#506: Has China Gone All-In with VR? HTC’s Graylin on what’s happening in China & VR

alvin-wang-graylinAlvin Wang Graylin is the China President of Vive at HTC, and I had a chance to talk with him at CES this year about what’s happening in China. He provided me with a lot of cultural context, which includes support from the highest levels of Chinese Government to invest in companies working on emerging technologies like virtual reality and artificial intelligence. There were a flood of Chinese companies at CES showing VR headsets, peripherals, and 360 cameras. On average, the VR hardware from China tends to be no where near the quality of the major VR players of the HTC Vive, Oculus Rift, Sony PSVR, or Samsung GearVR, but there were some standout Chinese companies who are leading innovation in specific area. For example, some highlights from CES include TPCast’s wireless VR, Noitom’s hand-tracked gloves, and Insta360 with some of the cheapest 360 cameras with the best specs available right now.

After CES, I was convinced that if you want to understand what’s going to be happening in the overall VR ecosystem, then it’s worth looking to see what’s happening in China. The VR market in China is growing, and there is a lot more optimism for technological adoption and enthusiasm for having VR arcade experiences. Education in China is also very important with the one-child/two-child policy, and Graylin says that if VR can be proven to have a lot of educational impacts then the government will act to get VR headsets in every classroom. Once VR is in the classrooms, then it’ll help convince more parents to buy one for the home if they believe it’ll help their education.


In an extensive round-up VR growth in China from Yoni Dayan, he mentions a moonshot project called Donghu VR Town, which is a proposed “city built in the south of the country, designed with virtual reality intertwined in every aspects from services, healthcare, education, to entertainment.” Here’s an untranslated promotional video that shows off what a VR-utopian city might look like:

It’s debatable as to whether Donghu VR Town would be a successful experiment if built, but it reflects a desire to innovate. Graylin said China doesn’t want to just be the manufacturing arm of the world, but that it wants to become a leader in virtual reality as well as in artificial intelligence, as can be seen in this Atlantic article detailing how Chinese universities and companies are starting to surpass American ones in researching and implementing AI.

China is a complicated topic and ecosystem, but after having a direct experience of the TPCast wireless VR, Noitom VR gloves, and the great-looking and high-res stereoscopy from a Insta360 camera at CES, then I think that it’s time to really look to China as a leader in innovation. If China really does go all-in on VR and AI and continues to investing large sums of money, then that type of institutional support is going to leap-frog China as one of the leading innovators in the world. I’ve already have started to see this at CES this year and at the International Joint Conference on Artificial Intelligence where there was a very healthy representation from China, and the thing to watch over the next couple of years is any big educational infrastucture investments by the Chinese government as well as the evolving digital out-of-home entertainment hardware ecosystem.

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Rough Transcript

[00:00:05.452] Kent Bye: The Voices of VR Podcast. My name is Kent Bye, and welcome to The Voices of VR Podcast. So the very first interview that I did at the Consumer Electronics Show in 2017 was with Alvin Wong Graylin, who is the regional president of the Chinese region for HTC. So this interview with Alvin actually colored the rest of my experience of CES because I think that in order to really understand what's happening in the overall VR ecosystem, you have to start to look at what's happening in China. And this interview I think is the first take of what's happening in China, but I don't think it's necessarily possible to have a singular perspective give you an entire perspective of everything that's happening in China. So this really started the journey for me of really starting to dig into what's happening in China and virtual reality. I've had a number of other interviews where we've talked about it briefly, but I think actually being at CES this year and having all the different Chinese companies and having the opportunity to have a direct experience with a lot of them allowed me to come to some of my own preliminary conclusions about what's going on. So we're going to start with this interview with Alvin talking about what he's seeing in terms of what the government is doing with supporting initiatives around education, and just overall supporting the virtual reality industry as one of their major initiatives. And some of the things that HTC is looking at, and specifically around education, and really trying to tell the story around how virtual reality could be used as an educational tool. So that's what we'll be covering on today's episode of the Voices of VR podcast. But first, a quick word from our sponsor. Today's episode is brought to you by the Silicon Valley Virtual Reality Conference and Expo. SVVR is the can't miss virtual reality event of the year. It brings together the full diversity of the virtual reality ecosystem. And I often tell people if they can only go to one VR conference, then be sure to make it SVVR. You'll just have a ton of networking opportunities and a huge expo floor that shows a wide range of all the different VR industries. SVVR 2017 is happening March 29th to 31st. So go to VRExpo.com to sign up today. So this interview with Alvin happened at the Consumer Electronics Show in Las Vegas, Nevada. It was happening from January 5th to 8th, 2017. So with that, let's go ahead and dive right in.

[00:02:36.919] Alvin Wang Graylin: My name is Alvin Wong-Graylin. I am the regional president for VIVE for China. And we're essentially trying to create a brand new ecosystem in China and supporting the rest of the global programs for VIVE.

[00:02:49.682] Kent Bye: And so maybe you could start off by telling me a little bit about the differences between the US market and the market in China and what is happening there with virtual reality.

