When it comes to the virtual reality industry today, the way people are looking at VR is very natural, but also very wrong. While we all incessantly talk and freak out about experiences like flying over the grand canyon in VR, it’s actually user-generated content in VR and new original voices that are set to emerge and lead the coming revolution.


ben smith winnick and coGuest Article by Ben Smith

Ben is an active investor in VR and digital media, and is 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.


Sure, right now, we want to make VR look like what we know already. As natural as that is, it seems like every time we build a new content platform we all get it wrong. As an early Google and YouTube employee, I have vivid memories of Google Executive David Eun in 2006, explaining to our YouTube team that media incumbents never seem to get it right.

When television arrived in middle of the 20th century, the radio guys thought they would win in the new technology. That sure didn’t happen. And then when cable came out, the TV networks thought they would win and control the new cable frontier. That didn’t happen. And then the internet came out, the media conglomerates thought they would win that. Whoops, whoops, and whoops again. It’s natural to believe the old platform will dictate the rules of the new platform. But it just never happens.

Why will VR be any different?

When new platforms emerge, even internally they are slow to recognize and seize upon their own unique talent and identities. It’s natural to emulate the old platforms until you realize you are different, and then take huge leaps when you embrace what makes you a unique platform and offering.

oculus-palmer-luckey-rift-pre-order-sales-figures
See Also: Oculus Founder – “pre-orders are going much better than I ever could have possibly expected”

At YouTube, we didn’t even want to embrace user-generated content stars for over half a decade. We turned a blatant blind eye toward the young personalities that have come to define the YouTube platform. Sure, YouTube encouraged young talent to express political opinions, or to be a voice of social change, but somehow this talent was not ‘good enough’ to be actual entertainment.

You can’t really blame Google too much. Google sells ads better than almost everybody, and in order to appease and appeal to advertisers, Google felt they somehow had to have the ‘premium’ entertainment that advertisers were used to buying. The ad buyers wanted something very different than what the actual viewers enjoyed. YouTube didn’t listen to viewers in creating a business model, and subsequently struggled for years. Unconsciously, we tried to make YouTube into a massive cable TV system. It seems like it’s only recently that YouTube is embracing new business models and starting to lead as we all make the move to a subscription based web.

Now virtual reality is already at the same crossroads. Somehow we’re overestimating how cool a flyover of the Grand Canyon will be to viewers, and dramatically underestimating how compelling new talent will be in VR.

It’s important to remember that all content platforms are actually about people. Personality drives content platforms. From Snapchat (Casey and others) to ESPN (Bill Simmons) to even Huffington Post (Arianna) to YouTube, it’s always about the people that define the platform. If anything, VR will open up millions of new ways to communicate and interact that we have never experienced before.

nikon keymission 360
See Also: Nikon’s 4K 360 Camera is Rugged and Ready, But Maybe Not for VR

The main argument against user-generated content in VR is that the barrier to creation is much higher than in video. There is a mistaken belief that users can’t create in VR today.

Some of the interesting startups addressing this challenge include Voxelus, Linden Lab, and several more stealthy teams. Some companies like Kaleidoscope have even embraced models that aggregate programmers as essentially the talent for the platform. While in the short term this is interesting, I suspect we’ll move from programmers as talent to front of the camera talent much faster than we all believe, even if in the short term this means animated characters. Likewise, social spaces are interesting, but face the dreaded ‘Second Life’ problem. There is nothing to actually do in these spaces until the talent emerges to entertain and interact with us.

Don’t get me wrong, dedicated VR content companies like Jaunt are certainly interesting, but the real action are platforms that enable creation and expression. There is nothing wrong with a Jaunt becoming a much needed HBO or Netflix of VR. But that’s not where the huge leap is for VR. While everybody is trying to create content companies, and some companies aim to create the mythical metaverse (the parallel being modern day portals like Yahoo), I’m more interested in who is creating the WordPress and Squarespace of VR. I’ll be watching to see which VR startups and platforms lower the barrier for user-generated VR content. A key indicator for the health of the VR industry will be how quickly the tools to create UGC arrive for users of virtual reality.

