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VIDEO & SOCIAL
VIRTUAL REALITY PLATFORMS
Columbia Business School Venture Fellows
April 2016
VIDEO & SOCIAL
VIRTUAL REALITY PLATFORMS
Columbia Business School Venture FellowsCorey Schwitz
AR/VR FUNDING 

BY CATEGORY
Category
Funding
($M)
Hardware 1,211.0
Infrastructure & Tools 425.3
Commercial & Industrial 391.0
Content 232.2
Social 16.9
Discovery & Distribution 16.8
Investment stage and category data from CB Insights
THE STATE OFVIRTUAL REALITY &VENTURE CAPITAL
• 73% of deals were early stage

(Seed or Series A)
• Gaming accounted for 80% of
funding in “Content” category
Most active investors
• 2016: Release of Oculus Rift, HTCVive, PlaystationVR
• Estimated sales of 2.5MVR headsets (Deloitte)
• VR/AR market projected to reach $150B in revenue by 2020
(Digi-Capital)
• Social and discovery/distribution apps have largely been
ignored in first wave ofVC financing as the hardware and initial
content of theVR ecosystem have been built.
The companies that will scale quickly and create long-term value
will focus on distribution over content creation,
building a meaningfully connected user base that actively
contributes and adds to the community.
These platforms can differentiate from Web 2.0

counterparts by creating ecosystems that necessitate 

complete immersion and presence, 

not just 360° video in a headset.
The companies that will scale quickly and create long-term value
will focus on distribution over content creation,
building a meaningfully connected user base that actively
contributes and adds to the community.
These platforms can differentiate from Web 2.0

counterparts by creating ecosystems that necessitate 

complete immersion and presence, 

not just 360° video in a headset.
Photo/Video - 12/100Social - 14/100
Analysis of Top 100 Free iPhone Apps*
CONSUMER ENTERTAINMENT LANDSCAPE: MOBILE
*March 2016 data
14 have significant Social andVideo overlap (6 of which owned by Facebook)
Music - 14/100 Games - 39/100
• Includes apps run by 4 cos with
multi-billion dollar valuations
• 4 of Top 5 in App Store
• Netflix and Hulu only apps not reliant
on user-generated content (UGC)
• Nearly 5-yr domination by Pandora,
Spotify, and SoundCloud
(Apple Music as well. but not in App Store)
• For obvious reasons, not a target forVR
• Industry leaders: Zynga, Gameloft, 

Rovio, EA, King, Supercell
• Frequent and extreme fluctuations

in mobile game downloads
• Only 4 w/ primary focus on

video consumption
Video and social apps have tremendous staying power and account
for approx. 30% of time spent on smartphones.
Content
Creation Tools
Content
Creators
Video Distribution/
Social Platforms
End-user 

Hardware
CAMERAS
VIDEO STITCHING
ANIMATION
SOFTWARE
OUTPUTGAME STUDIOS
ANIMATION & 

FILM STUDIOS
VRVIDEO & SOCIALVALUE CHAIN
• Requires rapid iteration,
advanced supply chain, and
heavy pricing competition.
• Headsets dominated by
major industry players.
• Wearable inputs threatened
by motion capture sensors
(Leap Motion, HTCVive
“room scale,” Intel RealSense,
NimbleVR)
INPUT
• Social platforms mostly
device-agnostic
• Several video platforms
creating their own content
(i.e.Vrse, Jaunt)
• OculusVideo and
Samsung MilkVR come
preloaded on headsets
• Thus far limited motion-
capture tech being
incorporated in game
experiences
•3 most watched videos in
Samsung MilkVR app for
2015: The MartianVR
Experience, The Dive
(sharks), Mtn. DewVR
(snowboarding)
• VR SDKs available
through Oculus,
Google Cardboard,
Sixense and others
• Cameras priced
competitively with
ranges $400 to $60K
SOCIAL
VIDEO
Social
• Historical track record shows aggregation, promotion, and delivery of media properties consistently
more profitable than content creation (Columbia Business School: Knee, Greenwald, Seave)
• Competitive advantage of increased scale through network effects
• Benefit of device-agnostic approach versus device-specific platforms created by hardware providers
(i.e. Oculus Social, OculusVideo, Samsung's MilkVR)
Distribution platforms have an opportunity to scale more quickly than any
category and be the most defensible companies in the industry over the long-term.
Content
Creation Tools
Content
Creators
Video Distribution/
Social Platforms
End-user 

