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The Evolution of Virtual Worlds, Part One.

This is the first in a series of four posts exploring how virtual reality will drive the future evolution and direction of virtual worlds towards Social Virtual Reality – what we’re calling ‘Virtual Worlds 3.0′.

It’s important to lay-out in the first instance how we got to today, moving through VW1.0 and 2.0. Using the definition of ‘a real-time multi-user virtual environment that can not be altered by the user’, VW1.0 was heavily driven by the KT&T (Kids, Tweens and Teen) market, with registered account growth from this segment reaching 1bn in 2013 and an active user base in excess of 250m account globally. (Note that we’re focussing more on social VWs rather than game-based MMORPGs and the like).

The graphic below (the KZero Universe chart) visualises the tween and teen segment of the virtual worlds marketplace.

kzero universe q2 2014 seg2

Many of these virtual worlds have amassed multi-million registered account bases by creating immersive environments based around activities such as socialisation, avatar dress-up, multi-player experiences questing and exploration. And, in many ways these virtual worlds have proved popular because they offere ‘visual social networking’ (via avatars) before the concept of mainstream social networking as we know it today. They offer users the ability to be in the same ‘place’ at the same time as other people, albeit with in most cases a 2.5D perspective, viewed via web-browser.

Screen Shot 2014-05-12 at 14.18.45In addition to existing IP branded platforms such as Playstation Home, Build-a-Bearville, Barbie World and Fusion Fall being popular, brand-new IPs such as Moshi Monsters, Club Penguin and Poptropica demonstrated the appetite for younger users to explore in and engage with virtual worlds.

Importantly, a key differentiator between this stage of the market (VW1.0) and the next, was the fact that users had no or little control over the environment – the virtual world could not be modified by them. In other words, User Generated Content (UGC) was not possible, which leads us to VW2.0.

We classify the second evolutionary stage of the virtual worlds market as VW 2.0, defined as a ‘A VW that allows the user to create/modify their environment’. By this of course we mean UGC….

Interestingly, some UGC-based virtual worlds actually existed before some of the more popular VW 1.0 platforms, with Second Life being the most prominent one. But, it was not until Minecraft became a global phenomenon that the concept of creating ‘virtual stuff’ hit the headlines and continues to do so. The advent of UGC worlds such as Minecraft, Roblox and Stardoll pushed global registered accounts up to 1.3bn and active users to 350m. Continue reading →

Fairy Forest Oculus Rift Virtual Reality Walkthrough Videos

Last week in collaboration with Dubit we released Fairy Forest, our first demo experience for the Kids/Tween market using the Oculus Rift. Read the full article here.

The Oculus demo is available to download from the WeArVR gaming portal. For those of you without a Rift, here’s a couple of walkthrough videos. The first one shows Fairy Forest in full single screen mode and the other is the Rift-enabled version. Enjoy. And, feel free to contact us if you’re thinking of developing content in virtual reality.

Further information:


Fairy Forest, an Oculus Rift Virtual Reality Demo for Kids

The market for Oculus Rift games and experiences is ramping up at pace, with a wide variety of genres and applications being published. This first tranche of demos and games range from rollercoaster rides and scuba diving, through to first person space shooters and horror games.

These games are being developed by enthusiasts and indie developers right through to more established game studios such as Frontier Developments (creating Elite: Dangerous) and CCP (creating Eve Valkyrie).

From a user perspective, due to the fact that the Oculus Rift headset is still in ‘developer mode’ and Sony’s Morpheus device is scheduled for launch early 2015, the ‘players’ of these early games are adults. However, as our Consumer Virtual reality market sizing assessment illustrates, it will not be long before kids and tweens become a driving force in the market as headsets become consumer-ready.

[As a side note, from a strategic perspective Facebook would do well to consider the Oculus Rift as a key tool to appeal to the younger users they are struggling to attract. Tweens and early teens have flocked in their millions to browser-based virtual worlds. Now, with the advent of virtual reality, social virtual worlds and immersive experiences will become extremely engaging. This is also one of our key strengths – creating virtual worlds and experiences for the KT&T (kids, tweens and teens) marketplace.]

To that end, welcome to Fairy Forest.

fairy forest kzero dubit

Fairy Forest is a virtual reality experience designed for kids and tweens. Developed in collaboration with Dubit, this is a prototype created to demonstrate the immersive qualities of VR.

