Profiting from Virtual Reality and Immersive Technologies
Published Wednesday, October 08, 2014 by Ryan Allway
Investors can often benefit from identifying emerging cultural trends and staking positions in companies on the leading edges of those trends. The Consumer Electronics Association (CEA) recently released its annual 5 Technology Trends to Watch for 2015. The report highlights, among other things, the movement toward more immersive entertainment, predicting that “within the next three years technology advancements will come together that result in entertainment experiences so vivid and immersive, movies and games will completely engulf our senses.” The rapid development of new immersive technologies for watching television and playing video games may very well provide savvy investors above average returns, especially if they are able to spot and take early advantage of these trends. The CEA report helpfully identifies some companies pushing this envelope, some very well known and others a bit more under the radar.

If full sensory stimulation is the goal, then entertainment platforms need to deliver the sense of feel and motion (haptic or tactile information) to round out the typical audio and visual experience. The report discusses one company at the heart of this effort, The Guitammer Company (OTC: GTMM). The company’s CEO, Mark Luden, chairs a Society of Motion Picture and Television Engineers group tasked with developing the standard by which haptic data is broadcast, and the company holds the patent that covers the technology underlying these tactile broadcasts. As Mr. Luden states, “Literally everything and everyone – from your family pet to NFL players – will have some kind of sensor on the transmitting all types of information, including location, motion and force for further use… Imagine watching the next Olympics on the ‘Immersive Channel’… and being able to ski or snowboard with your favorite athlete. See what they see and feel what they feel.”

As evidenced by the recent multi-billion dollar broadcast rights deals negotiated by the NBA and the NFL, live sports is a huge draw and where Guitammer is focusing its efforts. Last year the company broadcast tactile data in partnership with the NHRA over ESPN2, proving the technology and gathering positive fan reactions along the way. The Silicon Valley Business Journal reports that Comcast SportsNet Bay Area is partnering with Guitammer and the San Jose Sharks to broadcast games with “tactile data” - enabling fans at home to actually ‘feel’ the impact of a hit into the boards. Combining this technology with the power of live sports, the widespread popularity (and increasing monetization) of fantasy sports, and emerging virtual reality technologies, one can see that Mr. Luden’s vision of playing as your favorite athlete might not be all that far away and could be a profitable endeavor once it arrives.

Speaking of emerging virtual reality technologies that might get us closer to this vision, there are several large players in the virtual reality headset space. These devices aim to fool your brain into thinking you are actually experiencing the reality rather than simply observing it. Samsung Electronics (OTC: SSNLF) will be soon releasing its Gear VR, a headset accessory to its highly successful line of mobile phones. Sony Corporation’s (NYSE: SNE) Project Morpheus is focused in the gaming world, combining with the PlayStation 4 and utilizing 3D audio to give gamers the experience of being in the game rather than simply playing it. It is a similar headset to the Oculus Rift. Purchased by Facebook, Inc. (NASDAQ: FB) for $2 billion in March of this year, Oculus is a great demonstration of both the value and quick development of virtual reality. Palmer Luckey was an 18-year-old gamer when he developed the first prototype in late 2010. In 2012, he ran a Kickstarter campaign to help fund the company, exceeding expectations and raising $2.4 million. Less than two years later Oculus was purchased for $2 billion.

Virtual reality is also spilling over into the mass-produced media market. Computer-generated imagery (CGI) has revolutionized the film industry and made games more realistic than ever, but live actors have always been needed to convincingly portray the human element. Activision Blizzard, Inc. (NASDAQ: ATVI), developer and publisher of interactive games and content including the immensely popular Call of Duty games, is attempting to change that. Activision is collaborating with the USC Institute for Creative Technologies on Digital Ira, a realistic digital actor. One viewing of the prototype in a demonstration video will let you know that this ‘reality’ is not that far away, and the implications are extensive. If Digital Ira or his descendants can realistically replace human actors, games will become movies will become ‘real’ life. It might not be the best news for the acting profession, but in the world of immersive entertainment it would be a huge step forward.

Though the original focus of many of these technologies is in gaming, applications for virtual reality extend far beyond that world. According to Facebook CEO Mark Zuckerberg, “After games, we're going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face -- just by putting on goggles in your home.” These ideas echo Mr. Luden’s vision of playing as your favorite player and show where virtual reality might be headed. There are some technical hurdles to be overcome along the way as with any new technology, but the vision for an immersive and virtual entertainment environment is quickly becoming a reality.
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