Hardware
SOCIAL
VIDEO
VRVIDEO & SOCIALVALUE CHAIN
Social
The companies that will scale quickly and create long-term value
will focus on distribution over content creation,
building a meaningfully connected user base that actively
contributes and adds to the community.
These platforms can differentiate from Web 2.0

counterparts by creating ecosystems that necessitate 

complete immersion and presence, 

not just 360° video in a headset.
THE “ANONYMOUS”APP BOOM & FIZZLE
“Growth Score” in charts is an algorithm determined by Mattermark, accounting for a company’s website visitors, mobile downloads,
social media metrics, employees, and publicly announced funding, along with how these numbers are changing over time.
YIKYAK
SECRETWHISPER
• In Mar. 2016 down to under 3K iPhone downloads per
week after peak of 82K in Aug. 2014
• Fell from #2 social app in Sep. 2014 to #87 by Jan. 2016
• $73.5M raised, investors include Shasta & Azure
Users want to embrace their real identities. 

With the rise of ephemeral apps, the
overwhelming market leader, Snapchat, has
users with real identities while anonymous
counterparts have suffered. Facebook similarly
differentiated from MySpace and others with
real names rather than pseudonyms.
• Campus-focused app has been center of national
conversation on bullying
• $61M raised, investors include Shasta, Sequoia,Thrive • $35M raised, investors include GV & IndexVentures
• Shut down Apr. 2015 and returned remaining capital to
investors
– Palmer Luckey, Oculus VR Co-Founder
“Virtual reality will make it a lot harder

to be a total dick to somebody.”
• VR is the perfect medium for metaverses — digital spaces that replicate, and in
some cases surpass, the physical world.
• Early studies have shown that interaction in virtual reality increases empathy and
willingness to help others.
• VR may surpass video’s ability to emote nonverbal communication.
Virtual reality creates real presence and identity,
the opposite value proposition of anonymous networks.
VRCHAT
Raised seed round Feb. 2016
Open source, device-agnostic metaverses are growing.
ALTSPACE VR
$15.7M in financing
• Multiple motion-capture input options
• Can share 2D web content (spreadsheets,
movies, cat videos) within virtual spaces
A live improv show in Altspace.
HIGH FIDELITY
$17.5M in financing
• Co-founded by Phillip Rosdale (Second Life)
• 50+ domains, including re-creations of real-life cities
The companies that will scale quickly and create long-term value
will focus on distribution over content creation,
building a meaningfully connected user base that actively
contributes and adds to the community.
These platforms can differentiate from Web 2.0

counterparts by creating ecosystems that necessitate 

complete immersion and presence, 

not just 360° video in a headset.
Creating high quality user-generated virtual reality content
is becoming more efficient and less expensive.
Entry-point cameras available for as low as $400.
VR/360 video stitching and rendering
software widely available, led by Kolor
(acquired by GoPro in Apr. 2015)
User-contributedVR video platforms:
$1.8M seed round
raised Mar. 2015 Pre-seed raised Dec. 2015
Video platforms with professional content
will only survive with big partnerships
— Fox Sports, NASCAR, NBA
— Disney/ABC, MLB, NHL
With rise of UGC for VR, video and social platforms that are confined

to premium content will be at a substantial disadvantage in scaling.
The companies that will scale quickly and create long-term value
will focus on distribution over content creation,
building a meaningfully connected user base that actively
contributes and adds to the community.
These platforms can differentiate from Web 2.0

counterparts by creating ecosystems that necessitate 

complete immersion and presence, 

not just 360° video in a headset.
Incorporating motion-capture and haptic technology is
crucial to the value proposition of VR.
Fove headset with 

eye-tracking technology
HTC Vive user & “room scale”
sensors creating ability to walk
around virtual world.
Leap Motion sensor to detect and
reflect hand movement into VR.
Transforms videos into 3D holograms that
users can interact with and walk around.
Virtual hands responding from Intel RealSense
sensor. Similar concept, NimbleVR, 

acquired by Oculus Dec. 2014.
Distribution platforms that implement these technologies and deliver true
presence will give consumers a reason to forgo Web 2.0 alternatives.
Startup Stage UGC? Social? Notes
Metta VR Pre-seed
Exclusively focused on user content; 

