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VOLUME 4 | NUMBER 1 | SPRING 2016

Virtual Reality Deals: A Business Evolving

Michael Ashjian, Esq.

Michael-Ashjian-portrait Michael Ashjian is an entertainment and corporate attorney focusing his practice on business and intellectual property transactions. He is also the Director of the Arpa International Film Festival, held yearly at the Egyptian Theatre. 

In his final comments during his fifth year presentation of Trends, Fads & Transformation at the USC Institute of Entertainment Law and Business, Jeffrey Cole, PhD expressed that virtual reality (VR) is "very real".

Cole was right. Recent reports anticipate the industry growing by $150 billion1, and companies like Facebook, Sony, Samsung, and Google have invested a lot of money in order to compete in the marketplace.2 Initially intended for gaming, people and businesses are seeing the potential for VR in every industry, like education, film and television, medicine, tourism, the adult industry, and fashion.3

This is an exciting time as there has been only a few times in history where a new medium is born. What's more is that exhibiting VR content does away with passive viewership, and creates a very interactive and immersive experience of consuming content.

But what does that mean for content creators, and how will their agreements change given this new medium?

Defining Virtual Reality Content

Agreements evolve over time and precedent will always be the basis of crafting VR contracts. However, as more ways of monetization are created, services contracts will differ from the standard actor and producer services deals.

The aspect of VR deals which will now be standard is defining what exactly it is the producer will be creating. The explanation and inclusion of terms like "immersive media", "three dimensional environments", "simulating the physical world", "creating of visual and sensory experiences", "virtual reality", and "digitally recorded" are vital to define the specific type of virtual content the hiring party is expecting of the producer.

Moreover, what I think is most important to include in that same section is that the content shall be protected regardless if it is "displayed or exhibited with or without a head mounted display or goggles." This statement is akin to the rights provision "in any and all media now known or hereafter devised." Similar to those acquiring or maintaining rights who would like to own copyright in any medium over time, if and when news ones are developed (now VR), VR content owners want to maintain rights of their virtual content irrespective if they are exhibited (or experienced) through goggles, or any other displays that may be created in the future to interact with the VR content.

Virtual Reality and Brand Integration

Many legal professionals around town are concerned about the potential trademark and copyright issues that might arise from use in VR environments. This will require more effort on the part of a company's marketing, legal, and graphic design teams as logos and copyrighted material will now be in three dimensions and need extra care and attention in how it's used and where it is placed.

That being said, VR provides an opportunity for consumers to interact with brands like they've never done before, specifically, to create lasting impressions.4 Car companies can introduce concept cars and have people feel what it is like being inside the cabin. Foreign purchasers of real estate can be completed by showing the potential buyer what the house truly looks and feels like.

Virtual Reality Distribution—Problems to Overcome

TV programs and feature films only had two mediums to consider before the internet and the mobile revolution took over.5

There are several problems with VR distribution to the mass market and the potential adoption by a critical mass:

Hardware and Constraints of Space

Most of the higher quality VR headsets have the user connected to a computer or control station through one or more cables. As you are immersed in the experience of what you are watching, it is very easy to lose sense of the real physical space and either tangle yourself in the wires or walk off with the headset still on and pull whatever device the headset is connected to.

Low Inventory of Quality Content

Because of the problem mentioned above and the overall lack of demand for headsets prior to this year, the market does not have a lot of quality VR content to choose from. However, given that "Digital Hollywood" this year was almost entirely dedicated to VR, and its continued development, it is not difficult to predict that quality content will enter the VR space in the very near future. Moreover, content already produced may be converted into VR capable formats.

VR Is Not Mobile

Everything about VR is not mobile. As explained above, you are either tied to a computer or you have to carry around bulky goggles everywhere you go. In this respect, Google Cardboard is the best option, as they are small, lightweight, and easier (kind of) to transport. However, what you'll find is Cardboard lacks the quality expected of this new age technology compared to the other devices. Also, you would not be able to use the headset while walking in public since your line of sight is completely blocked (except HoloLens). As mobile exceeds PC's in internet usage for the first time in history6, this is still something necessary for developers to overcome.

However, uncertainty and difficulty entering the market occurs with all new technology and innovations. As discussed above, the uncertainty of virtual reality is very real and it will be interesting to see how things progress with this medium.



1 http://venturebeat.com/2015/04/06/augmented-and-virtual-reality-to-grow-to-150b-by-2020-forecaster-says/

2 http://www.wareable.com/headgear/the-best-ar-and-vr-headsets ; http://www.ibtimes.com/virtual-reality-should-you-buy-samsung-gear-google-cardboard-or-osvr-hacker-dev-kit-2142308

3 http://www.nytimes.com/2015/10/21/business/tommy-hilfiger-introduces-virtual-reality-headsets-for-shoppers.html?_r=0

4 http://techcrunch.com/2015/10/20/what-the-growth-of-virtual-reality-will-mean-for-brands/

5 http://www.theverge.com/2015/10/8/9480779/google-search-mobile-vs-desktop-2015 ; https://www.shopify.com/blog/15206517-mobile-now-accounts-for-50-3-of-all-ecommerce-traffic

6 http://searchenginewatch.com/sew/opinion/2353616/mobile-now-exceeds-pc-the-biggest-shift-since-the-internet-began

                                                                                                                                                                         
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