1.
Virtual Reality
The ‘Virtual Reality Society’ defines Virtual Reality as: “Virtual reality is the term used to describe a
three-dimensional, computer generated environment which can be explored and interacted with by a
person.”1
This includes Augmented Reality, in which virtual elements are incorporated within the real
environment to create a ‘mixed’ reality.
Virtual Reality is not a new concept. It has, in one form of another, existed for centuries. Anything from
360 degrees art exhibition to truly engaging theatrical performances can technically be considered to fall
in the paradigm of Virtual Reality. These products offer the end-user an immersive experience and
creates an illusion of being in a different ‘reality’, albeit ‘virtual’.
Today’s Virtual Reality Apparatus primarily consists of a Head-Mounted-Device. This HMD can have a
built-in screen that displays a stereoscopic 3-dimensional imagery or can incorporate a smartphone to
display such imagery. Using a divider, and a couple lenses, it can recreate, for the end user, a three-
dimensional landscape. Some of these also include few cameras and mapping sensors to capture real
landscape to incorporate virtual elements onto for a more ‘mixed’ reality approach. The processing
capabilities for the units are provided by the smartphone, or by a computer equipped with a VR-capable
Graphics Processing Unit. It may also include interactive interface in the form of hand-held controllers
that enable the user to interact in this virtual reality. For our purposes, we will include AR within the
realm of VR.
Virtual Reality is a new paradigm for end users, and has started to be used for increasingly large number
of applications. It is being used for Media consumption, Gaming, Training, Tourism, Retail, and much
more. As the industry is emerging, right now, the main target market for this technology are: consumers
who want to experience Virtual Media, Gamers, retailers that use virtual reality to simulate their
products in 3D, and companies that use Virtual Reality to simulate work-flow and train their employees.
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2
http://www.i-runway.com/blog/patentees-drive-to-make-the-virtual-real/

2.
We have seen a dramatic surge in VR related patent filings in the last decade, as illustrate by the
diagram above. As is with any new technology, the trend of patent filings is usually directly proportional
to the emergence of an industry, and it remains true for the VR/AR industry.
But the true measure of the emergence of an industry is the amount of revenue an industry generates.
While sources may differ in the expectations and forecasts, the expectation remains unanimous among
most industry experts: VR is expected to grow tremendously over the course of the following decade.
The following is a chart that illustrates the current investments, and the succeeding chart shows the
expected growth in the industry.
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3
https://www.cbinsights.com/research/augmented-virtual-reality-funding-trends-q2-2016/
4
https://seekingalpha.com/article/3963242-nvidia-technological-shift-drive-earnings-roof-next-years?page=2

3.
It can be concluded from the above chart that VR is expected to steadily grow over the course of coming
years. The biggest piece of information from the above chart is that Augmented Reality is going to dwarf
Virtual Reality in the coming years. VR is limited to Gaming, Simulations and Media Consumptions. But
with AR, we can expect this technology to make truly ground-breaking possibilities in the future.
Augmented Reality is going to benefit mankind tremendously by increasing utility, productivity and
could replace traditional media forms and modes of interaction.
The following is a current sales data in the industry, which includes breakdown of some of the biggest
players in the industry, that supports the above forecast:
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VR is the hottest technology since eCommerce or even sliced bread for that matter. Over the course of
next decade, VR could supplant personal computers and smartphones as the main daily consuming
device for media and even become an invaluable utility device like the smartphone has become today.
Education, Entertainment, Dating, Utility, and any other imaginable field of usage is set to receive the
VR/AR treatment and stands to benefit tremendously from it. The diversity of the potential usage of the
technology, using conservative forecasted revenues, is illustrated in the chart below:
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https://www.tweaktown.com/image.php?image=imagescdn.tweaktown.com/news/5/8/58383_881_oculus-rift-
price-slash-spurred-low-sales_full.png

4.
6 7
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https://www.statista.com/chart/4602/virtual-and-augmented-reality-software-revenue/
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http://www.thevrfund.com/wp-content/uploads/vr_industry_aug2016.png

5.
The above image highlights some of the most prominent companies in the industry, and although it is
very intensive, it is not exhaustive. The above diagram does not include hundreds of smaller companies
and startups that cater to the content and even development of the technologies and services
pertaining to the industry. There is very high competition in the market, and it is very fertile for
innovation.
There are numerous platforms, many applications, and a growing number of content creators. While
there are big players in the military and industrial scale VR companies, it is generally a harder market
segment due to high cost of entry. For our purposes, we will focus on consumer-grade VR technology
and companies catering to this market segment. Given the low cost-barrier for entry into the market-
segment, it is very competitive and highly innovative
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There are many vendors catering to the VR market. The above industry chart shows the breakdown of
VR content and VR platforms.
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http://www.01consulting.net/wp-content/uploads/2016/12/VR-Vendors-Market-Share-3.png

6.
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For now, Gaming remains the largest consumer VR application, and Sony is leading the market.
The Hardware
9
https://www.vrfocus.com/2016/03/superdata-releases-new-vr-market-forecasts/

