Sunny Dhillon is a principal and co-founder of Signia Venture Partners as well as a lifelong gamer. Signia has been an investor in mobile games, and so he knows what to look for in terms of a solid team and distinct art style that resonates with gamers. Signia was one of the 16 investors who invested $13.5M into 8i, a 3D volumetric capture startup, and Sunny says that he’s looking for other content creation tools to invest in.
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The first VR investment that Sunny has made is 8i, which made up of a solid team of digital effects artists from Industrial Light & Magic, WETA Digital and Digital Domain. 8i is working on digital lightfield capture tools using commercial off-the-shelf cameras. They’re aim is to bring more humanity into VR by creating user generation tools for people to put be able to put themselves into immersive VR experiences.
Sunny reflects many of the sentiments of Google Venture’s Joe Kraus in that he sees that 2016 is going to be a year of survival for the early movers within the virtual reality gaming space. He sees that the business models of advertising are still evolving the overall market is far from being completely sustainable. So Sunny is cautiously optimistic and he’s taking a slow and measured approach in that he doesn’t intend on investing into too much VR content in 2016. He first wants to see more market penetration and adoption with this first round of consumer virtual reality HMDs.
Signia Venture Partners has made investments into mobile gaming companies including Artillery Games and Super Evil Megacorp, who developed Vainglory. When he’s evaluating potential gaming companies to invest in, Sunny said that he’s looking for a solid team with a proven track record of creating quality games that have been successful on other platforms.
Sunny’s personal experiences in VR has told him that having higher fidelity of photorealistic experiences have increased his level of immersion, and that’s part of the reason why he’s so excited to invest into a company like 8i. At one point, Sunny told me, “I’ve focused a couple of times here on the photorealism because I think that that’s necessary for immersion.”
I had to disagree with this specific point because of how the presence research that Mel Slater has done indicates that photorealism only accounts for the place illusion, which is only half of the equation for creating presence with the other half being the plausibility illusion.
I think that one of the most important podcasts I’ve done so far is with the presence researcher Richard Skarbez who has been following on Mel Slater’s work on these two components of presence. Richard told me that he sees the uncanny valley as being n-dimensional meaning that the higher fidelity of visuals that you have, then you will need to have higher fidelity on all of the other dimensions of your experience in order to match what our expectations our bodies have with photorealistic visuals.
I’ve personally observed that the experiences that actually dial down the visual fidelity and instead put more focus on creating a coherent and plausible world can actually create a more immersive experience than a photorealistic one where I feel like a ghost with no agency. I’m a big advocate for saying that the plausibility illusion is the other half of the presence equation, and that it’s a mistake to focus on visual fidelity while ignoring creating a dynamic, interactive, coherent and believable virtual world.
The best example of a VR experience that created both a sense of place and sense of plausibility was Oculus’ Toybox Demo. For those developers who have experienced it, it’s consistently one of the peak levels of immersion and presence in a VR experience. There was also a level of social and emotional presence, but I very much noticed how the visual fidelity of Toybox was very stylized and non-photorealistic. It’d be an interesting research question to compare and contrast the levels of immersion and presence in a Toybox Demo that was both photorealistic, and more stylized like what was shown at Oculus Connect 2.
That all said, the issue of how high of visual fidelity that people prefer could very well be a personal preference. And we will need companies like 8i and investors like Sunny to continue to create the technology that might be able to overcome this uncanny valley. It’s a debate that I’ve had with other photogrammetry companies like xxArray’s Alexx Henry, and ultimately the market will decide what types of VR experiences resonate the most with users and what the components are that maximize the level of presence that we’re able to achieve within VR.
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Rough Transcript
[00:00:05.412] Kent Bye: The Voices of VR Podcast.
[00:00:12.110] Sunny Dhillon: My name is Sonny Dillon. I'm a principal and co-founder at a venture capital fund here in the Bay called Signia Venture Partners. It's a seed and series A focus fund, so very early stage technology companies. VR, AR, MR has kind of been a big focus area for Silicon Valley in general, for my fund in particular, for perhaps the last year or so. We've traditionally been pretty strong investors in the game space. VR is a natural extension. as a new platform for distribution and engagement. And as a player, as a lifelong gamer, a heightened level of immersion from a product consumption standpoint, too. So I've so far made one VR investment in the content creation tools and distribution platform kind of space, a company called 8i, based down in Los Angeles and in New Zealand.