[00:02:59.867] Alvin Wang Graylin: I think right now what we're seeing in the States is primarily VR still with the gamer community, at least from what we're seeing in terms of the majority of the awareness and purchases. Whereas in China, it's very broad. So we're seeing probably 30 to 40% of the purchases are B2B. in vertical industries everything from real estate to education to medical to location-based entertainment and that I think it's a very different audience than what we're seeing here and in fact there's already 4,000 or so VR arcades around the country you know it's also that like the first place where hotels are installing VR into hotel rooms instead of pay-per-view The accessories market is starting to really boom. If you go to places like Sins, there's everything from guns to walking paths to just pretty much everything you can think of that starts to integrate with VR. The arcades are becoming much more sophisticated. They're essentially calling it third generation now. So first generation was essentially these kind of very low-end VR devices in a pod, moving some dozen. Second generation was essentially Vive or some other, a little bit more sophisticated device in a more open field. Now they're getting to the third generation, which is more like what we're doing with Vive Land, where there's an environment, there's specialized play, a lot of accessories, group play, those type of things where it's becoming more like an amusement park. And there's now projects that are being created where there's going to be acres and acres of these type of projects creating essentially a mini Disneyland in VR for much lower capital costs. So one of the other areas I think where China is going to be very different over the next year or two is really in the education adoption in terms of directly into the schools whether primary and high school as well as colleges. We're working directly with the government today. We helped to essentially co-found the only government-recognized industry association in China, where there's over 200 industry members from around the world. So about 30 or 40 percent are from Western markets. Companies like Unity, like NVIDIA, AMD and Samsung and so forth are all part of this, as well as all the major Chinese companies. And we're actually helping to create standards for the HMD, for the environment, for content, for user experiences, so that it can be a very healthy cross-industry sharing and really set high standards so the consumers are also educated. right so these kind of things i think are a little bit different than what's happening in the states where it's still very kind of self-monitored and every company is really working on their own thing whereas i feel like there's a little bit more collaboration happening in the chinese market and then There's just a lot of companies brewing up as well. There's a lot of investments that are going into the market. You know, China in 2015 was the first year where venture capital exceeded that of the United States for all startups. And 2016 was almost twice as much money going into Chinese startups as US startups, which is amazing considering for the last 30 to 40 years, US was the bulk of global venture capital investments. And what's even more impressive is that the Chinese government is not really getting involved. And there was something like 25 billion U.S. dollars invested in China from private venture capital in 2015. Last year, 250 billion dollars was allocated by the Chinese government to support entrepreneurial growth in China and innovation. So this is a key initiative by the government to say over the next five years we want entrepreneurship and innovation to be the driver for the economic growth for the country. And they're putting real dollars behind that. I think that's going to both bring in a lot of talent from around the world as well as help the talent that is already in China to do things that they've never done before. Because as we all know, innovation follows where investment happens. And when enough money is being put in something, enough people are trying to solve problems, they will get solved a lot faster. And hopefully, I think that's the purpose of the government is trying to get around the old impression that China is just a manufacturing arm for the world. It doesn't have any innovation, it's copycat. And what we're seeing is, I think, China will become more and more the innovation capital for the world. And particularly, I think, VR industry will be one of the leading places where that's going to happen. It's starting to already happen, you can see, in the mobile space, where essentially most of the mobile devices in the world are manufactured in China. And right now, some of the leading companies in terms of innovation and user interfaces, in terms of software and hardware, are happening in China. And HTC itself is actually considered a Chinese, greater China company. And what we're seeing is, because I talk to a lot of startups in China, and the quality of real innovation happening is just at a much, much better level than it was five, ten years ago. Before Alibaba went public, there was really very little precedence. of startups creating millionaires out of employees. Only the founders got rich. But when Alibaba went public, over a thousand people became U.S. dollar millionaires. And that's creating a brand new acceptance of entrepreneurship in the Chinese culture. When I went to China in 1994, nobody wanted to do startups, right? Because startups was like the last place you go. First you go work for the government, then you go work for a big Chinese state-owned company, then if you can't get a job there, you go to a big foreign company, and the last thing you do is to go to startup, because startups are risky. Startups, you know, fail, and if you fail, you bring shame to your family. And so the Chinese parents used to really not let, particularly top students at top schools, go to startups. But that's starting to change. Now, the top students coming out of Beijing University or Tsinghua University, some of the top ones want to be startup entrepreneurs because they're seeing examples of other people succeeding. And there's an acceptance that failing in startups isn't the end of the world, whereas that was not the case five years ago. So I think this whole sea change of the social acceptance of startups is going to really create a lot more innovation and with this new wave of VR coming on to this industry it's a great place where there's now there's so much blue ocean opportunity because everything that's been invented in the internet and in mobile are going to get reinvented again in VR and when you had this brand new generation of smart motivated people who now have tons of backing behind them they're going to create some amazing things. So I am very optimistic about the innovation that's going to come out of China and the long-term leadership in the VR space that will be coming out of China as well.

[00:09:49.332] Kent Bye: So in the United States, it seems like it has started with a lot of the gamer culture and that it's people who may already have a high-end PC to play games and so for people just starting to get into VR it may cost them anywhere from a thousand to fifteen hundred dollars to get a high-end PC to be able to run a Vive which is another $800. And so do you see that in China that there's a rising middle class of people that have enough disposable income to actually buy a full room scale setup and PC and actually have it in their homes?