Over the next year, I’m asking questions like, “What is the equivalent of commenting in VR”? Thats fascinating. On a very fundamental level, I see current day websites as 2D representations, and VR as 3D representations. I’m excited to find out how to create comments in a 3D space. The future of VR commenting is participating, remixing, and creating. Showing people your world.

Marc Andreessen is on record as saying when he started Netscape, he didn’t anticipate the web becoming participatory. Back in the nineties, he missed the entire notion of the social web. That’s why Netscape ended up calling it a ‘browser’. So how, in 2016, will we have a new platform and medium where the user does not actively participate and create? Impossible. We’re not in 1998 anymore.

  • Jon

    Great article.. really interesting points of view. Love all the conversations I’ve had and will continue to have in our studio about the future of VR for many years to come. I think we currently fall into the category of ‘video guys who think they’ll be a success as VR content creators’… we’ll see I guess.

  • Andrew

    Good perspectives, though I wonder how assuming that user-generated content will dominate VR is not making the exact mistake the author warns against: applying the model of previous media (internet, specifically YouTube) to the new medium (VR).

    • user

      The question is what the content will look like but not who the creators will be. 100 professional programmers cant do what 100.000 users will do if they have easy and fun to use tools. And the best tools that ive seen so far are in the voxelfarm engine when it comes to world building. An early iteration is used in soe’s / daybreak games’s early access title called landmark. The users pushed the abilities to the limit.

      • Andrew

        Yeah, I agree with that and think that will probably turn out to be the case, but as the author said, it’s risky to think that what has been true for past mediums will continue to be true for new ones.

  • http://worldwidechaosinc.com Walter Sharrow

    Isn’t saying VR is going to replace TV like saying video games are going to replace TV? It’s an interactive experience by it’s nature, it’s not something you chill out to on the couch. It’s a video-game-type of medium. It’s not passive entertainment, like TV.

    In fact, this whole article might be jumping the gun, as until we see if the average consumer will shell out for those $500+ headsets, right now this entire revolution is premature. I had high hopes when Oculus was aiming for $300 or less, but seeing these new costs, I think the VR Revolution is in trouble.

    At it’s current trajectory, this is going to pop and fizzle in the larger audiences, people will declare the whole thing “Hype” by the end of next year, and it will stay “Enthusiast Only” until less expensive headsets and hand tracking come out on the market, years later. It’s not like the smartphone push, where cellular carriers subsidized high hardware costs to keep people on their networks. Nobody’s helping foot the bill here, those hardware costs are going to kill interest, regardless of how cool it might be.

    • kalqlate

      I think Facebook had planned to subsidize the Rift. However, then came Vive, and then came all of the other players, and then will come even more players in the VR headset space over the next year. Facebook correctly calculated that if they were to subsidize the Rift, they would quickly be overrun by the deluge of equally-priced, yet slightly lower-quality, and marginally more profitable headsets. Zuckerberg would be looking at a scenario where he’d never recoup his $2 billion and not have the Rift self-fund its next iteration. Even at $599, it’s going to be tough going for Rift CV1. But by pricing it this way, they have conceded that 2016 will be the VR “Enthusiast Only” year, with hopes that they can figure out some exclusive Rift CV2 content driver for the Facebook social network that will send sales soaring.

      • entropy
        • kalqlate

          This was one day BEFORE the actual price was revealed.

          http://www.bbc.com/news/technology-35241175

          In the twitter comment in your comment above, he indicates there will be no discounts for DK1 or DK2.

          On the next day, the actual price was announced, and it was announced for the first time that KickStarter backers of the DK1 would be getting a Rift CV1 for free.

          http://www.roadtovr.com/free-limited-edition-rift-coming-to-oculus-kickstarter-supporters/

          I’m sure his twitter comment meant “We are already subsidizing the Rift DK1 and Rift DK2″, and they’re then prices of $350 reflect that compared to the $599 of the CV1. Nearly the same hardware. What has changed? Oculus/Facebook decided to END subsidizing the cost of the device.

          • entropy

            So, the “we are already subsidizing the Rift [I think this means CV], discounts for people who bought *a development kit that was also subsidized*[DK1 and DK2]…”
            Means nothing to you? Alright, how does your selective hearing work with this?

