Intelligent Systems Report € December € 1995 € Volume 12 € No. 12

How (And How Not) To Market VR


By David Greenfield/Managing Editor

Little doubt exists regarding the future usefulness of virtual reality (VR) in the industrial, military and entertainment fields. However, as a relatively new and continually advancing technology with few definitive strongholds in the marketplace, VR is still in its marketing infancy.

Earlier this year at the VRWorld '95 Conference in San Jose, Calif., a business forum was conducted to examine the marketing progress of VR via the success of three companies: Crystal River Engineering (Palo Alto, Calif.) - a company which began by working with the military and is now developing VR products for the commercial marketplace; Straylight Corp., (Warren, N.J.) - another company which started out working on products for military use and is now involved in the entertainment industry; and Virtual I/O (Seattle, Wash.) - one of the more highly visible companies in the VR gaming field.

Claiming that his past marketing attempts were good examples of how not to market VR products, Scott Foster, president and CEO of Crystal River Engineering, led off the forum stating that when he began developing products for the VR field, not only was there no name for what he wanted to do, but there was no market for it either. Foster's company was one of many VR development organizations in the late '80s receiving military and corporate funding to develop VR products. Many of these companies were guaranteed the commercial rights to their products following development, leaving them free to market their products as they pleased.

"We just wanted to do it, and then a business plan kind of evolved from that which, eight years later, turned out to be a terrible one," Foster said. "Our plan involved using Navy money, NASA money and, occasionally, corporate money to develop things that these entities wanted, retain the commercial rights, try to migrate it into products, sell them again, and then, perhaps, that technology would get packaged down to where you could license it and make even more money, and so on. This is crazy."

According to Foster, the correct way to go about VR marketing development is to "get some marketing professionals to find out how the money is flowing through the current and near-term commercial networks, and then get yourself in front of some of it. You have to figure out what missing piece is out there, then design it, build it, and execute your plan."

Despite Crystal River's success, Foster maintains that approaching VR development and its associated marketing as a mathematician, the way he did, is not the best way to go about it. "You have to employ marketing and business people who understand the dynamics of the commercial world and can help solve the problems that really exist, rather than the problems that you want to solve as a mathematician."

For the continued success of your product, Foster stressed that you have to get developers to need your technology before the hardware providers will put it in the subsystem. To make this happen is very difficult. Foster's remedy: Get an 800-pound gorilla to do it for you. He used the example of Microsoft's Windows 95 support of 3-D sound. "With this support, there's a protocol that's been defined, opening up a fairly large market for developers to create some good sounds; once the hardware guys are convinced that Microsoft is going to support this, the links will be there for developers to use. This could bring the technology to market in a big way," he said.



Make your customers successful

Continuing on Foster's theme of adaptability to the market, Tony Asch, president of Straylight, stressed the importance of evolution in the VR industry of the past several years. Asch experienced an early success with his PhotoVR product, but when it, along with the early promise of VR, never lived up to the hype with which it was introduced, Straylight had to change its priorities. "What we discovered was that the most likely commercial use of virtual reality was in the entertainment field, and my feeling is that this is simply because virtual reality remains a fairly imprecise technology," said Asch.

Another reason Asch feels that the entertainment field is a more appropriate environment for most VR developers is the large amount of capital required to follow the military VR path. Once committed to the entertainment side of the VR business, Asch said that Straylight had to determine its own definition of success in the marketplace. "Because, in the end, in fielding products and trying to work with our customers to do that, we had to figure out what we wanted to get out of it."

Asch said that when he started looking at other companies in the field to gauge their success, he took notice of companies that had installed several hundred machines and decided that was a fair measure of success. But after looking more closely at these companies, he learned that such companies probably lost more money than anybody else in the VR business. "We even looked at companies that had raised enormous amounts of money with private or venture capital," Asch said, "and again, the net of it was they had lost lots of money."

So Straylight decided to focus its marketing and development on the idea of making its customers successful. "We set out to run a customer-responsive organization that sought to solve some of the problems in the installed product base," he explained. This approach led to the successful development of 3-D Ecstasy - a mobile, pod-based VR system.



No substitute for good support

Like Straylight, whose successful product evolved out of the needs of its customers, Virtual I/O was also forced to look outward in order to find the best and most marketable solution for its product after technological limitations hindered development of the original product idea. And they have even gone a step further.

Linden Rhodes, president and co-founder of Virtual I/O, said that after polling hundreds in the VR developer field and arriving at the sequential standards now used for its lightweight VR glasses, "we promptly brought on people to go out and evangelize the game developer community. This meant developing code for 3-D and head-tracking implementation to make this an easier job for developers. It also meant letting them have priority, high-level technical support beyond that which we were even in a position to give to our early customers. We loaned them units to show their investor communities and to take to every trade show under the sun."

Rhodes also stressed that "we were interested in doing cooperative marketing and promotional opportunities - putting information about their software into our product box, and putting information about our product into their software box, for instance. We were willing to help them at all hours of the night. We were willing to take them out for a beer when things were going rough in terms of making the head tracker work the right way."

Virtual I/O also luckily stumbled into the silver linings of marketing areas it didn't expect to. Rhodes said, "We didn't know about classic marketing philosophies, such as looking for strong vertical markets to help cross the chasm into the consumer marketplace. We were very fortunate to stumble upon two or three strong vertical markets where there was a real gut-level application." These markets include dental patient distraction and medical patient distraction.

Now that Virtual I/O is looking to refine its product and move it into the consumer arena, the big challenges facing the company include support of developers to help create and ultimately grow the market, support of retailers and distributors, and timing its press releases well. "If you get press early on before you have a product to sell, you'll be fielding many, many phone calls," Rhodes said. "And if you don't field these calls, because it doesn't make commercial sense at the time since your product is not ready, you begin to get Internet messages that say you don't have good customer service."

Rhodes pointed to Virtual I/O's interest in cooperative marketing efforts as being an important step for the VR community, because all companies in the field have a lot to gain from the technology's success. She stressed that such efforts, showing off the success of VR, could help to cool some of the negative press expected over the next year that will focus on VR's shortcomings and why some think it won't succeed in the consumer arena.



Click here to return to Table of Contents for the ISR December issue
ISR: Intelligent Systems Report Copyright © 2020 - AIWeek Inc. All rights reserved.