[00:10:19.770] Alvin Wang Graylin: Yeah. So if you look at the middle class population, which is about 20% of the China market, their average income is about the average income of a Western market. So they're essentially 20% of 1.4 billion is around 300 million people. So essentially the entire population of the United States is the middle class right now. And that middle class is going to double over the next 10 years. So ability to purchase is actually not an issue. In fact, if you look at the most expensive cell phones today are Apple phones and their best market is China. They sell more phones in China than anywhere else. There's more cars sold in China than anywhere else. The real estate in China is more expensive on average than the United States, and people are able to buy it. So the key is, it's not about can people afford it, it's do people value it, right? And right now we're doing very well. China's the number two market for Vive globally, and it's the number one software sales market for VivePort globally. So people are definitely showing, at least people in China, are definitely showing propensity to buy, and they're showing a willingness to pay for software, which are both very positive things. In fact, we did a consumer survey, I think it was in September, and they showed that the average price that a Chinese consumer is willing to pay for VR is actually about 20 to 30 percent higher than the average price that an American purchaser is willing to pay for VR. So that's actually really good. And I think we're going to see that trend getting more and more so because one of the things that we really want to push, and I mentioned earlier, is education. And education in Asia cultures in general is a big priority, and particularly in China because of the one-child policy. It's now kind of a two-child policy. But because of that, the entire two families related to that one child are all putting their dollars to make sure this child gets the best education and has the best future possibilities. So once VR becomes adopted in schools, then no parent's gonna say, hey, I'm not willing to spend $1,000 so that my child can be at the same level. I don't want them to be behind or disadvantaged because they don't have a VR at home. So these two, once there's examples of adoption in education institutions, and then the home will follow in a big way, right? And not in like five or 10% of the market, I'm talking about 80 to 90% of the market will buy quality VR to make sure that their kids are able to have the best available education. Now, we actually did a research study, I don't know if you saw, released about two months ago, which showed that a child who is taking VR-supplemented education can essentially turn a C student into an A student. And we're trying to now replicate the study on a broader scale and on more longitudinal studies. In fact, what's even more exciting is that versus the control group, the prior lowest ranked students in the pre-test actually outperformed the highest ranked students in the control group in their final results. So the VR actually turned the worst students into better students in the post-study test than the best students of a normal school. So what that really says is that every child is a genius. And we've just been teaching them wrong. So if we give them a new medium to learn with, something that engages all their senses and takes away all the distractions, then they actually can learn this stuff. And we just were forcing everybody to learn using a text-based-in-a-book type of learning or something on a chalkboard, when what they really wanted to do was to play with it, to touch it, to interact with it. And everybody had the ability to learn something. And we did this study based on an astrophysics class, which is not an easy class to understand, which showed off the advantage of VR. But there's everything from chemistry to physics to geometry to history could benefit from VR, right? Maybe not everything. Let's say language, I don't know if that would help much. But actually, for language learning, if you're doing foreign language learning, I mean, everybody knows that the best way to learn a language is go visit a country. You can essentially put this on and have an instant trip to whatever language country you want to be in. I think those kind of studies, we're going to do real proof cases on a broader scale. In 2017, we're expecting to get these STEM courses into hundreds of schools. And I think by 2018, once a few school systems see the results and benefits, the government will actually support wide adoption. I think 4% of total GDP is set aside for education enhancement. And for a multi-trillion dollar market, that's a lot of money. So, you know, once there is enough practical proof that the value is there, I think that's the other thing that's going to happen is that China's government is willing to put that money to make sure every school has the best systems out there because, you know, they want their kids to take advantage of the best education out there. And it's not just enhancing education through using multi-century experiences, but also making accessibility to limited resources, right? I think one of the most limited resources today is quality teachers or quality professors, right? And whether they're international professors or in China, there's very few of them out there. But if you can put on a VR headset and be in the classroom of Nobel Prize winning professors from around the world, You're going to essentially get the quality of education that somebody, essentially less than 0.1% of students today get. And that's going to make the accessibility of high quality education available to everybody. So you put that in combination with the ability to absorb that content. then our average IQ of our future kids are going to be just out of this world. And we're going to be able to solve the kind of problems that the world's been struggling with for decades or in fact hundreds of years. You know, things that we, you know, let's say curing cancer. I would expect that with these type of advances and together with AI and using these tools we're supplementing higher intelligent, more knowledgeable humans with better AI and in different experimental environments. It's going to make the world a better place and I think that's the kind of future that this technology can enable more so than we've seen already with the existing waves of technology over the last 30 or 40 years.

[00:16:43.662] Kent Bye: Yeah, so we've talked a little bit about both the government impact and putting a lot of money and actually investing in a lot of these companies as well as potentially educational initiatives. And we've also talked a bit about the educational incentives in terms of families wanting to give their students the best education. I'm curious if you could talk a bit about more of the pop culture influences. I know that in Asian cultures in general, if we look at artificial intelligence, for example, In Japan, they have Astro Boy, which is sort of the most optimistic characterization of what AI could be in terms of an assistant and a helper. But yet, in the United States, we have the Terminator as kind of the paradigmatic example of AI gone rogue and sort of like these apocalyptic dystopian futures. And so, I see this cultural differences, and you could look at virtual reality. We have the Matrix, which essentially puts human beings as batteries for these AI machines. I'm curious to hear a little bit more about the pop culture influences and these new technologies that are in China and how that may be playing a part as well.