Pre-launch active filmmaker engagement
Vrideo Seed Main focus on user-generated content
LiveLike Seed
Sports viewing with social component; 

No league partnerships announced
Vrse Seed
Platform & production house; 

Created original content for NYT, NBC,Vice
Littlstar Seed
Mix of user & pro content; 

API to build video into other apps
8i Series A Turns video into full-volume 360 holograms
NextVR Series A Sports platform partnered with PGA, NFL, NBA
Wevr Series C
User-generated video and animated content; 

Only available on HTCVive
Jaunt Series C
Full stack: VR camera, software, production
company, & viewing platform
Video VR Platforms
Platforms focusing on user content must engage with amateur filmmakers to help
navigate the complexities of shooting video in VR. The next step: provide fully
immersive experiences using light-field and motion-capture technology.
Native/Web 2.0 apps: Oculus Video, Samsung Milk VR, YouTube, Netflix
Startup Stage
Open
source?
Full immersion
potential?
Notes
vTime
(Starship)
Unknown
Only available for Samsung GearVR & 

Google Cardboard
Beloola Seed Intuitive builder tool for non-developers
JanusVR Seed Active Reddit and Slack communities
VRChat Seed Has been live pre-VR for nearly 2 years
AltspaceVR Series A
Excellent community management;

Prioritizing motion-capture inputs
High Fidelity Series B
Developed marketplace with user-created
items; High quality design
Social platforms are a natural fit for VR. Startups should actively manage their
early users, create marketplaces, and prove they can attract mass audiences.
Native: Oculus Social
Social VR Platforms
“VR is going to be the most social platform.” -Mark Zuckerberg
LOOKING AHEAD
• The presence of active market leaders. Leading tech companies are more
prepared than traditional media companies were for the rise of the Internet.
• Will Oculus, Google/YouTube, Samsung, and others crush any competition?
• Active acquisition market?
• When will adoption curve set in? Platforms that succeed will require
patience, timing, and luck.
• The power of network effects. At what size will network effects set in?
What benchmarks are required for later stage investments?
• The impact of augmented reality. Will release of Microsoft Hololens and
Magic Leap come at the expense of virtual reality? Or will entertainment apps
always have a niche audience inVR?
Corey Schwitz
cschwitz17@gsb.columbia.edu
@coreyschwitz • linkedin.com/in/coreyschwitz
Questions?

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Investing in Video & Social Virtual Reality Platforms