3D environments, coupled with strong narrative and engaging game mechanics will combine to present massive growth opportunities for the KT&T market and we’re positioning ourselves to be at the forefront of this virtual revolution building on our expertise from browser and tablet screen-based virtual worlds.

Fairy Forest is available to download from the WeArVR virtual reality gaming portal.

fairy forest kzero dubit3fairy forest kzero dubit2

fairy forest kzero dubit4

Looking to develop an Oculus Rift application? Contact us here.

Brands in Virtual Reality

Brands and IP’s have always been interested in the virtual world sector, creating their own experiences (branded virtual worlds) or entering third party games and worlds via branded virtual goods.

Now, with the growing emergence of virtual reality, led by the Oculus Rift, we’re starting to see the same trend. This is happening in two ways. Firstly, brands are creating their own experiences on an ‘official basis’. Secondly, just as we’ve seen in the virtual worlds sector, particularly in properties such as Minecraft and Second Life (i.e UGC) fans of brands are creating ‘unofficial’ virtual reality experiences.

We’ve been tracking these official and unofficial virtual world initiatives since 2006, so it’s about time we tracked the virtual reality sector. Our Slideshare presentation below presents the first tranche of Brands in Virtual Reality.

We’ll be updating this each time a new VR experience is published, including our own. These games and experiences can be downloaded from the WeArVR virtual reality portal. A high-res version of this presentation can be ordered here.

Looking to develop an Oculus Rift application? Contact us here.


12 Key Sectors for Virtual Reality Applications. Q2 2014 KZero VR Radar.

Back in January we released our first ever Virtual Reality Radar Chart showing 12 key sectors for consumer VR. Three months on, there’s been a lot of activity in the space with both independent developers, Kickstarter-backed and more established studios releasing and announcing content for (mainly) Oculus Rift users. Here’s a segment of the updated Virtual Reality Radar for Q2 2014 showing Role Playing Games (RPG), Simulation/Exploration and First Person Shooters (FPS).

virtual reality radar q2 2014 seg4The RPG segment has seen the most activity in Q1 2014, particularly within the Horror genre.  Immersive and atmospheric experiences with scary storylines are highly suitable for virtual reality and we expect even more developers to enter this segment of the market.

Other games of note within the RPG segment include Asunder: Earthbound (a cinematic adventure game set in a fictional 1930’s universe aboard a passenger airplane) and Wander (a non-combat, non-competitive, collaborative multiplayer game for PS4 and PC with Oculus Rift support).

The Simulation and Exploration category is also seeing new entrants and ongoing activity. This category includes games based around underwater experiences, with Ocean Rift and World of Diving being great examples  along with upcoming releases such as Into the Deep Blue.

Two other experiences to mention in the Simulation and Exploration group are K&L Station (‘A Cinematic Hugo meets the 5th element’) and Riverside Residence from Arch Virtual, demonstrating how virtual reality can be used in the architectural market.

The last category in this segment is First Person Shooters (FPS). As shown above, this group has the lowest number of games in it at present, but is expected to be a key focus for Sony’s Project Morpheus. One of the demos shown by Sony at GDC, The Castle is an early prototype of this genre.

The high-res full version of the Virtual Reality Radar Chart can be ordered here. We’ve also put this presentation into Slideshare.

Within our Radar analysis we’ve also assessed growth areas across the 12 categories. Shown below is the segment for Social Worlds, User Generated Content (UGC) and Mirror Worlds.

virtual reality markets q2 2014 seg2Social Worlds are virtual reality applications allowing person to person interaction in real-time – a virtual world in virtual reality. This will be a key area of focus for Facebook following their $2bn acquisition of Oculus VR as well as other companies seeking to exploit the opportunities presented by Social Worlds. One prime contender in this space is High Fidelity, the start-up headed by Philip Rosedale (founder of Second Life). During 2015 we anticipate commercial launches targeting  adults, with KT&T (Kids, Tweens and Teens) having to wait until 2016.

User Generated Content VR applications is another exciting segment – imagine being able to build (and share) brand-new objects, buildings and worlds in a virtual reality environment. We expect 2015 to be a great year for UGC in VR and with Minecraft pulling out of a planned VR version (although you can still play Minecraft using Minecrift) there is a major opportunity for companies to enter this vertical.

The high-res full version of the Virtual Reality Radar Chart can be ordered here. We’ve also put this presentation into Slideshare.

