Is there a business model for virtual reality news? Native advertising provides a start
Virtual reality and its cousin, 360-degree video, have been the talk of future-of-news circles since late last year — usually with the disclaimer that there is no business model yet.
But the starting place to generate revenue is clear: native advertising and sponsored content. Even as both VR storytelling and viewing technology remain in their infancy, big brand sponsors — McDonalds, Coke and a host of others — want in.
News outlets with well-developed studios for branded content have the jump on their competitors. Use of the technology for news along with advertising in a similar "native" style can grow together.
"Every advertiser I talk to wants to know more," Sebastian Tomich, the New York Times' senior vice president of advertising and innovation, said in a phone interview. Besides debuting with a blockbuster pilot for General Electric, Tomich said, the Times' T Brand Studio is now turning out four or five brief demos a week for potential advertisers.
Digital native sites which have already bet big on branded content for the majority of their ad support — Vox, Buzzfeed and Quartz among others — have a running start building a news and business VR presence. Ditto VICE Media, with its deep roots in you-are-there videos.
Meanwhile Gannett, one of the first legacy movers with a VR tour of an Iowa farm produced in September 2014, has announced plans to a launch a full virtual reality show — part stories, part ads — later this spring.
Ads could be in pre-roll format as is typical for videos. Or they could be freestanding, competing for clicks with news presentations. Or, over time, they may be something entirely different.
Gannett's low-key news release a month ago didn't specify the length, frequency or format of the show. A spokesperson said she had no further details to add yet.
But even with plenty yet to be determined, the technology provokes excitement in the executive suite as well as in the tech development trenches. Tomich's boss, New York Times CEO Mark Thompson, detailed his rollout plans to Business Insider in December after the company's initial VR experiments:
The entire exercise from first idea of doing something big to 1.3 million viewers going out was five months, six months. It's partly a proof of concept to the speed with which we can move. I think one of the things the Gray Lady needs to do is pull up her skirts and start running in some areas, and this would be an example of that.
I found a sampling of legacy executives eager to talk about the embryonic VR business even with so much still open-ended. The current set of questions facing them are basic:
What is it?
Emilio Garcia-Ruiz, who directs digital news for The Washington Post, thinks it's important to distinguish true virtual reality from 360-degree video.
The former, building a modeled environment in three dimensions, Garcia-Ruiz said, is an expensive proposition that can require a team of half a dozen and a six-figure budget for a single 10-minute piece.
A panoramic 360-degree presentation, by contrast, can be filmed with a few $350 cameras (or a rougher version with smart phones). The cameras also capture images that are "self-stitching," simplifying an otherwise cumbersome post-production challenge.
In practice, most discussions of VR news you will hear this year comprise both formats. Watching a rudimentary 360 video, even on a desktop, serves as a low-impact teaser for more immersive experiences to come.
How to watch?
Garcia-Ruiz describes the first generation of high-end viewing devices as "clunky, pricey and completely amazing." Facebook's $599 Oculus Rift goggles debuted in late March to frosty reviews. ("Virtual Reality's Rising Star Isn't Quite Ready For You," The Wall Street Journal; "Clunky Portal to the Promise of Virtual Reality," The New York Times).
More than an hour — and a high-powered computer — are needed for setup. The device is heavy, uncomfortable, odd-looking and so thoroughly shuts out distractions that a user moving around is in peril of tripping over her coffee table.
The HTC Vive alternative, scheduled for a June launch, is even more expensive at $799 pre-order but potentially easier to use.
Google Cardboard, a paper rig to view the content on a smartphone app, is at the other end of the spectrum. It theoretically costs $15 to $20 but is often given away as the Times did to a million Sunday subscribers to accompany a magazine story on three refugees. Better and cheaper devices are surely on the way, some this year, many more next, according to the news developers I spoke with.
How to make it routine?
Any ad revenue bonanza is blocked for now by the limited audience equipped with a viewer. But the case for getting started sooner rather than waiting until later to produce segments is strong. It is a learn-by-doing exercise, for sure.
