Technology has rocked creative industries over the last 20 years. The Virtual Reality Renaissance is now happening while the whole Entertainment industry is facing the consequences of a democratised and marketing-oriented business model for the creative process entailing the devaluation of content. Cross-media projects, crowdsourcing and immersive user interfaces will be key features for VR to have a consistent role in the next-generation Entertainment.

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| The Planet of Creators
Visions In VR: Industry Insights Into The Crea5ve Landscape.
[For IDTechEx conference in Berlin – May 10th, 2017]

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CCI (Cultural and Crea-ve Industries)
Two different perspecIves of analysis
Decision makers
(Top-down)
Ar-sts
(BoNom-up)
Ø Data
Ø Market
Ø OpportuniIes
Ø Self-expression

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CCI Market
Ø 2,250 bn US$ revenues
(1% of global GDP)
Ø 29,5 mn employees
(1% of the populaIon)

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CCI are driving digital sales
200 billion US$ contribu-on to global digital sales
530 bn US$ total sales of digital services
66 bn US$ of digital cultural content in B2C Sales
21,7 bn US$ of Ad revenues from online media and
streaming services
Source: CISAC — the Interna5onal Confedera5on of Socie5es of Authors and Composers

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CCI generate value
Ø In Society
Ø In Economy
Ø In Health and Wellbeing
Ø In EducaIon

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CCI – Peculiari-es
Ø The cultural and creaIve world is
mulIpolar
Ø Cultural producIon is young,
inclusive and entrepreneurial
Ø Digital Economy is acceleraIng
local diversificaIon
Ø The role of women is beNer
appreciated and rewarded

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CCI – To do List
Ø PromoIng author’s rights
[àfair compensaIon]
Ø PromoIng growth
[consolidaIon is back in vogue]
Ø Pursuing global expansion
[opportuniIes in emerging markets]
Ø Balancing on-line moneIzaIon
[value chain distorted by intermediaries]
Ø Nurturing talents
[lifeblood of CCI]
Source: Cultural 5mes: the rst global map of cultural and crea5ve industries, EY, 2015

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BUT!

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MUSIC INDUSTRY

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MUSIC INDUSTRY
Source IFPI

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MUSIC INDUSTRY
Source IFPI

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1) The strange case of Dick Dale
Many older arIsts are touring just to
pay the bills, including medical bills.
That includes Dick Dale, who remains
on the road despite his advanced age
to pay for treatment for rectal cancer,
renal failure, and massive vertebrae
damage

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2) The strange case of Damon Krukowski
Krukowski wrote a scathing feature
for Pitchfork in November 2012 that
berated SpoIfy, Pandora and other
streaming services regarding how
liNle they paid arIsts. CiIng his BMI
royalty check from that year’s first
quarter, he says Galaxie 500 received
a total of $1.05 for the 5,960 Imes
SpoIfy users played Tugboat one of
the trio’s oldest songs.

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What’s wrong with Music?
1. Streaming:
Ø Duplicitous contract structures
Ø Low Payments
Ø Indie/Major arIst have different rates
Ø Priority is not in the interest of content holders
Ø Record labels don’t share IPO gains and other
liquidaIons with arIsts

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2. Sales:
Ø Vinyl sales are sIll a Iny fracIon
Ø Downloads are going worse than ever
à downward technological regression:
streaming pays less than download,
download pays less than physical
formats
What’s wrong with Music?

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3. Business Model:
Ø MoneIzaIon
Ø Touring is unsustainable
Ø Survival problems
Ø Crowdfunding is not an alternaIve
Ø DevaluaIon
4. Ecosystem:
Ø Money first
Ø Shares go outside the industry
What’s wrong with Music?

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5. Album
Ø “Cherry-picking” consumers
Ø Failure to find an alternaIve bundle
Ø They’re promoIonal to live concerts
Ø Less focus and appreciaIon of music
6. Piracy
Ø Constant leaks on major arIsts
Ø Wrong metadata/matching methods
What’s wrong with Music?

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7. Massive Media overload
Ø Harder and harder to get noIced
Ø More access à less music listened
Ø ANenIon-span in compeIIon with other media
Ø Short release cycle
8. Social
Ø Lack of a centralised hub for music fans
Ø FrustraIon among the arIsts
What’s wrong with Music?

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9. Ar-st survival problem
Ø Struggling to make a living wage
Ø Overwhelmed with non-musical tasks
Ø 58% unemployment
Ø Low salaries
Ø Free shows
What’s wrong with Music?

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10. Brain Drain
Ø Low job security for major employees
Ø Companies overpay execuIves
Ø Impossible to hire innovaIve superstars
Ø Disinterest of young people
Ø Very liNle innovaIon dictated by non-
industry players
11. Indie Labels
Ø Geong squeezed
Ø Ongoing downward sales decline
What’s wrong with Music?

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12. Live
Ø High price and infrequent shows
Ø Older arena-filling arIsts are dying
Ø Touring is extremely expensive
13. Songwri-ng
Ø Low salaries
Ø LiNle negoIaIng power
Ø Fake songwriters
Ø Plagiarism
What’s wrong with Music?