            From Palmer Luckey’s recent AmA:
            “For gamers that already have high end GPUs, the equation is obviously different. In a September interview, during the Oculus Connect developer conference, I made the infamous “roughly in that $350 ballpark, but it will cost more than that” quote. As an explanation, not an excuse: during that time, many outlets were repeating the “Rift is $1500!” line, and I was frustrated by how many people thought that was the price of the headset itself. My answer was ill-prepared, and mentally, I was contrasting $349 with $1500, not our internal estimate that hovered close to $599 – that is why I said it was in roughly the same ballpark. Later on, I tried to get across that the Rift would cost more than many expected, in the past two weeks particularly. There are a lot of reasons we did not do a better job of prepping people who already have high end GPUs, legal, financial, competitive, and otherwise, but to be perfectly honest, our biggest failing was assuming we had been clear enough about setting expectations. Another problem is that people looked at the much less advanced technology in DK2 for $350 and assumed the consumer Rift would cost a similar amount, an assumption that myself (and Oculus) did not do a good job of fixing. I apologize.

            To be perfectly clear, we don’t make money on the Rift. The Xbox controller costs us almost nothing to bundle, and people can easily resell it for profit. A lot of people wish we would sell a bundle without “useless extras” like high-end audio, a carrying case, the bundled games, etc, but those just don’t significantly impact the cost. The core technology in the Rift is the main driver – two built-for-VR OLED displays with very high refresh rate and pixel density, a very precise tracking system, mechanical adjustment systems that must be lightweight, durable, and precise, and cutting-edge optics that are more complex to manufacture than many high end DSLR lenses. It is expensive, but for the $599 you spend, you get a lot more than spending $599 on pretty much any other consumer electronics devices – phones that cost $599 cost a fraction of that to make, same with mid-range TVs that cost $599. There are a lot of mainstream devices in that price-range, so as you have said, our failing was in communication, not just price.”

            Source: https://www.reddit.com/r/IAmA/comments/3zt7ul/i_am_palmer_luckey_founder_of_oculus_and_designer/cyovz8j

          • kalqlate

            :D My hearing is just fine, thank you. But how about your comprehension skills?

            Do you even know what subsidized means? :D In the case of a product, it means to sell BELOW cost of manufacturing to attract more consumers and for their financial benefit.

            There is nothing in the quote that you so kindly presented that indicates that the CV1 is susidized. At best, the following quote shows it’s MAYBE break-even:

            “To be perfectly clear, we don’t make money on the Rift.”

            You can expect that at least one tech review site will do a product tear-down and cost assessment. I can almost guarantee you that parts and manufacturing of the Rift en masse will not amount to more than $450-$500. Throw in marketing and salary support, and you MIGHT reach $599.

            Look for the tear-downs coming soon, and THEN we’ll see..

          • entropy

            He said that the Rift (which Palmer has historically used as a term specifically for the Consumer Version) is already subsidized the day before the price was announced. He later clarified that internal estimates were hovering around $600 at the time of his previous ‘ballpark’ quote, which was months ago. You tried to dismiss the first quote on the grounds that he had said that before the price announcement, but in his own words, their internal estimate had been very close to 600 for quite some time. He continued on to clarify that he had been trying to correct the public misconceptions about the price for the past two weeks. That post was made the day AFTER the price announcement, indicating that he was already fairly certain of the price in multiple ways.

            You have been dismissing useful data presented by the primary public face of this company in order to support your anti-facebook rhetoric and have backed down already from your asserted assumptions to a weaker ‘wait and see’ stance.

            Furthermore, the definition of subsidize is: to help someone or something pay for the costs of (something). -Merriam-Webster’s Online dictionary.

            That doesn’t mean losing money on it. It means they’re helping with the cost. Selling at cost would qualify, since most tech makers do sell for profit.

          • kalqlate

            hahaha… “…anti-facebook rhetoric…”. Mis-comprehend much?

            Oh, boy… “and have backed down already from your asserted assumptions to a weaker ‘wait and see’ stance.” No, my “wait and see” stance is presented as a way to go beyond rhetoric in either direction to evidence-based assessment.

