has the potential to be a completely different animal than passive video. I predict that the really big winners in the VR space will be those that bring new interactive experiences; particularly, those that venture into telepresence. The companies most aligned for that now are those that incorporate some form of social chat. And among those, the ones already handling video, which most do, have much of the infrastructure for VR telepresence in place. Currently, most chat apps constrain you to chatting with people you know, and discoverability is limited. The more fun, random interfaces are those of Meerkat and Periscope, with Periscope’s world-zoom interface being the most fun. As soon as cheap 360 cameras are supported on video chat services such as these, phones will incorporate miniaturized yet high-quality 360 video cameras. It’s then, I think, VR, particularly mobile VR, will really take off.

    • iKrontologist

      This web site is kind of a shoot themselves in their own two left feet site. I’m beginning to doubt if any of the writers are actually in to 3D HMD experiences in the first place. They seem like back door funded Applewellian Proles and Shills out to knock it down, until Apple finally gets something going 5 yrs from now. Like they did copying Note Phablets and Tablets with Stylus no less!!!!

  • kalqlate

    Yaaaaaaaaaaaaaaaaaay! We’ve got Disqus on RoadtoVR!!!!!!!!

    • RoadToVR

      I’m glad someone finally noticed. :)

    • brandon9271

      I’m very happy about this as well. They old comment system was horrendous. The confirmation email EVERY time you comment was especially annoying

  • vniven

    Hmmm…
    – I didn’t need a headset to watch my first Youtube video.
    – the producer of that video didn’t need a special camera to make it.

    How do you see the VR industry overcoming these 2 very significant scaling hurdles?

    • RoadToVR

      You needed a video capable digital camera or webcam and a good enough internet connection to upload and watch it. Neither of which were particularly prevalent at the dawn of Youtube, the equipment and connectivity grew on demand and in response.

      Whilst the two aren’t directly comparable it’s true, for virtual reality, the hardware will follow as the user experience it offers is strong enough to make people want it. Low cost 180 and 360 cameras are already on their way.

      In any case, VR != just video, full, interactive and immersive virtual reality sells itself – people will spend the money to experience this stuff. That’s the theory at least.

      • John Horn

        Exactly RoadToVR, this is a market where the demand will be grown from scratch. Comparing it to youtube is a bit myopic.

        This is what a “Revolution” usually does in the human sphere, both technological and political:
        +It gives people something they didn’t know they wanted in the first place.

      • Komen Just

        “interactive and immersive virtual reality sells itself ” – yes, that’s true. But we don’t have this yet – and we will not have for years. 2016 (maybe) VR headsets will have very low resolution, poor 100 f.o.v., and there’s no real VR content (only simple games).

        I was excited about ‘modern’ VR – until I try gear-vr – thats toy for children, nothing more. That’s not VR – just screen on your face. That’s not enough to make revolution.

        • brandon9271

          VR has to start some where and all the things you mentioned will come with time. Just look how much has happened already. The Rift was just a cell phone screen and magnifying glasses duct taped to ski goggles a few years ago! Things have come a long way in a very short time. VR is going to succeed because it offer a compelling experience even within it’s limitations. 180 FOV, 4k+ resolution and full body tracking aren’t necessary for that.

  • Patrick Wise

    “The VR Industry Is Spinning up Just like Online Video 10 Years Ago”

    Also like motion controller gaming and 3d-television. I guess that means there’s a 1/3 chance it will be a big success, 1/3 chance it will be a passing fad, and a 1/3 chance it will never take off. ;-)

    • brandon9271

      It’s definitely not going to be a passing fad. I just wish i knew where to best put some money on this “bet” because i know VR is going to be big and I’d like to invest.