7.
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As the industry has started to emerge, a couple of industry standards have been set in terms of the
hardware, and the platforms for VR consumption. The primary devices used for VR immersion today can
be categorized into four segments:
1. Smartphone-Based
This section employs a smartphone, inside a special VR head-unit to deliver VR content. This is the
fastest growing segment, as it builds on an existing and plentiful hardware (smartphone) to deliver
VR content to the users. Since the related VR-head-unit has an extremely low cost of acquisition for
the consumer, this has been the basis for consumers to demo the VR experience. Google first
launched ‘Cardboard’ as an entry level application to compete with Oculus, but has now become
ubiquitous with VR. Although companies like Samsung have built on the platform to create product
such as Samsung Gear VR to produce a more premium product, the market is saturated with generic
cardboard-like products from hundreds of manufacturers.
2. Console-Based
There are a handful of console manufacturers, and the console use proprietary VR head-units. Since
it builds on existing platform, this is the best platform to deliver gaming-driven VR. This is the fastest
growing segment. While there is growth potential in this segment, the use of closed infrastructure
means that it would be very hard to enter this market segment.
3. PC-Based
PC-based VR headsets are the best VR-experience to be had right now. With products such as Oculus
Rift, any PC equipped with VR-capable discrete Graphics Processing Unit can be used to enjoy VR
content. While the cost of entry remains high, this market-segment is projected grow tremendously
as the processing capabilities are based on a PC.
10
https://www.strategyanalytics.com/strategy-analytics/news/strategy-analytics-press-releases/strategy-
analytics-press-release/2016/04/13/strategy-analytics-oculus-rift-htc-vive-sony-playstation-vr-will-dominate-$895-
million-virtual-reality-headset-market-in-2016-on-just-13-of-unit-shipments#.Wf9VLohrw2w

8.
4. Standalone
While this segment has just started to grow, it remains highly competitive, diverse, and rife with
innovations. On the traditional side of the spectrum, there are companies such as Sulon which
provide an all-in-one unit to achieve VR on a (pair of ) screen with their Cortex , and then there are
companies such as Avegant which use retinal projection to achieve the same. There are also
companies experimenting with mixed ‘reality’ such as Microsoft with their Hololens, and the Sulon
Cortex.
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As the industry is starting to emerge, the standards are being set. But there is still room for innovation,
and the current industry structure aids and rewards innovation, and fosters constructive competition.
VR and Porn
Sex is one of the most powerful driving force in all living beings. Biologists will unanimously agree, that
the sole driving force in the world is the continuation of species, which is why sex still remain the
primary motivating factor for the human condition. This carnal instinct can, and is usually used, for
constructive non-sex related endeavors. But human beings are complex animals, and sex still drives
much of human endeavors and aspirations.
It should come as no surprise, then, to analyze the ‘sex’ potential that could drive industry emergence.
There is precedence to this approach. Pornographic material has, in the past, been one of the primary
driving force behind many of today common media. Artists have realized the power of sex, and many of
the artistic masterpieces from history (cave drawing, painted vases, copulating sculptures, nude
paintings, etc.) have an air of erotica to them. Some of the earliest ‘moving-pictures’ featured
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http://www.psu.com/news/29059/PlayStation-VR-price-to-hit-$400-600-says-research-firm

9.
pornographic material. More recently, the rise of VHS has been attributed to pornography, because it
could fit longer videos compared to its early, superior rival Betamax.
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Early days of Internet was limited to character-based interfaces. But, as soon as users could share binary
files over the internet, pornographic images were most prevalent. In 1995, Phillip Elmert-Dewitt
reported on Times Magazine cover story “Cyberporn”, that 83.5% of the images on ‘Usenet’ were
pornographic.13
In the early days of the internet, the word ‘internet’ was synonymous with porn. The
growth and adoption of the internet is attributed to porn.
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12
http://www.internethistorypodcast.com/2015/01/history-of-internet-porn/
13
http://www.internethistorypodcast.com/2015/01/history-of-internet-porn/
14
https://www.dailydot.com/business/eat24-advertise-porn-sites-data/

10.
Today, about 30% of all internet traffic is porn. And one of the hottest search term within porn is ‘VR
Porn’. VR porn has become one of the biggest market-segment within VR industry.
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Therein lies the Ethical Dilemma: Pornography is one of the major driving force for VR. But Pornography
raises questions about morality and ethics. Pornography has become a multi-billion-dollar industry, and
while it is legal within certain constraints, there is a tremendous potential of exploitation of women and
men of increasingly younger age.
Pornographic acts between consenting adults ae legal. But as the demand for young faces in porn has
grown, it begs the question if an 18-year-old has the capacity to understand the consequences it brings
to their own life and the ramifications towards the society as a whole. Moreover, there are always
criminal elements at work that exploit women and children into such jobs.
While there remains tremendous potential for Pornography to drive the emergence of this industry, we
need to be aware of the exploitation that exists in the industry. If left unchecked, there could be a
backlash towards the VR technology and industry, stemming from the potential unethical and immoral
practices surrounding the porn industry. It could ultimately stunt the growth of the industry.
To combat, and hopefully prevent such unfortunate outcome, we need to put in effect a stringent set of
rules and regulations that protect the potential subjects of abuse in the industry. To curtail the
consumption of tobacco, we recently raised the legal age to buy tobacco to 21 years of age. We need to
raise the legal age to participate in pornographic media to 21 years of age. Furthermore, we need to set
up institutions to help women get out of such a situation if they are being coerced. We also need to
train and educate the police and relevant task-forces as they relate to crime in an age of internet. But
the most important step we can take, would be to invest in education. We show them what is at stake.
We need to let them know that there is help. And we need to give them a set of skills that is relevant in
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https://www.marketwatch.com/story/how-the-future-of-virtual-reality-depends-on-porn-2015-07-15

11.
today’s economy such that they are able to make a living and do not fall into the traps of pornography
out of desperation.