Looking to develop an Oculus Rift application? Contact us here.

Further information:





KZero on Bloomberg: Will Facebook Trigger an Acquisition Spree in the Virtual Reality Sector?

Big deals always get attention and that’s certainly true following the $2bn acquistion of Oculus VR by Facebook. Bloomberg writers Serena Saitto and Olga Kharif have assessed the ‘other’ companies in the VR space along with potential suitors for purchase. KZero CEO Nic Mitham was a contributer to the Bloomberg article, titled ‘Oculus Boosts Funding Appeal of Virtual-Reality Startups‘. Here’s an extract…

In the hours after Facebook Inc. announced plans to buy Oculus VR Inc., messages came pouring in at Virtuix Omni.

“My inbox has been flooded by investors who want to touch base,” said Jan Goetgeluk, 30, founder and chief executive officer at the startup, which makes a treadmill-like device that lets users move their feet to navigate within computer games. Goetgeluk is in talks to raise $2 million of venture funding from private and institutional investors.

Looking to develop an Oculus Rift application? Contact us here.

26 Mar

Why the Facebook Acquisition of Oculus VR is Great News for the Virtual Reality Market

Virtual Reality

Email inboxes, Twitter feeds and News sites have been red-hot today due to the announcement that Facebook is to acquire Oculus VR in a $2bn deal.

Whilst some of the reactions have been negative, largely based on people not being fans of Facebook, we think this is great news for the virtual reality market and here’s some reasons why…..

Firstly, it’s a clear indication that the virtual reality market is going to be huge. Last week at GDC Sony presented their foray into the market with Project Morpheus. And, not to be outdone, Microsoft made noises about their interest in the market. Having Facebook in the mix means greater awareness of the technology.

A similar thing happened back in 2007 when Club Penguin was acquired by Disney in a $700m deal. Up to that point, it was only really kids (i.e. the players of a small number of virtual worlds) who had heard about virtual worlds. Almost overnight they became mainstream assisted by the media which then led to an influx of VC activity in the space and the creation of countless start-ups and companies launching their own worlds.

Secondly, consumer adoption of headsets will be assisted with potentially lower price points. Oculus will be able to price the consumer version (CV1) more attractively, meaning more people will be able to afford them. Mark Zuckerberg has already gone on record stating the FB won’t try to make a profit off selling Oculus hardware.

Thirdly and ultimately most important in terms of where this market is heading, having Facebook  involved in the space means a greater focus on the ‘social’ aspects of virtual reality. By this we mean the creation of virtual worlds and spaces allowing synchronous user to user interaction.

Of course, using virtual reality to play games is a key application and we expect many successes in this segment of the market. But, the virtual reality market really comes alive when people can have experiences together, in the same space at the same time. This is the main reason we believe Facebook has acquired Oculus and is referenced in the press release from yesterday…

“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” Zuckerberg said in a statement. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”

vr radar thematic seg2 q1 14So, expect ‘Social Worlds’ to be a major part of the virtual reality roadmap.

We identified this segment back in January when we released our VR Radar – 12 key sectors for virtual reality adoption. The social worlds segment is shown in the graphic right.

And another sector, LifeLogging could also be part of future plans. After all, recording and sharing what we’re doing in our lives is a key feature of Facebook.

Concluding the point of this article, the virtual reality market was going to be big without the Facebook acquisition. Now it looks like it’s going to be bigger and probably take place faster.

Looking to develop an Oculus Rift application? Contact us here.




Forecast: 200k Virtual Reality Headset Units Sold By End of 2014. $60m Market Size.

Announcements made at GDC last week by Sony and Oculus have helped to firm-up the state of the consumer virtual reality market in 2014. For those of you who didn’t catch the GDC news…..

  • Oculus confirmed that the second iteration of the developer kit (DK2) will be shipping in June/July 2014.
  • Sony showcased Project Morpheus, their VR headset. However, this will not be shipping in 2014 and instead is rumoured to be available early 2015.

Back in January we released our State of the Market report and accompanying market sizing analysis. In this market sizing assessment we forecasted a total of 200k VR headset units sold in 2014, yielding a  market value of $60m (at an average sales price of $300). It looks like our forecast was pretty accurate for the following reasons:

  • Oculus has sold 75k DK1 units to date (with sales now suspended for this version). Of this 75k, circa 25k were sold in 2014 (we estimate).
  • We expect the vast majority of DK1 buyers to purchase DK2.
  • With interest in VR and Oculus continuing to grow through 2014, we forecast at least 100k new sales (from new buyers) in 2014 once DK2 is released. This is a prudent estimate.

