VR is here to stay, it seems, much like augmented reality (AR). As the success of Pokémon Go shows in terms of its global popularity, these new technologies have huge potential in gaming and beyond.
But the global hit's failure to help much in terms of profits for Nintendo shows an important question unanswered: How to monetise these new emerging technologies.
"VR is all about the contents. And you make money from contents through ads," said Kim Tae-woo, CEO and founder of Minkonet, a South Korean startup specializing in developing VR programs, in the company's office in Seoul.
Minkonet in March this year debuted its 360-degree live-streaming technology, called Swing 360, and showcased the technology at Game Developers Conference (GDC) 2016 in San Francisco. It allows spectators to watch an ongoing game at 360-degrees with control over point-of-view in mobile, PC, or VR headsets.
Game live-streaming is a fast-growing business -- as well as the newer 360-degree VR streaming -- due to the popularity of e-Sports. Amazon bought game live-streaming service vendor Twitch for $970 million back in 2014; while Developer Valve created its own StreamVR OS for VR headsets.
The biggest news, however, comes from Google that it's preparing for the launch of its Daydream VR platform, which will set the standard for VR content on Android and YouTube. New VR game apps and videos on the online video channel will only grow going forward.
"These are all good news for the fast-rising VR live-streaming market and I believe Swing Ads provides a good opportunity for growth," said the CEO. "Daydream could surely be a turning point in VR."
Swing Ads, still under development, is Minkonet's new VR ad service. It allows advertisers to place interactive, virtual ads on the 360-degree video being streamed live.
The ads are "native object" ads: Virtual ads are placed on the virtual game environment itself. For instance, if there is a virtual vending machine, a Coca Cola add will be placed as a poster on that machine itself. The ads are not shown to the gamers but only to viewers watching the game with Swing.
The ads can be virtual objects themselves or even video-within-the-game or game-within-the-game; in other words, more interactive than simple product placement. This will allow, later when commercialised, for game developers to sell their in-game items as virtual objects. Viewers can find out more about the ad by looking at them for over 0.5 seconds, after which the specific details of the service or product on display will be shown -- not a pop-up screen but a screen configured for the game's virtual environment.
"Swing Ads was a natural successor service to Swing and Swing 360. We thought deeply about how to make the VR viewing experience even more immersive and more importantly, profitable," said Kim. "Our ads are native objects within the game -- that enhances viewing experience and gives incentives for game makers and sponsors as well."
Minkonet can also place in-game ads, not just-video ads -- the ads will be seen by the gamers during game play, not just viewers watching the live-stream. But Minkonet opted to just apply the technology to the replay for the gamers to concentrate.
Nine patents on VR technology are pending in the US and three of them are technologies related to Swing Ads. One of the patents is on reducing the "dizziness" that is a major complaint in current VR use. In South Korea, four patents are already registered and 10 are pending.
Minkonet showcased its 360 VR live-streaming at the GDC Europe 2016 last month. It plans to unveil Swing Ads to the world at Unite LA in November and GDC 2017 in San Francisco.