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AUDIOVISUAL INDUSTRY

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AUDIOVISUAL INDUSTRY
266,17 bn US$ in revenues
(13,8 bn US$ streaming)
Source: Film Industry Network
38,3 bn US$ revenues
(worldwide box office)

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AUDIOVISUAL INDUSTRY
Source: Film Industry Network
Ø Most lucraIve sector within the ICC
Ø Forecast to grow by 24.3% by 2018
Ø Booming in emerging countries
Ø In mature countries, increasingly popular

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AUDIOVISUAL INDUSTRY
Source: Film Industry Network
Ø Global box office is driven primarily by Asia
Ø More compeIIon between mature and emerging
countries
Ø Strong growth by 2019
Ø Rising of new digital distribuIon: Neslix

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What’s wrong with Movies?
1. Funding
2. Employment: 19% drop in 2 years
3. Theaters are loosing their charm
4. Global market for high budget movies:
triumph of super-heroes, acIon franchising

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What’s wrong with Movies?
5. Talents are moving to TV
6. Improving VFX to abract people into theaters
7. Neclix is star-ng to produce their own
movies
8. Lack of government grants for
short-movies

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What’s wrong with Movies?
9. Lack of success content in different markets
10. Lack of regula-on
11. Crews don’t know legal rights

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GAMING INDUSTRY

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Source: ESA
GAMING INDUSTRY
90 bn US$ revenues (2016)
ARPU 39,32$
Forecast:
1,331 bn $ 2017 --> 1,598 bn $ 2021
77% digital/44% physical sales

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GAMING INDUSTRY
Source: ESA
Ø 67% households own a device that is
used to play videogames
Ø 65% of households are at home with
at least one person who plays
3 or more hours of videogames
per week

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GAMING INDUSTRY
Source: ESA
Ø Average gamer is 35 years old
Ø 53% mulIplayer games once a week:
6 hours playing with other online
and 5 hours playing with other
in person

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GAMING INDUSTRY
Source: ESA

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GAMING INDUSTRY - Facts
1. Improved compu-ng power at lower cost
2. Integra-on of game development and publishing business
3. Improved infrastructures
4. Inves-ng is challenging
5. ESRB: introducIon of gaming raIng system

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GAMING INDUSTRY - Facts
6. High seasonality trends
7. Lack of a clear market leadership
8. Gamers’ interest:
Graphics 67%
Price 65%
InteresIng story 59%
Online gameplay 50%
ConInuaIons 48%
Familiar 47% (ESA 2017)

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What’s wrong with Videogames?
1. Though challenges:
- to mantain year-over-year revenue growth
- to compete with increasing global
compeIIon
- development, producIon and markeIng
cost are rising and complex
- aNriIon notes (both consumers and
employees have more opIons)

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What’s wrong with Videogames?
2. DLC is going out of control
3. DRM fails too ohen
4. Overserialisa-on
5. Vicious metacri-cs

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What’s wrong with Videogames?
6. Press Embargoes
7. Digital Pre-order Bonuses
8. Micro transac-ons in full-price game
9. Struggles for indie à Professionalism

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COMMON THREADS
1. Low Barriers
2. Extremely High Compe--on
3. Access to funding is crucial
4. Content:
- Visuals over story (mainstream)
- DevaluaIon/unprofessionalism (indie)

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COMMON THREADS
5. Big, complex projects
6. Interest in new stories increases with more interac-on
7. Interac-on is becoming more and more successful
8. Global and digital mean diversifica-on
9. Crysis of communica-on skills for old media
10. Familiar content is more appreciated

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BEHIND THE LINES
1. Relevant, independent produc-ons are disappearing
2. The emo-onal threshold is really high
3. People want to be part of the game
4. Two types of creators:
- “New creaIve class”
- Full-Ime workers

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VIRTUAL REALITY
- and its potenIal to reform the CCI -

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HOW – near future
1. MUSIC: by improving the experience of musical events
2. MOVIES: by adding interacIon
3. GAMES: by enabling full immersion

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HOW – later
1. By selng the Metaverse: a unique, global, creaIve
background to act as a common ground for local
diversified content producIon
2. By using generic content to hit the global market
3. By using crowdsourcing to engage creators
4. Wise use of AI and genera-ve algorithms

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WHY
- VR market is increasing (80 bn US$ industry in 2020)
- 2,3 bn US$record of investment in 2016
- Some Itles already hit the million ground
- 63% gamers are familiar with VR
- Over 90% are saIsfied with their purchase
- 74% of VR play single player games
Sources: Goldman Sachs, Digi-Capital, IDC, Road to VR, Digital Trends, PS4-Magazin

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HOW FAR WE ARE
Applica-on of old formats to VR
TransiIon takes Ime for changing behaviours
1) consolidate behaviours for existent markets
2) consolidate VR into the landscape

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Ø Ac-on Game X Music Crea-on: The first game where the music
created by player is directly changing the gameplay
Ø No Music Skills Needed: In-built audio assets make the process of
creaIon intuiIve even for non-skilled musicians
Ø Costumice story soundtrack: players creaIve capabiliIes change
the music for the story

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49. PHASE 1: Crea-on Mode
Ø Control a team of eight caracters, each of them
equiped with their own samples
Ø Variety of music thanks to different sample packs
Ø Every character has disIngued music style
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info@nilasphere.com

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51. info@nilasphere.com
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PHASE 2: Bable Mode
Ø Fight with a different weapon depending on the
track you created
Ø Every fight is different, either you can aNack the
distance with a crossbow or have to wait paIently
to aNack from close range with sword and shield

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FUTURE IMPLEMENTATIONS
Ø Multiplayer and Co-Op Mode (also for VR-Cafes)
Ø Creation Lab where players can create there own
samples using ingame instruments
Ø Marketplace where players can upload and share
there created soundtracks and samples

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The Planet of Creators
info@nilasphere.com
www.nilasphere.com
+49 1522 6145608