[00:17:43.307] Alvin Wang Graylin: I think China takes probably a little bit more optimistic view to technology and what we're finding is that they really like to adopt technology. And particularly, if you go back and look at the last 30 or 40 years, the reason that China has made its growth is because it knew that it was behind the rest of the world. and it needed to open up and it needed to absorb as much outside influence and technology as possible. That was the whole Deng Xiaoping era where essentially what created the last 30 years or 40 years of outrageous growth unseen in history is the fact that China invited the rest of the world to come in, bring in their technology, share, and then be able to adopt as much as possible. And Chinese families in general have the concept that if I'm going to buy something, I'm going to buy the best. Because one is it's going to last forever, which is not really true for technology, but they want to feel that way. And then two is that there's a big face issue, right? A lot of reasons why people buy an Apple, because Apple is seen as the top of the line in their segment, whether it's a laptop or whether it's a phone, and they want to show off, right? in a country which really didn't have wealthy people until maybe 10 or 15 years ago because everybody was essentially the same you know when I immigrated from China United States in 1980 my parents made 30 RMB and 20 RMB a month which is like you call them like 50 or something and now it's probably worth like five dollars but that was like everybody made the same money everybody worked and there was no rich people but now that there's a concept of wealth people want to gather it and they wanted to show it off and you know one of the ways to show it is to show that you have a better quality of life or better assets or better car or whatever Now it's also getting into things like travel and experiences. So they're getting beyond the material goods now. It used to be for a while, you know, China was expected to be, or I think it probably is now, the largest luxury market in the world. But I think one of the things that is going to happen is about who has the best experience, who has the best vacations. This is the kind of stuff that people are now comparing. And so VR is one of these new technologies that is becoming a status symbol, right? It's not what you said earlier, which is, you know, it costs $1,000 for a PC and then another $1,000 or $800 for a Vive. It's actually, to run a Vive, I need a house with a 25 square meter room. And if I can afford that, that means I've made it, right? And so that's kind of where it's headed, is that people with a high-end VR system, actually they're inviting their friends over, they're becoming the center of attention. So that makes that willingness to pay really not an issue. And particularly if you take into account what I said about education, I don't think that's a concern at all. People feel like, you know, the average English tutor makes $100 an hour or something like that, US dollars, to tutor a child in English. That's probably a lot more than an average tutor here in the U.S. gets. And that's with an average income of, you know, in the cities, probably 4,000 RMB a month, which is maybe like $600, right? So they're willing to pay one-sixth of their monthly salary of one of their adults for one hour of educational supplement for their child. So if I just buy a Vive, that's like eight hours, big deal. People were willing like, if this really helps my kid, $1,000 is nothing. In fact, when I go to talk at conferences and I say, how many people would pay $1,000 for a high-end game machine, which is what a lot of people still think VR is capable of, and maybe like 5% of people would raise their hand. And I say, how many people would pay $1,000 for a device that lets your child get access to the best education in the world, be able to go and attend classes from the best universities and best professors in the world. Everybody raises their hand, right? And I said, how many would pay $10,000? Everybody keeps their hand up, right? So it's not about willingness pay. It's not about price. It's about value. And if you can show the value that your product or technology is bringing to them, income and cost is actually not a factor.

[00:21:51.360] Kent Bye: Just in terms of education and children using VR, I know there's been a little bit of an open question in terms of the impact of the vision systems with the emergence accommodation conflict as the eyesight is still developing. I know that Oculus has recommended that only if you're 13 years old should you start to be using these technologies, but yet I've also heard that, oh, if it's just a half hour at a time, you know, that's okay. Is it a matter of managing screen time, or have you looked into different studies around the physiological impact of VR technologies on children?

[00:22:22.990] Alvin Wang Graylin: Absolutely, and we're quite concerned in terms of the healthiness of the technology. So, middle of 2016, we did a study that did a comparison of VR usage versus cell phone usage. This was for adults and what we found is that the eye strain for people, I think it was over 16, we showed that it was actually half as much eye strain as using a phone. So, you know, we ourselves are using phones hours a day, probably use way too much, but we're also letting our kids use iPads for hours a day without any problems. So essentially, it's about half as much eye strain as using anything that is close distance to you. In fact, using a book, there's been studies that show reading a book actually creates more eye strain than using VR. Now, on the issue of children, I'm particularly concerned about it because I'm really pushing very hard to try to evangelize the concept of using VR to educate. So I want to make sure that it's healthy for our children. So I asked our research group to work with the Beijing Children's Hospital. We are just about to finish this study. We've gotten some initial results that actually showed that for children 6 to 13, because that was the age where people were concerned about, because that's when people start going to school, we actually found that about 30% of the children, their eyesight got better after using VR for two hours. And we're still trying to verify the reason for that, but what we're hypothesizing, and this was all overseen by children's doctors from the hospitals there, is that the focal point for VR is around three meters, whereas that for reading a book or a paper or a phone is about a foot and a half. And so your natural eyes are actually designed for looking into long distance. The further the better, the more natural. And whenever you need to focus near term, you actually have to squeeze your eye muscles to get that focal point closer. And so most children are on their phones way too much or reading books way too much. And this is why 90% of Chinese children actually have myopia. So we actually feel like reading and being educated and spending more time in VR actually would help their vision and reduce their eye strain versus reading or versus using a phone. I mean, of course, if you weren't wearing nothing and just in a normal space looking at the world, that's probably the least amount of strain. But most kids today spend probably more than 10-15 hours a day studying, which means they're looking at a book or a computer or a phone, right, which are actually more damaging from their eyes. So I had studied VR and education 25 years ago at the HIT Lab, which was one of the first research labs in VR in the United States. And my professor, Tom Furness, I was actually having lunch with him a couple weeks ago and I asked him this question, I said, You know, so where does this 12, 13 year limit come from? And he said, oh, I actually know the answers to that. And I said, well, what, tell me, I'm very interested. He said, it actually came from a 1980s Atari study, which showed that children's brains mature at about six, so they stop doing rapid development. So at that point, the psychological impact of playing games would be reduced. But then the Atari executive said, oh, six, that's still iffy. Why don't we double that? Let's make that 12. Because then there's no way we're going to get sued for making games and making children addicted to games. So there's really no research basis for the age of 12. It just came from that particular study and then after that everybody just kept using it because it was what other people used and they didn't know why and it just kept going. So it's good that we're actually doing this study to show that 6 to 12, there was no damage. In fact, here's the best part of the study because after we did that children's study, we did interviews with every student. both the ones that were in the control group using iPads to draw or they were using a tilt brush to draw. So one was in 3D, one was in 2D. And the interviews, if you just look at the expression of the children, they're just so different. The ones that came out of VR, They're just beaming. They're like, oh, can I come back? When can I set up another appointment? When am I going to get these into schools? Blah blah blah. They just loved it. And then you talk to the iPad kids, and they're saying, oh, you know, I'm so disappointed. All my friends got to play the VR. They're almost all crying. They're like, can I come back and do the VR side instead? They're just so disappointed, right? even though they were essentially given the same exercise to draw this particular thing in whatever tool they were given and we gave them a certain amount of time and nobody was pushing them and they were not graded and so from a pure interest level and excitement and enjoyment of the activity you could see the difference right. And this also would, I think, help the other side of probably the issue with a lot of Chinese education is that they're overly focused on math and science, right? And some language, but they don't do a lot of art, music, creativity, right? And when you start engaging all your senses, you start using your whole brain. And I think that actually has a lot of side benefits that VR can bring to children's mental development. So to your original question about children's health, are we concerned? Yes, we are. We're doing everything we can to verify that it's safe. You know, once the study's kind of fully been analyzed by the researchers and the data's there, we'll publish a paper that explains what we found and have recommendations in terms of maybe the amount of use and so forth. But so far, if anything, we find that it is less damaging and in some ways more helpful than reading a book or using your phone or using an iPad. So if we're comfortable today letting our kids read a book or use an iPod or use an iPhone or any kind of phone, then I think we should be as comfortable, if not more, letting them use VR.