[00:00:58.968] Kent Bye: And I'm looking to do more. Great. So 8i, it seems like they're doing some sort of photogrammetry, high-resolution capture. Maybe you can describe what is it that they're doing, and why was that interesting to you?
[00:01:09.485] Sunny Dhillon: So I think a lot of technology that was originally developed within the visual effects space was just never commercialized. A lot of strategic R&D arms, movie studios, James Camerons of the world, were working on a lot of tech that now has applications for more immersive virtual worlds. 8i specifically, the team, was what we were backing. Obviously the market that they're going after and the product as well, which I'll come to, but the team in particular was just stellar. A team that came out of ILM, Weta Digital, and Digital Domain. So the top visual effects houses, the team that worked on Gollum, worked on all the Hobbit movies, they came with glowing reviews. From my own background of working with the Lord of the Rings producers, it was an easy reference check to be able to do and it just came back glowing. So the team's very impressive from a technical chops perspective. In terms of the product, a lot of the cameras that we've been seeing, Jaunt, even Lytros, Immerse, new camera that they've announced, et cetera, they're all inside out, so they're based inside facing outwards, right, in a 360 spherical kind of contraption. What 8i is doing is allowing you to create and capture light fields for more realistic, photorealistic capture, live video capture of a personal performance, and do it with very few number of cameras and off-the-shelf cameras at that. So it's many years of research and proprietary technology that goes into that. So more realistic capture for full 3D volumetric video is the idea.
[00:02:37.377] Kent Bye: So we're here at the Virtual Reality World Expo and you're on a panel talking about VR and investing in VR and kind of the ecosystem in the space from the perspective of a venture capitalist. And so what were some of the main points that you were trying to make on that panel?
[00:02:50.701] Sunny Dhillon: So I think cautious optimism was something that I hit upon repeatedly. My fellow panelist, Joe Kraus, alluded to 2016 being the year of survival. A lot of excitement is coming out around Christmas 2016 when headsets are really going to be pushed on the direct-to-consumer kind of marketing level. There'll be booths and hardware set up in every Best Buy and Major Target hubs throughout the country, where people will get to have that aha, first-time experiential VR moment. I guess one of the things that I caution around optimism, while being optimistic on the space here, is the business model and the monetization is going to take some time to come to fruition. So we're not going to see enough of an audience or, in media speak, enough eyeballs to be able to monetize this stuff through advertising anytime soon. You'll have very cool forms of immersive ads that go in a la minority report within a virtual world that's highly dynamic, highly social, highly locally relevant, socially relevant, etc. Because it's also so immersive, it's just going to add to the impact that any ad can make. You're just not going to have the eyeballs there for some time. You're not going to have the hardware upgrades there for some time. I think, you know, you and I are just looking, standing not too far away from a PlayStation VR headset, formerly Sony Morpheus, right now. they're going to have a pre-install base of about 30-35 million PS4s by Q2-Q3 of next year whenever they decide to ship, right? So, shipping that as a peripheral device for an existing base of gamers where there's not the level of upgrade required as like a PC for an Oculus Ready program PC, for example, I think is a lower friction adoption process that's going to be required. In short, cautious optimism is the path that I'm taking. I'm very interested in the tools and content creation tools kind of space right now, more so than I am investing in straight VR content until headsets have shipped next year.
[00:04:41.580] Kent Bye: Yeah, and it seems like that's a challenge because it seems like the hardware space seems to be fairly well-established in terms of the big players, in terms of the virtual reality head-mounted displays. There might be some breakthrough peripherals that come through, but even at that, the major players are going to have, I would imagine, like a lock in terms of the sixth degree of freedom controllers there. And then you're looking at content. And so because you have invested in other games, what are some of the game companies that you've already invested in, and how could you see that extrapolated into VR in terms of what you would be looking for if you were to make an investment in the content?