          • Lamanuwa

            I’m looking forward to that teardown as well. I’m pretty sure the Bill Of Materials is going to fall short. I also think the fabric design is causing them to have a slower production rate. Which accounts for scarcity and some of the cost.

            But they cannot expect us to fund FaceBook’s venture into gaming (Oculus Store). That has to come from the games they sell.

          • entropy

            I was saying that your definition was too narrow, not that it didn’t fit the larger definition. Breaking even on a multibillion dollar investment qualifies as subsidizing when you compare it to standard hardware industry practices. But you only heard the part where I contradicted your definition.

            Nice job dodging the Palmer quotes altogether by focusing on ridicule, BTW.

          • kalqlate

            Nope. Didn’t dodge the quotes at all. Of course, I suppose I should believe everything corporate execs say, right? I’m not saying Palmer is lying, but… he has to come up with some way to make the relatively dramatic difference in anticipated price palatable.

            Breaking even on a multibillion dollar investment qualifies as subsidizing…

            Sorry. No.

            A much exaggerated example, but I hope you get the picture:

            If I pay $10 trillion for a company that makes widgets that cost $1 to make, I do not get to sell them for $1 billion each in the hopes of selling 10,000 of them to break even, while telling potential customers that they should be happy because I am subsidizing their cost.

            Again, sorry. That’s not how subsidizing works. In the case of a product, it’s about determining the cost of producing the product, adding in how much profit you would like to make (if any), then discounting from there. The discount is the subsidy.

            Commenter Lamanuwa raises some interesting points.

            Hey, you could be right and I could be wrong. …

            Friend, let’s wait for the tear-down.

          • entropy

            So to be clear,

            the company’s most recognizable representative (a former journalism major) says both that they are not making a profit off of sales and states multiple times in public that the price of the consumer Rift is subsidized and you let your accusation of Facebook (one of the wealthiest corporations in history) making a quick cash grab off the profits (which goes against their stated intentions regarding VR) stand?

            You, sir, are hearing what you want to hear.

            We have no logical reason to make the leap from ‘the price is higher than expected’ to ‘it was Facebook trying to make a profit’, especially when all reports indicate that Oculus has virtually complete autonomy at this point.

          • kalqlate

            Hahaha… To be clear, you have comprehension issues.

            Nowhere in my comments did I accuse Facebook of “a quick cash grab”. If I had, I’d be as insane as the person making that assessment of what I wrote.

            You should really read my opening post once again.

            You have revealed that you have no clue about how even the richest companies seek to balance the books on any investment.

            According to your theory, Facebook is clearly capable of giving millions of units away for free. Interestingly though, they chose not to. They’re so brimming with cash that they could’ve indeed priced the CV1 at $350 and not even blinked. Interestingly though, they chose not to.

            Do you know why? Wait…pfff… of course you don’t.

            IT’S BECAUSE THEY ARE A BUSINESS, and businesses don’t like suffering losses on any investment.

            To help you out a bit further…

            Business 101: Golden Rule: Seek ROI as quickly as possible to begin proving to all internal and investorsinvestor stakeholders investment is sound.

            The Facebook CFO’s job is to assure as best as possible that Facebook keep investors happy by keeping Facebook profitable and showing growth and growth potential. A smart CFO will be aggressive and not listen to the chimes of “let’s price it below cost to make it really attractive and stall the competition.” At this phase of VR when new headsets are announced every month, there is no stalling the competition.

            Business psychology 101: If you’re selling the best in class, you’d better price it that way, especially amid growing competition that you couldn’t beat on price anyway; otherwise, you’re shooting yourself in the foot.

            Back to ROI: $2 billion is a big red number to have on the books, even for Facebook.

            My contention is that when the CFO ran the numbers, he found that $599 was a financially and psychologically sound number given the projection of possible units sold, including the midway discount through final release of CV2.

            Now, stop being so damned emotional about this, entropy. You’ve revealed that you no nothing about how a business is run. If you’d like to continue this debate and embarrass yourself further, sure go ahead, but I think you’d be wiser to do as I suggest and wait for the product tear-downs. It’s your choice.