[00:28:12.863] Kent Bye: Yeah, that's really interesting. What it reminds me of is James Waha of Vivid Vision, who essentially used VR to cure his lazy eye. He had dipopia and couldn't see in stereoscopic 3D, but yet he was able to essentially retrain his neurons in his brain to use the muscles that were okay. It's just more of a brain issue than an actual eye issue. It was just like he needed to do a skill relearning of how to use his eye and the thing that I wonder if in the future whether it's using a virtual retinal display or some of these LCD displays that at some point would it be possible for people to retrain their vision to be able to actually see in 2020 and to retrain those muscles and Just looking at the principles of neuroplasticity and what they can do with stroke rehabilitation and all the different medical applications, to me, hearing you say that the focal distance of VR is actually 3 meters, which actually improves eyesight, and we've been playing in close quarters and a lot of the ways that we interact with the world is actually within a hand's distance, and so reading a book or playing with toys, but, you know, something better might be playing baseball, or something that, if you can't play baseball, or something in a big wide open field with looking at things at long distances, then perhaps VR could start to help. to simulate that type of experiences.

[00:29:26.864] Alvin Wang Graylin: Yes, I completely agree. So we should have, I think, the opposite attitude of what we're seeing a lot today is how people are saying, oh, these screens are an inch from you. It's got to be bad for you. And the reality is that these screens are not the same screens we grew up with. Because when we had CRTVs, I remember my mom would say, don't sit so close to the TV. And the reality is that the amount of radiation coming from these LED-type displays are much less than you get from looking in daylight. So if you're willing to sit by the window, if you're willing to go outside and walk on the grass, then it's actually less damaging to put on your headset. So there's just a lot of myths out there in terms of the potential risk and damages, just because anything new people are afraid, which is understandable. But I think we should be embracing it and really doing more studies to verify these things. The reason why we want to publish these data is because we encourage more people to go and try it and test our hypothesis. Because I want as much validation as possible because if it's good for people, we want people to know. If it's not good, we need to know where it's not good. But so far, the initial data we've seen has been extremely positive.

[00:30:35.734] Kent Bye: I think the first couple of years of virtual reality, it's been mostly dominated by the big players of the HTC Vive, along with Valve, but also Oculus Rift, PlayStation VR, as well as the Google Cardboard and Google Daydream, and also the Samsung Gear VR, in addition to the Oculus Rift. I guess those five big companies. And yet, a lot of these trade shows and different VR conferences that I've seen, a lot of the startup mobile VR headsets have been from China. And I haven't really given them much of a consideration just because I thought, well, these other players are going to own the platform. But yet, within the last couple of months, there's been an announcement from the Kronos Group saying there's a big initiative to have VR open standards, which I think actually levels the playing field. opens up the doors for a lot of innovation for these smaller startup companies that may be coming from China. But I'm curious to hear your perspective about the Chinese VR market in terms of some of the other players that are out there, but also mobile VR headsets, augmented reality, peripherals. What else is happening in the Chinese space there?

[00:31:39.204] Alvin Wang Graylin: Yeah, I mean, I think because of the willingness to adopt, the willingness to try new things and the new VC money that's poured into the space, there's a lot more players there. And, you know, there's probably, I would say, five to ten very respectable companies that have quality, decent products in the marketplace, whether it's AR or VR. And for people who actually spend a little time there and visit these companies and see their products, they would be very surprised in terms of the quality it is versus anywhere else in the world. And I don't think it's actually inferior. And I think the thing that they probably lack versus the five companies that you said is that they don't necessarily have the distribution, they don't have necessarily the deeper pockets. So what that probably means is that, you know, longer term they may be licensed or bought out or whatever. But I think that the independent innovation that's coming out from that market is going to create some big players. And just like you see in the phone market today, I mean, companies like Xiaomi and ZTE and Huawei, they're Chinese companies, but they're global major market shareholders. And, you know, I think in any industry there's going to be a few top players who will probably get the lion's share of the profits, but it doesn't mean they're going to get the lion's share of the total units. And you're going to also need different products at different price points to meet the market needs, because not everybody can afford Avai, which we totally understand. And so for people who want to try VR and don't necessarily have the budget for it yet, having these other options to start that experience is actually a positive thing for the industry. Because VR is one of those things where, as you know very well, it's not something you can just explain to people. So you have to try it. And if it's more accessible and more people are able to try it, then they understand, OK, well, what I'm trying is mid-tier VR. I like to try what a really good VR feels like. Or what I'm trying is the most basic cardboard VR. then it gets people more excited and goes on to the next level. So what we don't want to do is to have people try the lowest end product and think that that's the highest end, because that's one of the other misunderstandings I hear, is that even people who call themselves experts, they'll say, oh, yeah, I've tried VR, it's not ready. And I'm like, what do you mean? What have you tried? They say, oh, I've tried these cardboard things, or I've tried Samsung gear, and I got sick, or whatever. And they feel like that's VR. And as we know, there's a lot of things that are much better than those kind of experiences. If they didn't know there was something better, they would get the wrong impression. Whereas I think pretty much everybody who tried Vive that I know have been very pleasantly surprised. And their normal answer when I go work with them on a demo is, first of all, it's like, wow, this is much better than I expected. You know, where can I buy this? And then how much does it cost? Whereas when I first talked to them, I was like, oh, come in for a demo and you can understand it for yourself. They're like, eh, I don't know. I kind of know. I see it on TV. I've seen shows about it. And I was like, no, really, you got to try it. Otherwise you won't understand it. And there's still 99% of people out there who haven't tried high quality VR. So I think that's something that will change because of the adoption of the VR arcades and the entertainment centers and the VR internet cafes. So more and more people will get to have access to it. So that's one of the things I'm pretty excited because once people try that, they're going to see the potential of this technology and more and more people with this new entrepreneurial mindset will start going into the space. More innovation will happen and it just fuels this positive snowball effect.

