How will the mass adoption of virtual reality disrupt media and advertising?

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Alvin Wang Graylin, HTC China Regional President of Vive, explains how the mass adoption of virtual reality will disrupt media and advertising. (And why that adoption is probably going to start in China.)

Graylin describes virtual reality (VR) advertisements as a way of being able to buy advertising in somebody’s dream. “It’s so real. It’s going to make all other media obsolete at some point,” he says.

What is virtual reality?

Virtual reality is the ‘ultimate’ media because it captures nearly every single sense that a person has, not only as an audience but as a participant. It will allow a person to do things like interact with characters in a movie or speak to people or touch things at a level of interaction with media that was never possible before, says Graylin.

He says one of the biggest misunderstandings around the technology is the separation between augmented reality (AR), mixed reality (MR), and virtual reality (VR) as three different things.

“It’s all one thing, and it’s essentially the ability to change your perception on what you are seeing, hearing and feeling, and how much of the real and virtual worlds comes into that,” he says.

In three to five years time, a single device will incorporate all of these types of realities, much like a television can simultaneously play black and white movies, color movies or 3D video. “It’s all being seen on the same medium but it’s different pieces of content,” says Graylin.

Should we be scared of this new technology? Graylin says we should be excited by the new opportunities VR presents. Imagine being able to eliminate the need for business travel? But still be able to have life-like contact with something that is 10,000 miles away?

“There is so much that is going to be possible – to take a lesson from the best professors at a university you have no way to attend or to be able to split the atom and be the size of an atom and see the interaction between the protons and the neutrons and the electrons, or to go back in time and see how dinosaurs lived.”

The pace of learning and maturity of children in the future will be boundless. Kids of today are focused on reading and text-based learning, but tomorrow’s students will learn based on multisensory experience learning.

“We are going to have a lot of children who are 10 years old and have already finished college, because they will be able to learn in ways we never could have before, absorb things we couldn’t have understood at their age,” he says.

“Once this becomes the proliferated media, no one will want to or need to go into any other existing form of media,” he adds. And as the future of media becomes more experiential, the written language will likely become less and less relevant. Ad copy will become less important.

How will this impact the advertising industry?

As a result, the advertising industry as we know it can expect to be completely disrupted. Advertising will still exist but in different forms. There will be more product-placement driven advertising compared to today’s interruption driven advertising.

Metrics in a VR future

Graylin expects this new order will move away from clicks and click through rates (CTR) because simply put, there will be nothing left to click. Instead measurements will move towards interactions and the purchase side – whether that’s a service, or a product or a membership, towards some kind of transaction.

For example, imagine watching the news in front of your virtual desk. Somewhere on that desk, there could be a product placement of a cup of something like a Starbucks coffee or a Coca-Cola.

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*MediaSpike is already developing product placement for advertisers in the VR space, such as this example for Pepsi. (MediaSpike)

“Whether or not I pick it up and interact with it shows how valuable or effective that advertising is. And when I do interact with it, how long do I play with it? And do I go into its virtual world that I can open, or do I just look at this object and then throw it away?” says Graylin.

Future metrics for VR will be around:

• The amount of interactions

• The length of interactions

• The follow on activity of purchase after that interaction

• The number of repeated interactions afterwards

• Sharing of the experience with others

Pay-for-action type ad models will become more important than pay-per-download or pay-per-click models.

How soon will this happen and where will it happen first?

For virtual reality to become ubiquitous, Graylin expects it will take five to eight years. But for it to become mainstream, it will happen within the next three to five years.

And it will likely start in Asia and most likely in China, where Chinese audiences are more open to trying out new things and have a propensity for adopting new technologies faster and a willingness to pay top dollar for the best products.

“Everything happens faster in Asia. With the amount of technology being built here, the amount of spending power available here, the amount of content being created here and the huge amount of public and private investments being put into the tech space here, Asia is a natural ground zero for VR,” says Graylin.

Silicon Valley was the epicenter of the Internet, and partly the mobile revolution. However, it’s in China’s Shenzhen where today 90% of the world’s phones are being made by companies like Foxconn, Huawei and Xiaomi, says Graylin.

Manufacturing isn’t restricted to phones but drones and VR hardware and a vast pool of accessories, services and locally created content.

HTC, Sony and Oculus are already manufacturing their VR systems in China, according to Graylin.

In terms of innovation, Graylin cites the features of Tencent’s WeChat, which has been flagged by western technology companies as they attempt to replicate it.

“Asia is taking a bigger role in the mobile industry and in the VR industry it will take an even bigger role,” he says.

What will the next device look like beyond mobile phones?

Within the next five years, Graylin says the device will no longer be a mobile phone that relies on buttons or touch. The next primary interface model will be activated by voice, our eyes, movement, gestures, and even brain waves.

It will take the form of something worn on the head like a pair of glasses to replace or augment the consumer’s vision or hearing. A second device in the user’s pocket will do the processing and network connections, and it likely won’t have a screen.

“It will take on the function of the phone, the TV and the computer and everything else. The outputs will replace what you feel in your hands, what you hear in your ears, what you see in your eyes, and the display will have the ability to change between an opaque or transparent or translucent surface to allow you to switch between an immersive or lightly augmented environment. Down the road, VR systems will likely be a combination of contact lenses, wireless earbuds, and haptic systems that seamlessly immerse you into virtual worlds at will.”

What does the future look like?

All of this is going to happen a lot faster than people think, says Graylin. As a result, there will be a lot of room for innovation around the VR space.

“Everything we see as a pipe for media technology will be recreated or reinvented again for VR, which means there is a huge greenfield for entrepreneurs and even for innovative larger companies or ad agencies who can take advantage of this new wave,” he says.

Even the role of developers and content creators will be different from what they are today.

“The skills you will need to create an effective VR ad will be ‘how do I build an experience relating to your product that people will want to interact with, come back to and share with each other?’ How do I tell a story in a 360-degree immersive and interactive environment versus telling a story in text, or a picture or in a passive 30-second video?  No one has the best answers yet, which can be a challenge for the marketing industry, but for those who figure it out, it’s going to be fun times ahead.”

*Alvin Wang Graylin is a keynote speaker at ClickZ Live Shanghai on September 20-21. To learn more, buy tickets or download the brochure for this event at the Andaz Xintiandi, click here. Or email Polly.Hochio@clickz.com for more information.

**Featured image courtesy Lifeliqe

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