  • 1. VIDEO & SOCIAL VIRTUAL REALITY PLATFORMS Columbia Business School Venture Fellows April 2016 VIDEO & SOCIAL VIRTUAL REALITY PLATFORMS Columbia Business School Venture FellowsCorey Schwitz
  • 2. AR/VR FUNDING 
 BY CATEGORY Category Funding ($M) Hardware 1,211.0 Infrastructure & Tools 425.3 Commercial & Industrial 391.0 Content 232.2 Social 16.9 Discovery & Distribution 16.8 Investment stage and category data from CB Insights THE STATE OFVIRTUAL REALITY &VENTURE CAPITAL • 73% of deals were early stage
 (Seed or Series A) • Gaming accounted for 80% of funding in “Content” category Most active investors • 2016: Release of Oculus Rift, HTCVive, PlaystationVR • Estimated sales of 2.5MVR headsets (Deloitte) • VR/AR market projected to reach $150B in revenue by 2020 (Digi-Capital) • Social and discovery/distribution apps have largely been ignored in first wave ofVC financing as the hardware and initial content of theVR ecosystem have been built.
  • 3. The companies that will scale quickly and create long-term value will focus on distribution over content creation, building a meaningfully connected user base that actively contributes and adds to the community. These platforms can differentiate from Web 2.0
 counterparts by creating ecosystems that necessitate 
 complete immersion and presence, 
 not just 360° video in a headset.
  • 4. The companies that will scale quickly and create long-term value will focus on distribution over content creation, building a meaningfully connected user base that actively contributes and adds to the community. These platforms can differentiate from Web 2.0
 counterparts by creating ecosystems that necessitate 
 complete immersion and presence, 
 not just 360° video in a headset.
  • 5. Photo/Video - 12/100Social - 14/100 Analysis of Top 100 Free iPhone Apps* CONSUMER ENTERTAINMENT LANDSCAPE: MOBILE *March 2016 data 14 have significant Social andVideo overlap (6 of which owned by Facebook) Music - 14/100 Games - 39/100 • Includes apps run by 4 cos with multi-billion dollar valuations • 4 of Top 5 in App Store • Netflix and Hulu only apps not reliant on user-generated content (UGC) • Nearly 5-yr domination by Pandora, Spotify, and SoundCloud (Apple Music as well. but not in App Store) • For obvious reasons, not a target forVR • Industry leaders: Zynga, Gameloft, 
 Rovio, EA, King, Supercell • Frequent and extreme fluctuations
 in mobile game downloads • Only 4 w/ primary focus on
 video consumption Video and social apps have tremendous staying power and account for approx. 30% of time spent on smartphones.
  • 6. Content Creation Tools Content Creators Video Distribution/ Social Platforms End-user 
 Hardware CAMERAS VIDEO STITCHING ANIMATION SOFTWARE OUTPUTGAME STUDIOS ANIMATION & 
 FILM STUDIOS VRVIDEO & SOCIALVALUE CHAIN • Requires rapid iteration, advanced supply chain, and heavy pricing competition. • Headsets dominated by major industry players. • Wearable inputs threatened by motion capture sensors (Leap Motion, HTCVive “room scale,” Intel RealSense, NimbleVR) INPUT • Social platforms mostly device-agnostic • Several video platforms creating their own content (i.e.Vrse, Jaunt) • OculusVideo and Samsung MilkVR come preloaded on headsets • Thus far limited motion- capture tech being incorporated in game experiences •3 most watched videos in Samsung MilkVR app for 2015: The MartianVR Experience, The Dive (sharks), Mtn. DewVR (snowboarding) • VR SDKs available through Oculus, Google Cardboard, Sixense and others • Cameras priced competitively with ranges $400 to $60K SOCIAL VIDEO Social
  • 7. • Historical track record shows aggregation, promotion, and delivery of media properties consistently more profitable than content creation (Columbia Business School: Knee, Greenwald, Seave) • Competitive advantage of increased scale through network effects • Benefit of device-agnostic approach versus device-specific platforms created by hardware providers (i.e. Oculus Social, OculusVideo, Samsung's MilkVR) Distribution platforms have an opportunity to scale more quickly than any category and be the most defensible companies in the industry over the long-term. Content Creation Tools Content Creators Video Distribution/ Social Platforms End-user 
 Hardware SOCIAL VIDEO VRVIDEO & SOCIALVALUE CHAIN Social
  • 8. The companies that will scale quickly and create long-term value will focus on distribution over content creation, building a meaningfully connected user base that actively contributes and adds to the community. These platforms can differentiate from Web 2.0
 counterparts by creating ecosystems that necessitate 
 complete immersion and presence, 
 not just 360° video in a headset.
  • 9. THE “ANONYMOUS”APP BOOM & FIZZLE “Growth Score” in charts is an algorithm determined by Mattermark, accounting for a company’s website visitors, mobile downloads, social media metrics, employees, and publicly announced funding, along with how these numbers are changing over time. YIKYAK SECRETWHISPER • In Mar. 2016 down to under 3K iPhone downloads per week after peak of 82K in Aug. 2014 • Fell from #2 social app in Sep. 2014 to #87 by Jan. 2016 • $73.5M raised, investors include Shasta & Azure Users want to embrace their real identities. 
 With the rise of ephemeral apps, the overwhelming market leader, Snapchat, has users with real identities while anonymous counterparts have suffered. Facebook similarly differentiated from MySpace and others with real names rather than pseudonyms. • Campus-focused app has been center of national conversation on bullying • $61M raised, investors include Shasta, Sequoia,Thrive • $35M raised, investors include GV & IndexVentures • Shut down Apr. 2015 and returned remaining capital to investors