[00:35:00.643] Kent Bye: And maybe you could tell me a bit more about the digital out-of-home market in China with these 4,000 VR arcades. What type of content is being shown? Is it just normal Vive titles? Are they also doing other unique multiplayer interactions with passive haptic feedback and experiences that you would look at to what I see as kind of the premier VR arcade at this point that I've seen so far has been The Void out of Utah with some of their experiences they've done with having redirected walking and tricking your mind into believing that you're walking in very long distances. And they're more of a cooperative experience because you don't have the space to be able to actually have multiple players doing things against each other. But I'm just curious to hear what's happening there.

[00:35:43.574] Alvin Wang Graylin: I mean, I think, you know, there's definitely a number of companies who are doing kind of void clones out there. And I think some may even be talking to void or to zero latency and bring them licensing their technology into China. But I think the majority of those, you know, four or five thousand arcades out there are still at kind of that second generation, right? Or maybe some kind of two and a half generation where there's some of these passive haptic stuff. Someone bring in active haptic technologies, you know, special guns or they have like this Gatlin gun thing I was trying the other day. It's pretty cool. I mean, you really feel some kickback kick on that and there's ones who are using bikes and I think you actually see today in our booth there's a number of haptic related that could be applied to arcade levels whether it's sports related or it's exercise related or it's gun related or whatever. So that's happening and I think one of the things in terms of content is we recently announced the ViPort Arcade. It's taking content from around the world that is suited for quick start play that really is more suited for out of home experiences, right? Whereas in-home experience you essentially have a lot more time, you can go through levels and training and all these things. kind of backstory, whereas these are more, you put it on and you have five minutes, you better get some value out of it, right? And then also more multi-user play. All of these things are going to be part of, and we already have, I think, about 300 titles today that's part of the Viport Arcade library that the developers have specifically chosen and said, I want to be on Viport Arcade, right? And some of them have specific design. I think about 50 to 60 of those were specifically written or modified for arcades. And so the quality and the count of content is just dramatically increased over the last month. Because before that, each of the arcades essentially licensed their own technology, or some of them just downloaded things off of Steam or Vipor and then played it. But the quality wasn't there, and also technically the licensing wasn't really there for some of them. But what we're doing now is to bring high quality content, high breadth of content, make it legally available, and bring back revenues to the developers who created it. And so this creates a healthy ecosystem that everybody wins, right? Because the arcade owners, one of the things they need the most is quality content that brings users back, because they need repeat business. And for developers, as we're starting this market initially, the number of actual home users are still growing, right? So how can I supplement my income with other forms of income? So this out-of-home type entertainment is a great way to do that. And we're already doing it on over 1,000 arcades today. It's going to go to probably 4,000 to 5,000 by the end of 2017. That is part of the Viport Arcade Network, which that's a lot of users.

[00:38:24.210] Kent Bye: Great. And finally, what do you see as kind of the ultimate potential of virtual reality and what it might be able to enable?

[00:38:30.574] Alvin Wang Graylin: You know, I think we talked a little bit about this earlier, but the ultimate potential of virtual reality, I think we just need to look at science fiction books. And I mean, we're already seeing a lot of things that's been, whether it's books or TV shows or movies that are science fiction, plots have already started to come true. And it will be more and more so. And this is kind of the last screen. This is kind of the last major interface change that's going to happen for humans until we start getting chips in our head or a plug in the back of our head or something. So you said it's a 500 year type of technology revolution. I'm saying probably in the next 30 to 40 just because I think by that time we're going to get into that next more biological integration. But it will replace our screens. It will probably replace a lot of our transportation. It will probably reduce a lot of our need for resources. I mean, do we need a 5,000 square foot home if we can put on a goggle and have a mansion that we're sitting or be at the beach? Or do we need to fly in a plane anymore if we can put on a goggle and have that instant immersive presence at some other place to have this meeting? We could be doing this interview from different parts of the world. will be possible very soon. And there's a lot of technology that's already enabling a lot of these things to happen. And gathering assets, you know, before we compare ourselves by what car we have or where do we live or how much money is in our bank account. But if everything in virtual space is essentially free or could be free, then does it matter? And if you can be twice as smart or twice as efficient in VR, you would have more time to use in the things you want, right? I think that's something that it's going to bring more happiness, global kind of social happiness, right? Because the measurement of happiness essentially always goes back to not how much you have, but how much free time do you have to do the things you want, right? And this technology, I don't see it as something where somebody goes in and then they stay in there forever. I see it as something that they go in, they do the things they need to do, whether it's to learn or to work or to play, and then they have more time to spend with their family, their friends. and have a really quality real world experience at the same time have a high productivity virtual world experience. I think that's the potential of what this technology can bring. I'm sure there will be a few people who take it too far. But overall, I think the positive benefits totally outweigh any negative drawbacks of this technology.

