14 Jul

More Reality Than Virtual–Pokémon Go Sweeps the World

The massive and immediate success of Pokémon Go caught many industry observers on the hop. The smartphone app blends old-school gaming with fairly low-tech augmented reality. Gamers love it as they hunt virtual Pokémon characters in their neighborhoods. The phenomenon proves that the right augmented reality (AR) or virtual reality (VR) content can be a hit and generate real revenue.

Pokémon Go launched days before a Media and Entertainment Services Alliance (MESA) Europe event in London where my former IHS colleague and VR industry analyst Piers-Harding Rolls presented his verdict: “VR is here to stay.”

IHS forecasts huge growth in the number of VR devices in consumers’ hands. From four million in 2015, the global install base will reach 17 million by the end of 2016, going on to exceed 50 million by 2020. This market is driven mostly by lower-priced smartphone-based VR adaptors like Samsung’s Gear VR (25% share) and the almost-free Google Cardboard (17% share). Higher-end devices like Facebook’s Oculus Rift and Sony PlayStation VR appeal to gamers.

Google’s Daydream ecosystem also shakes things up as it launches this month, with the promise of disrupting the VR market and establishing more mainstream standards and uptake via Android devices.

The market is currently driven by hardware vendors – and gaming is now the big driver of paid-for AR and VR content as Pokémon shows. The market is nascent, but already worth around €500 million in 2016, growing to €1.5 billion next year. VR is also attracting lots of short-form content like movie trailers – and the potential for major live event streaming is round the corner.

As Pokémon demonstrates, content and IP owners who find the right niche in this fast-growing sector will see huge growth. VR should now be part of any content business’s strategy. To make that possible, VR is now a critical component of content rights and licensing.

In fact, VR impacts every aspect of the IP rights and licensing business:

  • To future-proof content as VR becomes more mainstream, it needs to be part of new content creation, acquisition and licensing deals today.
  • VR devices create new platforms and formats for content that need to be part of a windowing strategy. Should the low-end vs. high-end devices represent different tiers in content license deals? Is VR content on a smartphone covered by existing deals for mobile devices – or is it a completely new category?
  • The close link with entertainment gaming adds rights complexity. Do talent agreements include rights to use likenesses in immersive, VR, interactive formats? Will talent expect a premium level of participations for this new and very different format?
  • Merchandise licensing is impacted as gaming and short-form promotional content dominate VR. This provides new opportunities to grow brands, and license character properties for innovative applications.
  • The technology itself is novel and highly innovative, already creating technology licensing opportunities around the hardware and software components.

The business models around VR and AR hardware and content remain largely untested, with lots of experimentation going on. It’s still hard to predict exactly where VR is heading – but analysts like Piers are confident that it’s not another “flash in the pan”, and definitely not another 3DTV.

What is certain is that the opportunities in this growing market will be most readily available to those content and IP owners ready and able to license for the new format. That requires the right licensing strategy, the right business processes, and tools sufficiently flexible to adapt and accommodate emerging platforms, like FADEL IPM Suite.

Categories associated with this post: Conference Insights, Rights Management
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Robert Ambrose

Robert Ambrose (@rambrose) is Director of Strategy and Business Development for Europe at FADEL, a global provider of enterprise-class intellectual property rights and royalty management software. He works with media, entertainment, publishing and high tech companies to transform their approach to exploiting content, brands and IP.

Robert is focused on enabling organizations to engage customers and audiences, and to maximize profitable revenues through an effective cross-platform content supply chain and efficient back office operations.

Robert has more than 25 years of hands-on experience in the media industry, expert knowledge of digital media technology, production process and market drivers. He has previously worked as a broadcast journalist, media technology consultant, with major technology vendors, and as an industry analyst.

He has extensive international experience, working directly with media companies in Europe, the Middle East, Africa, Asia and North America. Robert holds an MBA with Distinction from Imperial College, London.

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