Still, organizations may choose between relatively few projects that aim for state-of-the-art quality or a high volume to get rank and file staff in the game — as Gannett's USA TODAY Network is doing with its staff at 107 regional papers.
What's a good fit?
So what sort of topic/environment benefits from the VR/360 treatment? Jim Kennedy, senior vice president for strategy and enterprise development for The Associated Press, proposes a simple test: While watching, "do you want to turn your head?"
If the focus is a single person — even, say, Bernie Sanders, at a spirited rally — the added value is modest. The view from a seat in the stands at the Indy 500 is more intriguing. And a tour of the squalor of a refugee camp can be riveting.
How do you mix environments and storytelling?
It is not evident yet how best to mesh the intense VR engagement with storytelling. A reporter imposed on the scene or voiceover narration can easily seem intrusive.
If the user with many options is navigating, he could easily veer off an intended story line.
There are also unresolved craft and ethical issues. VR constructions don't lend themselves to editing to remove disturbing or inappropriate images as easily as conventional video does. There is also the possibility a scene could be too intense — say for a veteran who suffers from PTSD watching a battlefield reconstruction.
Two interim solutions seem likely. For now, settle for environments where the absence of a story will not be much missed, such as exotic travel or luxury real estate locales. Or present the VR/360 as an enhancer to a story presented with more familiar elements — text video and audio.
AP's Kennedy said that the news service anticipates that a VR/360 element will in time be something clients expect on certain stories — especially reports from remote geographic locations worldwide. Enough compelling content could support a premium level of service too.
How to make it newsy?
Video games are the template for VR. Enthusiastic gamers will be first to spring for the viewers. Potential uses abound in all sort of endeavors, high and low, ranging from medicine to pornography.
The New York Times' Tomich said that an important test of whether VR gets big for a big audience or turns out to be only a specialized novelty will be in filmed entertainment. "From a director or editor's point of view, what's left now when you are finished is pretty raw...Moving to scripted work — that's going to be difficult."
A bad movie in 3D is still just a bad movie.
On the other hand, even if news isn't among the first and broadest uses, the potential is evident in the first round of pilots.
Who are the right partners?
Besides the Google and Facebook presence, there are any number of more specialized vendors and production labs looking to break out from the current small business base and looking for partners.
In addition, universities and foundations find the technology's potential intriguing. The University of Texas, for instance, was on board for the Post's pilot project — a virtual exploration of the surface of Mars (debuting in March the day after owner Jeff Bezos detailed his ambitions for a space travel business).
This makes for a richer range of experiments and cushions the formidable production costs during an exploratory period. The demand for quality and quantity of content from platform companies ought to be robust.
For news organizations looking to get started on VR, what are the best practices? And for those already dipping their toes in, what's next?
Kelly Andresen, who directs branded content for Gannett, says the company got up to speed quickly by cultivating internal talent and keeping the focus on young consumers.
We have some great innovative internal talent that started looking at the next generation of news consumers. Younger audience consume content in virtual worlds. One particular team member has a son who learned all about World War II from a video game. We did focus groups with younger gamers and observed the way this ‘Minecraft generation’ worked. They like the immersive experience — it’s more empathetic and enables a higher engagement with the content.
In my beginner's survey of the business, I was intrigued too by the potential for creating truly different content, not traditionally defined journalism. For its first VR project, The Economist teamed with a volunteer group in November, to reconstruct the display of antiquities at Mosul, which ISIS had destroyed 18 months earlier.
The art objects are gone but a decent approximation of what was there now exists and will be accessible indefinitely.
I have a lot to be modest about in forecasting the trajectory of news technologies, but I have reason to think a nifty ride is just cranking up — not unlike the virtual rollercoaster experience that dazzled me as a kid in the first Cinerama movie — or next-generation IMAX.
Correction: A previous version of this story cited a recent New York Times Magazine article with a companion Minecraft world as an example of virtual reality. Although Minecraft allows users to create virtual worlds within the game, it does not rely on virtual reality technology.