  • 10. – Palmer Luckey, Oculus VR Co-Founder “Virtual reality will make it a lot harder
 to be a total dick to somebody.” • VR is the perfect medium for metaverses — digital spaces that replicate, and in some cases surpass, the physical world. • Early studies have shown that interaction in virtual reality increases empathy and willingness to help others. • VR may surpass video’s ability to emote nonverbal communication. Virtual reality creates real presence and identity, the opposite value proposition of anonymous networks.
  • 11. VRCHAT Raised seed round Feb. 2016 Open source, device-agnostic metaverses are growing. ALTSPACE VR $15.7M in financing • Multiple motion-capture input options • Can share 2D web content (spreadsheets, movies, cat videos) within virtual spaces A live improv show in Altspace. HIGH FIDELITY $17.5M in financing • Co-founded by Phillip Rosdale (Second Life) • 50+ domains, including re-creations of real-life cities
  • 12. The companies that will scale quickly and create long-term value will focus on distribution over content creation, building a meaningfully connected user base that actively contributes and adds to the community. These platforms can differentiate from Web 2.0
 counterparts by creating ecosystems that necessitate 
 complete immersion and presence, 
 not just 360° video in a headset.
  • 13. Creating high quality user-generated virtual reality content is becoming more efficient and less expensive. Entry-point cameras available for as low as $400. VR/360 video stitching and rendering software widely available, led by Kolor (acquired by GoPro in Apr. 2015) User-contributedVR video platforms: $1.8M seed round raised Mar. 2015 Pre-seed raised Dec. 2015 Video platforms with professional content will only survive with big partnerships — Fox Sports, NASCAR, NBA — Disney/ABC, MLB, NHL With rise of UGC for VR, video and social platforms that are confined
 to premium content will be at a substantial disadvantage in scaling.
  • 14. The companies that will scale quickly and create long-term value will focus on distribution over content creation, building a meaningfully connected user base that actively contributes and adds to the community. These platforms can differentiate from Web 2.0
 counterparts by creating ecosystems that necessitate 
 complete immersion and presence, 
 not just 360° video in a headset.
  • 15. Incorporating motion-capture and haptic technology is crucial to the value proposition of VR. Fove headset with 
 eye-tracking technology HTC Vive user & “room scale” sensors creating ability to walk around virtual world. Leap Motion sensor to detect and reflect hand movement into VR. Transforms videos into 3D holograms that users can interact with and walk around. Virtual hands responding from Intel RealSense sensor. Similar concept, NimbleVR, 
 acquired by Oculus Dec. 2014. Distribution platforms that implement these technologies and deliver true presence will give consumers a reason to forgo Web 2.0 alternatives.
  • 16. Startup Stage UGC? Social? Notes Metta VR Pre-seed Exclusively focused on user content; 
 Pre-launch active filmmaker engagement Vrideo Seed Main focus on user-generated content LiveLike Seed Sports viewing with social component; 
 No league partnerships announced Vrse Seed Platform & production house; 
 Created original content for NYT, NBC,Vice Littlstar Seed Mix of user & pro content; 
 API to build video into other apps 8i Series A Turns video into full-volume 360 holograms NextVR Series A Sports platform partnered with PGA, NFL, NBA Wevr Series C User-generated video and animated content; 
 Only available on HTCVive Jaunt Series C Full stack: VR camera, software, production company, & viewing platform Video VR Platforms Platforms focusing on user content must engage with amateur filmmakers to help navigate the complexities of shooting video in VR. The next step: provide fully immersive experiences using light-field and motion-capture technology. Native/Web 2.0 apps: Oculus Video, Samsung Milk VR, YouTube, Netflix
  • 17. Startup Stage Open source? Full immersion potential? Notes vTime (Starship) Unknown Only available for Samsung GearVR & 
 Google Cardboard Beloola Seed Intuitive builder tool for non-developers JanusVR Seed Active Reddit and Slack communities VRChat Seed Has been live pre-VR for nearly 2 years AltspaceVR Series A Excellent community management;
 Prioritizing motion-capture inputs High Fidelity Series B Developed marketplace with user-created items; High quality design Social platforms are a natural fit for VR. Startups should actively manage their early users, create marketplaces, and prove they can attract mass audiences. Native: Oculus Social Social VR Platforms “VR is going to be the most social platform.” -Mark Zuckerberg
  • 18. LOOKING AHEAD • The presence of active market leaders. Leading tech companies are more prepared than traditional media companies were for the rise of the Internet. • Will Oculus, Google/YouTube, Samsung, and others crush any competition? • Active acquisition market? • When will adoption curve set in? Platforms that succeed will require patience, timing, and luck. • The power of network effects. At what size will network effects set in? What benchmarks are required for later stage investments? • The impact of augmented reality. Will release of Microsoft Hololens and Magic Leap come at the expense of virtual reality? Or will entertainment apps always have a niche audience inVR?
  • 19. Corey Schwitz cschwitz17@gsb.columbia.edu @coreyschwitz • linkedin.com/in/coreyschwitz Questions?