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How do You Make Money in VR? Content Comes First

Unite Europe 2017 has officially kicked-off this morning, with the virtual reality (VR) content taking centre stage in a talk by Julie Shumaker, Vice President of Business Development of Advertising at Unity Technologies, subtlety entitled ‘Get Ready: The Money is Coming’. But how, you say? Shumaker insists that if you create compelling content, advertisers will soon follow.

Shumaker began her presentation by discussing the continued development of advertising, from print ads to radio, television, internet and mobile. In each era, advertising copied the principles of the medium before it in the first instance, opposed to adapting to the unique benefits of the new technology. It took time to for advertising creators to learn the rules and establish convention for new opportunities, so VR will follow the same template, right?

Unite Europe 2017 Julie Shumaker

Unity Technologies is keen to ensure that this doesn’t happen.

“At Unity, we believe that advertising in VR can be even bigger than what we’ve achieved in mobile,” states Shumaker. “What it’s not is a micro app that a creator spends millions and millions of dollars distributing… think of it as an easter egg, or a hidden target behind the wall. The user chooses to follow Alice through the looking glass.”

Shumaker suggests that creating an environment or ‘virtual room’ should be the baseline standard for content creators. Placing a billboard, poster or virtual object in these environments is an easy and immediate route to advertising revenue, but possibly not the best opportunity VR provides.

“First of all: content is king,” Shumaker echoes the sentiment of videogame development for the past three decades, before adding: “Advertising drives content.”

It’s a chicken-and-the-egg scenario. Developers need funding to create content, but advertising want existing content as proof for their investment. The new opportunity brought about by VR is one of consumer awareness of advertising and the potential relevancy to a product’s audience.

“Consumers choose ads. Almost 80% of consumers choose ads in exchange for content,” states Shumaker, obviously referring to the modern opportunity given by mobile to exchange advertising revenue for in-app purchases (IAPs). However, will this model catch on in VR?

To Shumaker, context is important. While the above product placement is an easy opportunity, it’s not a huge revenue driver. Furthermore, if the product isn’t one which appeals to the VR experience’s audience it won’t resonate well with consumers. Context, then, has to be positioned ahead of the importance of the revenue stream.

What lessons are to be learnt from Shumaker’s talk? In honesty, it’s the same catch 22 situation that VR developers will already be familiar with: the content needs to be built first to attract consumers, and once the consumers are there the advertising revenues will follow. No answers were provided for that middleground we’re in now: VR is finally becoming established as a consumer medium, but how will developers survive until those revenues become available?