Screen Shot 2014-03-23 at 16.32.27Our five year unit sales forecast is shown right. Post 2014, our forecast is based on the following assumptions:

  • In 2014 Oculus is the only company selling a virtual reality headset. So, our 2014 forecast numbers for the market is essentially a forecast for Oculus.
  • Sony enters the market Q1 2015 with a consumer version of Project Morpheus.
  • Oculus also launches their consumer version (CV1) in Q1 2015.
  • Microsoft and potentially three other major companies enter the market towards the end 2015. We anticipate Samsung, Apple, Google and LG to be in the mix here.
  • Other hardware start-ups launch consumer VR headsets throughout 2015  and 2016.
  • Hardcore gamers and Innovators drive initial sales (these are the people purchasing DK1 and 2).
  • Early adopters and light gamers boost sales supported by the Early Majority and the Teen market from 2015, ramping up from 2016 onwards.

Total unit sales in 2015 is forecasted at 5.7m, rising to 10.9m in 2016 with the VR market establishing itself as a serious contender in the global gaming and entertainment marketplaces. Over the full five year period of 2014 to 2018, we forecast total cumulative unit sales of 56.8m.

Our Slideshare presentation containing more detailed market forecasts for consumer virtual reality is shown below. For more insight into the Virtual Reality market you can order our State of the Market report for free here.

Looking to develop an Oculus Rift application? Contact us here.

Legends of Oz Branded Virtual Goods in Blocksworld

Branded virtual goods (BVG’s) are a great way for brands and IPs to connect with target audiences playing games. Typically, virtual goods inside games and virtual worlds based on real-world brands are at least 5x more popular than non-branded equivalents.

We’re one of the pioneers in the BVG arena, having developed campaigns for brands such as L’Oreal Paris inside Second Life and Dancing with the Stars/ Strictly Come Dancing inside Stardoll.

Screen Shot 2014-02-07 at 09.44.23The latest campaign we’ve forged is between upcoming Legends of Oz movie and popular 3D building game , from Linden Lab (creators of Second Life). Blocksworld has over 1m downloads from the App Store and over 400,000 user-generated worlds have been created.

With the new branded virtual goods set, players will be able to create and play with content and characters from the upcoming animated feature film, slated for release on May 9, 2014.

Screen Shot 2014-02-07 at 09.37.26

The Legends of Oz set will include: Continue reading →

Virtual Reality News Weekly: Issue 1

The first edition of our email newsletter Virtual Reality News Weekly came out yesterday. If you’d like to get this delivered via email you can subscribe here. Here’s what was in week 1.

vr radar seg4 q1 14The brand-new VR Radar chart. We’ve taken our popular Virtual Worlds radar chart and adapted it for the consumer Virtual Reality market. The Virtual Reality radar chart shows 12 key segments we believe will be driving consumer interest. For each segment we’ve identified the year in which the first commercial activity will occur along with initial game demos/prototypes and planned VR compatible games. View the full presentation on Slideshare.

Wired magazine takes a closer look at the latest Oculus Rift (Crystal Cove) with positional tracking. More.

Virtual reality beamed straight onto the retina. Check out the Avegant Glyph – the headset meant to go mainsteam. More.

Sony releases details about their highly anticipated VR headset at CES – ‘A theatre on your head’. More.

Minecraft + Oculus Rift = Minecrift. UGC based VR applications are featured in the Radar chart. More.

Game distribution platform Steam gears up for pending player demand by adding a Virtual Reality category. More.

Consumer Virtual Reality sector (hardware and software) valued at $16.2bn by 2018. More.

Personal Movie Theaters. Once you try it, it all makes sense. Techcrunch explains further. More.

Buckle up for simulation car racing games. The Road to VR takes a look at what’s in the virtual garage. More.

The Kids, Tweens and Teens sector is one of the key segments explained in our latest market report. More.

Virtual Reality News Weekly comes out every Wednesday.

Further information:

Order the State of the Market Report for Consumer Virtual Reality.

Sign-up for Virtual Reality News Weekly

Order the high-res full version of Virtual Reality Radar Chart.

Slideshare presentation: Virtual Reality Radar chart.

Slideshare presentation: Consumer VR Market Size.

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