[00:05:14.770] Sunny Dhillon: So I think there's two separate questions there. Specifically, what could I extract from my existing portfolio of gaming studios into VR for their potential moves into VR is how I understood the question. And then the other question I think was, what am I looking for for fresh deals in VR now? So if we answer the former first. I'm incredibly bullish on the gaming companies in our portfolio. We have a couple of hardcore PC gaming plays in the competitive multiplayer kind of space, one of which is Artillery Games, which just raised a follow-on round from Chinese internet powerhouse Tencent. And the other one that I can talk about is Super Evil Megacorp, creators of a hardcore multiplayer online battle arena game named Vainglory that's doing really well and I'm a huge fan of. The team, in terms of the type of team that I would back, that would be going out to venture forth into a new platform, for a well-known and strong style of game design, that's exactly what Super Evil was in mobile three or four years ago. The kind of caliber of team that knows how to build a great game and knows how to leverage, for example, on mobile when it was early days, input was all touchscreen. Swiping, tapping, now force touch, for example, on the new generation of iPhone devices. So being able to leverage that into your game design while not sacrificing on quality and making a hardcore game overly casual just because mobile was dominated by Flappy Birds and casual Angry Bird type games for a long time. I think being able to prove that hardcore gamers deserved more on mobile and executing on that is the same kind of tenacity, quality, you know, strength of conviction and resolve that was demonstrated by that kind of team doing that on the early days of mobile and doing so again now on VR. I think that's the kind of team that I would be looking for. You know, someone that has a strong track record of developing similar kinds of games but on different platforms in the past. That kind of diminishes some of the risk around game design around the team and like the ability to create good quality games. It's going to be a lot of blind leading the blind at the beginning. Teams that have as much sight as possible within those murky, misty early days. You can only really put your trust in the kinds of people that I just alluded to. Somebody that can diminish the risk and has just had a lot of high quality success in the past. And then for new first time entrepreneurs in this kind of space, I think it's rare if you look at mobile for the first to market type guys, first to market game developers. I think Joe alluded to this yesterday as well. the iFund from Kleiner Perkins, a lot of those companies that were making games and apps for the early iPhone ecosystem are no longer around. So I think learning from a lot of the corpses and walking dead in the graveyard that you have to walk through in this misty, murky kind of environment in the next few years, I think there's gonna be a lot of lessons learned. So I'm taking a slow and measured kind of approach there. I don't have to be invested in the first hardcore game to market, the first hardcore indie game to market, for example, on VR. I'm happy to wait a little while.
[00:08:10.982] Kent Bye: When you say content creation tools, what are some examples of that?
[00:08:15.264] Sunny Dhillon: So 8i is a prime example of that. It empowers content creators to be able to create realistic looking virtual reality human performance capture and motion capture cheaply and accessibly. That's the plan and that's what they're working towards right now. And the speed of progress that they've been making has astounded us all. They're just really stellar guys. Other types of content creation tools that I've been looking at. There's a couple of companies in LA and one even here in San Francisco that are working towards a user generated content. So enabling much more the average Joe who doesn't know how to use Final Cut and Avid and every other editing tool under the sun, or even know how to code in Unity, someone that doesn't have that kind of background, i.e. you and I, to be able to create content is exactly what saw a surge to prominence in smartphones. being able to make it accessible and usable by experts and by your grandma alike is what some of these companies that I've been looking at are focused towards. So being able to enable content capture from within mobile and port real-life images and people and experiences and being able to port that into a VR environment, for example, creates a much more immersive and relevant environment to the viewer, right? So there's companies that are working on stuff like that. There's others that are working on creating God mode type games within the Valve Vive, for example, where you can really interact with the world around you. If you're familiar with Minecraft, this is a 10x on that in terms of how much interaction you can have with that world around you. And it's really realistic looking. And I focus a couple of times here on the photorealism because I think that's necessary for immersion. Though, you know, I've seen some pretty compelling cartoony and toontastic style VR virtual worlds as well that people are able to manipulate and interact with that creates for a pretty immersive experience.
[00:09:59.091] Kent Bye: Yeah, actually I disagree with that too. Just based upon the research from Mel Slater, talking about the place illusion and the plausibility illusion as being two key pillars to presence. Whereas there's kind of an uncanny valley that once you get to photorealistic, then you expect everything to be totally real. And so some of the experiences that are some of the most immersive actually dial down the photorealism to the point where it's on the other side of the uncanny valley. And actually, what the other component of that presence is that plausibility so that there's full interactivity and agency within that experience. And so something like the toy box demo from Oculus is a perfect example of some that if you talk to any developer that experienced that, they'll cite that as one of the top immersive experiences that they've had. partly because of the social presence and emotional immersion that comes with having another human there, but also because of the coherence behind being able to pick up and interact with anything.