[00:40:53.595] Kent Bye: Yeah, the way that Tipitet Shivasan phrased it was that we'll no longer be judged by the objects that we own, but yet the experiences that we've had. So as we move from the information age to the experiential age, I think that's what VR provides is the democratization of experience so that people are able to experience all sorts of different things that they may not have physical access to.

[00:41:13.985] Alvin Wang Graylin: In fact, I think if you go down to it and you ask somebody and you say, hey, if you had one year to live, what are you going to do? Right. And I would say 90 percent of people say probably two things. One is I want to travel the world. And two is I want to spend more time with my loved ones. Right. Now if this technology lets you make distance obsolete and you can instantly travel to anywhere in the world no matter what age you are or how much money you have and be immersed in whatever culture that you want to be in. In fact, you can be immersed in whatever period of time you want. So you could essentially have time travel and distance travel. So it makes all these things that used to be limitations for us disappear. And then you have more time to spend with your family in the real world. It satisfies the basic need of people. I think that's something that a lot of today's, I guess, industry people don't really understand, or maybe they haven't spent enough time on, is that this is not just a pure technology, not just something for productivity. This actually can have the ability to make us generally more satisfied, more fulfilled, and more happy as a species. So I think that's really the potential. And actually the other thing is that because of the things that we do or that we don't do, let's say commuting or needing big houses, our eco footprint as a species reduces and this planet becomes much more sustainable. If you look at a lot of the expert forecasts, it's got somewhere between 50 to 100 years before we run out of resources and somehow destroy ourselves. But if we are able to use, let's say, a half or a fifth or a tenth of the resources we do today, then it could actually be infinitely renewable. That's the kind of thing that this technology can do if we let it. Awesome. Well, thank you so much. No, thank you. And that was a fun talk.