          • entropy

            So because they’re a business, you know exactly what happened internally? Better than Palmer Luckey?

            Well, I’m sorry. Clearly the logical choice was to assume that the ramblings of some guy from an internet comments section had more business savvy and insider information about Oculus than the notoriously frank and occasionally foot-in-mouth honest millionaire founder of said company.

            You can condescend to me and attack my expertise all you like if you think it saves you face, but I’m not the first one who said it was subsidized, Palmer Luckey was.

            Since you can no longer dispute the meaning of his words with pedantry, you’ve turned on me personally. You operated on less information and more guesswork and were shown to have been making assumptions. Now, rather than admitting that you misunderstood Palmer’s quote, you dig at me personally rather than accept a relatively minor correction.

            Why? To save face on the internet? Do you believe a debate to be won when you’re forced to attempt to embarrass your opponent into submission? I would call that a failure, but then I believe the point of debate is to reach the truth, not to elevate one’s status.

          • kalqlate

            …but then I believe the point of debate is to reach the truth, not to elevate one’s status.

            So we wait for the tear-downs. Great!

          • Lamanuwa

            I agree completely about your price argument. It is refreshing to see someone see through this entire fiasco.

            I’d say yes to Oculus not making any profit on the hardware, but subsidising is a different issue. Had they done so, it would have been all over the news.

            Last time that happened as far as I can recall was the PS1. They too were entering a new market as an outsider company trying to gain a foothold. Looking back, I think they chose wisely.

    • benz145

      I don’t believe the implication is that VR will replace TV, only that VR content is not going to be TV-like, even though that’s where many people’s heads are right now.

    • MasterElwood

      HMD costs are no problem. In 2 years when the CV2 arrives, Ebay will be full of used CV1. Also: in 2 years virtually every new PC will have VR-ready specs.

      Also right NOW: over 60 million people have a $99 VR-solution: the Gear VR.

      There is no stopping the VR revolution.

    • Matthew Lynch

      I find many VR experiences to be more passive and deeply relaxing than even TV actually. The Netflix VR app on Samsung Gear VR alone can let you chill passively and just watch TV on a 100″ screen in a virtual log cabin mansion.

    • Lamanuwa

      While I agree with your price argument, I just wanted to point out the progression of media technology and how one encapsulates another.

      I think of it this way instead. Internet can broadcast TV within it and much more. The TV can broadcast Radio and much more.

      In this same way, VR can be used as the delivery platform for all other forms of media in human history. It can do TV, Games, Video, Internet, Radio, News papers etc. within it.

      This is why they say VR encapsulates all other media. But this is the far future, not this Xmas. There still needs to be a huge amount of people using it often for that to happen. With these prices we can safely assume it won’t be soon.

      • yag

        Actually, it’s said that AR will be the ultimate platform because it can contain VR and all other platforms present and future.

  • P. Pzwski

    VR sill had one big drawback – demand of HMD. We cannot ‘make’ VR without
    installing something on peoples heads. This is completely disqualifies today’s VR as new medium for masses. Even Star Trek creators know that VR has to be ‘natural’ like hologram.

    Today’s VR (and AR) is something new, but in this form cannot become more than entertainment console for games and videos.

    Until we find a way to create something like ‘holodeck’ (create VR in entire room for everyone inside – VR PROJECTOR?) VR will stay in niche.

    • user

      When it looks like glasses most people could use it.

  • Andros Yon

    it’s just that viewing 3d spaces alone is not enough. Haptic suites are coming out, virtuality needs you to believe it, like in hypnosis. And we have to touch to believe.

  • pm

    Very refreshing article, thanks!
    Beyond hardware and entertainment stands user generated content and sharing.
    I guess MozVR and Chrome teams are expecting to build some standard practices and win the race, but I tend to believe the real disruptive thinking will come from elsewhere :)

  • Rocquito

    I like how optimistic Ben is, but I am worried that with all this “VR as entertainment-social-new-Facebook-revolution” they all lost track of a couple of aspects along the way:

    The main one is that, in order to have an Oculus Rift, you first need to own an expensive gaming PC. That means that the users you are targetting in the first year are GAMERS. Sure some guys in FB may be thinking that it’s easy to convince the non-gamer average Joe to spend $1500 in a PC + Oculus. I personally doubt it. However, for gamers it’s a bit ‘easier’ because several of them will have a gaming PC or a PS4, so spending $400-600 is expensive but still more convenient.