[00:10:51.729] Sunny Dhillon: Absolutely agreed and very valid points about what it's required to really create presence. I think coming to your toy box example for a moment, it really was that social interaction with my friend in the other room at Oculus HQ in Menlo Park. When I was trying it for the first time, that made me feel like he was really there. He's waving. As the avatar becomes more realistic, which to me I think is actually important from my level of immersion, I could be biased not as an investor but as a consumer right now in that regard and as a gamer. But the mannerisms of that avatar, the closer they came to the realistic person that I know and love, it made it much more immersive that he was really there. And it was that social element that made me feel presence in that toy box kind of room. Of course, I know that I'm not in a living room destroying gnomes and pillars and plates and everything else, right? But even if I wasn't, the fact that I was doing it with my friend made it much more immersive. So you're absolutely right on the social element.
[00:11:42.848] Kent Bye: Yeah, and one of the things that Richard Skarbez, he's a researcher from University of North Carolina, who's sort of following on Mel Sater's work, is that he made the point to me that the uncanny valley is n-dimensional, which means that when you have photorealism, you expect exact haptics, exact sound, and that when it's not meaning there is some disconnect in your mind that takes you out of the experience and can break presence as well. So I just want to iterate that just because I feel like it's an important point that a lot of people in VR may go down this path of this striving towards photorealism while ignoring this other component of having, let's say, realistic artificial intelligence that are interactive and dynamic and there's a coherence there that makes it believable.
[00:12:21.666] Sunny Dhillon: There's definitely more to it than photorealism, you're absolutely right. So far, that's been the biggest hook out of several. It's not sufficient in itself in isolation, but so far it's been one of the more important hooks from my degree of immersion in the experiences that I've tried. So it could be biased to a limited set of N, you know, N plus one or whatever so far, but there's tons more out there that I haven't experienced. That's why I'm here today.
[00:12:44.822] Kent Bye: One of the challenges I'd see in terms of being a VC and having maybe a lot of people trying to pitch you is that having a 2D video of an experience is way different than having a virtual reality, 3D immersive experience. Because it's really hard to judge a VR experience just from a video. You really have to be there inside of it in order to really see what's happening.
[00:13:02.115] Sunny Dhillon: That's exactly how we've taken pitches so far to date. The demo's been perhaps the most outside of the team and vetting the team in advance. The demo's perhaps been the most make or break moment, absolutely.
[00:13:13.757] Kent Bye: And finally, what do you see as the ultimate potential of virtual reality and what it might be able to enable?
[00:13:20.602] Sunny Dhillon: I mean, how many times have you had people say Ready Player One to you? I'm sure countless times. I'm waiting for that moment of true fantastical immersion that can be granted to the geek kid that's wanted VR to be our real reality since the Matrix first hit shelves, since we first read Ready Player One. Anytime I immerse myself into a fantasy world of Warcraft or Starcraft or Diablo, etc., any hardcore game I used to play, anything that I could do to get more immersed in that environment, instead of turning the lights off and getting my dimmers and my shaders just right and having the right graphics card to make it look realistic on screen, anything that can give me incremental immersion into that, I think, blows the hinges off the door for engaging in truly immersive, realistic kind of entertainment experiences way beyond that. I think AR, VR, they get mixed together far too often in terms of market forecast, etc. AR has the potential to disrupt any prior computing platform that we previously had. VR has so far been largely focused within entertainment, but there's huge enterprise in healthcare and biological impacts that technology is going to have that has not been researched, explored, or well-funded so far. So I'm very excited by the overall changes that occur with interacting between ourselves as people and with the environment around us. I think that's the highest level that I can kind of attest to when I talk about the revolution that's coming with these new technologies.
[00:14:46.156] Kent Bye: Awesome. Thank you. Thank you. And thank you for listening. If you'd like to support the Voices of VR podcast, then please consider becoming a patron at patreon.com slash voices of VR.