[00:43:01.070] Kent Bye: So, that was Alvin Wong Grayland. He's the regional president of China for HTC. So, I have a number of different takeaways about this interview. First of all, this is the interview that I started with CES, and I think I left CES really believing that China was going to have a large role to play in the overall VR ecosystem in the many years to come. Not only from a market perspective, since the market is clearly there and it's growing, but also from more of an innovation perspective. TP-Cas, for example, doing wireless VR is probably one of the best wireless solutions that I've seen that's on the market right now. And it's a Chinese company. Noidim is another good example of some of the best. VR gloves that I've seen are coming from Noida. And so you're just seeing some of the leading innovators coming out of China now. I had a chance to talk to three or four different Chinese-based companies at CES, and on the record, just doing these different interviews. But I also had a chance to try out a whole lot of other types of technology from Chinese companies that didn't really merit me doing an interview about. And I think that that was the thing that was really striking at CES was that there was a flood of Chinese-based companies that did have products that were not up to par to the best of what virtual reality is out there. So there's a lot of second and third tier type of technologies that are out there that are going to be serving the markets in these different tiers of cities. So I think this interview helped contextualize for me a lot what is happening in China, but I'm also still really super hesitant to come to any final conclusive thoughts about what is actually happening in China, especially without me having had a direct experience. I did this interview back in episode 476, which was that there's essentially two words for experience. There's your own direct experience that you have, and that's erlebnis, and then there's the Experience that you have that's learned either from your own direct experience or it's learned from others So it's based upon what other people say and that's the Afra home and because the world is so large It's basically impossible for you to have a direct experience of everything and so you end up having to learn about the world based upon what other people tell you and So this is a good example of an interview where I'm trying to learn about China based upon what other people are telling me, but I have to take into consideration, you know, this is HTC, they are trying to push an education narrative and, you know, they want to see VR succeed. And so I do think that after being able to have a little bit more of a direct experience and test a lot of the different things based upon talking to different VR companies, I did find a number of different startup companies that did say that they were getting money from the Chinese government to be supported in being able to do what they're doing. And that ranged from like Nordic Trolls, which is a AAA gaming studio that was working on like these gaming experiences, which was a really surreal thing to hear. Like, okay, imagine like Epic Games getting money from the US government to be able to develop a game like Robo Recall. That's sort of a surreal scenario, but that's what I found was actually happening in China. Nolo VR was another company that was getting some government funding. But there's also other companies like TP Cast that were a little bit more self-made. They already had a strong revenue that's coming into their company and they didn't need to necessarily take money from the government. And I've never actually been to China as well, so it's hard for me to make a lot of these conclusions based upon never having been there and not knowing much about the culture from my own direct experience. But it does sound like education is a huge priority for the Chinese culture, and I heard that proved out by talking to some other people from China, and that I think education, if it can be shown in some conclusive way, It sounds like the Chinese government, once they make a decision, then they can make something happen really quickly. So they just have the money and the ability to just kind of snap their fingers and it just happens. And so some of the things specifically around education in VR, you know, they talked about one of the studies that they were doing, like astrophysics. I think what Alvin meant was like celestial mechanics of seeing how the planets move through the sky. Now, there are some specific topics, like that's a good example, where I did an interview with Ka Chun Yun back in episode number 57, where he works in these domes, and dome immersive education is something where there are specific topics like astronomy and celestial mechanics that once you're in a dome environment, it is way better than trying to reduce the movements of the sun, for example, and how it moves. and how the ecliptic changes over the course of the year from the equinoxes and the solstices and the path of that sun. You can get a better intuitive sense if you're immersed within a dome environment rather than a 2D screen trying to see the same thing. You just get a different experience of it. So there are going to be some topics, anything that has a spatial relationship, geometry, and other things where it's just a clear easy win for VR. The thing that I am cautious about is the impact that all early virtual reality developers will face, such that if you're giving a demo to someone who's seeing VR for the first time, their reaction is going to be primarily based upon the fact that virtual reality is amazing. And it's going to be difficult if you're a game developer to get honest, candid feedback about the specifics of your game that you're designing in VR if somebody is just seeing VR for the first time. It's going to take some time for people to get used to the medium, and then they're going to be able to see the actual impacts. And so I'm skeptical and cautious when I hear different types of education research where they say, OK, we threw kids in Tilt Brush for the first time, and they thought it was absolutely amazing, and they wanted to do it more and more. That is certainly true. To be able to tie that into a direct educational impact is the next problem. Just because VR is cool doesn't necessarily going to mean that it's going to make people into this cognitively enhanced super beings by being able to study the same material. It's going to have to have that translation of actually converting the content to be delivered within the virtual environment to actually make it better and to actually stick. Now, I think that the other side is that there's this whole principle of embodied cognition. And I think that learning how to apply the principles of embodied cognition universally to all different domains of being able to educate yourself, I think is going to be a process to really figure out those best practices. And I think it's going to be a time before we're able to first find out what those practices are, and then to be able to prove it out. And the principles of embodied cognition are super powerful. I've covered it in previous episodes, like episode 412, using embodied cognition to teach computational thinking, or 375, where you're using these immersive environments to be able to do immersive analytics and use the affordances of space to be able to be applied to sensemaking and intelligence analysis. And back in episode 73, just talking about the embodiment theory in general and how being embodied in characters can actually help you remember things more. And in episode 475 about Google Earth, just the fact that you can go to physical places and that will evoke memories. And so just the ability to have the architecture be replicated within VR can be enough to trigger all these memories that you actually have, which means that if you go into VR and have a very, Distinct architecture that you're seeing then you have the ability to be able to encode memories in a way So if you can design environments that have the architectural representation to metaphorically describe The things that you're trying to teach and you're able to kind of take people on a field trip every single day Then that's gonna allow people to remember things more and I think that's a big thing for what Google's doing with their expeditions program is But to be able to translate an entire curriculum into that, I think people like the Khan Academy, people have been doing some great job of just creating these videos and it's going to be the equivalent of something like that. Taking all this content and being able to have all these lessons within these immersive environments and to really understand the design principles of that medium. And the Khan Academy was able to happen because people understood the process of teaching and the process of using a tool like video and the different animation affordances that it allows, but that's something that had been pretty evolved. And I don't think that the virtual reality medium is necessarily evolved enough to have an equivalent of a Khan Academy come in and automatically translate all of this material in a way that's going to be ready to be deployed into schools. So even if China is able to just dump a lot of money into these VR experiences and start having people use them in schools, it doesn't necessarily guarantee that they're going to be able to use them with any amount of success. So I'm cautiously optimistic that they'll be able to make some innovations, but I still think that there's actually a lot of work that's still yet to be done. The big takeaway from this interview, though, is that if you are looking at education and you are looking at trying to get investment into VR, I did hear about people moving over into China to be able to start to work on these different types of VR projects. I'm hearing more and more of these different larger VR arcade companies, for example, getting funding and resourcing from China. Spaces is a good example. In that I do get the sense that there is an overall optimistic outlook when it comes to technology and technology adoption. I've seen a lot at the AI conferences that I've gone to, there's always been a very strong contingent of Chinese researchers who are presenting their latest research in machine learning and artificial intelligence. And so I think there's going to be a lot of innovation given that there's going to be this investment into technology from China into AI and VR that we can expect to see a lot more innovation coming out of China. Over this past weekend, I was at the MIT Tech Conference and I was helping moderate a panel on the convergence of AI and VR. But at this conference on exponential technologies, there was the founder of Kernel Company, Brian Johnson, and he was talking about this wetware, which is essentially like this brain implant that is going to eventually allow you to do neural injection. They're starting with being able to solve the problem of dementia and Alzheimer's to have this brain implant that could bypass a lot of the things that are going wrong with being able to encode memories. And so they're trying to start with doing this neural injection type of technology with disease, but eventually move to cognitive enhancement once that's possible. And so when we're talking about this possibility of using these neural implants for cognitive enhancement, that's something that within the culture of the United States is not going to necessarily happen here first. And the thing that Brian said is that, you know, The Chinese are actually really interested in doing these types of neural injection and cognitive enhancement. If it could give their people an advantage overall in the economy of the world, then this is something that they're going to be starting to push forward. And so when it comes to like the more fringes of biohacking, I think that I can expect to see a company like China really innovating there. especially if they've already putting artificial intelligence and virtual reality as one of their top initiatives for the entire country and doing a lot of investment in that. So that was also just something that made me want to actually start to go over to China and have my own direct experience of what's happening over there. So there's certainly a lot that's happening in China. I feel like I'm just starting to really wrap my head around it. And I think that I was able to prove out a lot of what Alvin was saying based upon what I was able to talk to other people at the CES show. But there's also just a lot of other things that I just, you know, I'm kind of cautiously optimistic about just until I can either have my own direct experience or start to hear more and more information about it. But it's at least put China on my map as one of the markets to really look at for the future of innovation and the evolution of virtual reality, especially as a market. So that's all that I have for today. I just wanted to thank you for joining me on the Voices of VR podcast. And if you enjoy the podcast, then please do spread the word, tell your friends and become a donor. Just a few dollars a month makes a huge difference. So, go to patreon.com slash voicesofvr to donate today. Thanks for listening.

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