    And THAT is the mistake they commit when comparing with Facebook, Google, YouTube or other media: the early adopters will be GAMERS and will want GAMES. And even PlayStation with all its limitations seems to have a better plan for PlayStation VR, and they at least invest on bringing big franchises like GT, DriveClub, Rigs, Tekken or AC to VR. Oculus not only is filling its line up with lots of indie games that would usually sell for $2 on Steam, they are not even making it easy to “port” normal games to VR.

    The reason being “ported games don’t look good on VR”. Well, f**** work on tools or the hardware. You sure as hell won’t convince big companies to make exclusive, dedicated titles to a platform selling 10 times less than PCs and consoles. And sure as hell you won’t convince lots of gamers to spend $600 to play VR indie titles when they also need a PC that can run every AAA on the market.

    • Marin Placeholder

      A few points to consider,
      1- Many consumers spend $1000+ on MacBooks which most use to surf the net, browse social, and reply to emails! To imagine spending $1600 on a machine that they’ll use to do far more than that is reasonable in comparison. Think of the price of the first Apple and DOS PC’s and how that didn’t stop the prohibitively expensive personal computer revolution.
      2- You’re focusing on the price of entry as if it’s fixed and permanent. The first of any genre of electronics was almost always prohibitively expensive and yet early adopters bought and allowed the hardware to streamline and scale to where product price was within reach of “the average Joe”.
      3- Yes, Oculus and Vive will have tons of indie games but by all accounts there are many major projects in the works and due by release date or soon after. All you need is one monster, as Xbox had with Halo, to hook fans and form a following.
      4- Ben’s whole point is that you don’t just port old content as you’re suggesting. You don’t broadcast people in a radio studio broadcasting a show on the first TVs to get people hooked on TV. It had to be original content created explicitly for that medium.

      I don’t think Ben’s vision forsees a future months after the Rift release or even in this Version 1 group of headsets coming out. I agree that the vast majority of buyers this initial go-round will be hard core gamers and I think all of the major players are aware of that and will do their best to deliver.

      • Lamanuwa

        I think Ben’s talking about a more far flung future, while Rosquito (lol) is talking about the immediate future, which you have to survive in order to reach the rest.

      • brandon9271

        Isn’t it also possible that a”second life” style social VR experience wouldn’t necessarily require a hardcore gaming rig? I’ve seen several VR apps with very minimal graphics and surely a mid level PC could run such apps at 90hz.. Hell, it’s not like GearVR or the PS4 are high end PCs so a sub $1000 PC should be able to offer similar experiences.

  • Robert Molley

    I honestly can’t wait for VR products to be easily available. I finally went to my 1st CES 2 weeks ago and theres a bunch of cool VR headsets heading our way this year.

    One of the big ones I tested was the 3Glasses D2. They’re supposed to be shipping to North America this year for $399. SO much cheaper than the other ones I tried. Still has a great latency, FOV and refresh rate. I spoke with them for a few minutes when I was there … apparently they have a standalone headset coming out later this year too. (Saweet!). Anyways – they were my biggest surprise from CES. Definitely one to keep on your radars.

    I also checked out some of the bigger named-VR sets at the show (Oculus, Samsung Gear, HTC Vive). There were a few glitches (as expected with young tech), but there’s some really good stuff coming out to look out for. Great English content too – gaming and videos.

    I also heard about Deepoon – a Chinese knock off of Oculus. Apparently they’re trying to use Oculus’ content on their VR headsets and sell for less. Cool idea, but there’s got to be some issues with intellectual property/compatibility. No objection Oculus? It’s an interesting convo about innovation vs. straight up copying successful competitors.

    Anyways – can’t wait to see how the industry changes this year as products/content actually enter the market. Think it will become mainstream? #hereshoping