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E66 | Monetizing VR Content | Samuel Huber

by How To Create VR
September 20th 2019
Today’s guest is Samual Huber, the founder of Admix, a monetisation platform for VR, AR and games that has raised $2.4 million dollars in funding. In this episode, Sam and I will be chatting all abou... More
want to know how to monetize your VR experiences then this episode is for you. So let's get to it. You are listening to the how to create VR podcast, weekly conversations with V. R. And A R. Professional creators, designers and producers. Hello and welcome to another episode about how to create the our podcast where I speak with professional creators, designers, developers and producers who work on V R A R and M R. Projects all marcelo in a VR evangelists and the creator of how to create VR dot com. My guess is Samuel Huber, the founder of Ad Mix, a monetization platform for V R A R and games. That has Raised 2.4 million dollars in funding today. Sam and I will be chatting all about how to make money as a creator with V R and A R. But before we get started, I want to remind you to register at how to create VR dot com. It's free. And registration gives you access to all of our content, including tutorials, podcast interviews and more. Just visit how to create VR dot com and click on the register for free button.

All right, SAm, welcome to the podcast. Thanks for having me, glad to be here. We're all doing VR. And the big question is when are we going to make money with this? So we're going to get into that today because that's your focus of your business. Yeah, that's right. But before we do that, why don't you just tell us about yourself, give us your background, How did you get to the point where you are today? Yeah, sure. So I started my career as an engineer but always wanted to do my own thing, launch my own business. I was very creative teenager always whether it's writing stories or building applications or drawing. So as an adult, the best way to do that was to create my own business. So in 2000 and 14 I ended up leaving my job, put together a small game studio, We had seven people and we're developing games for ourselves, our own ip, but also for clients like Unilever or Amazon for example. And through this period of time we had some successes ended up selling one of our games. Also a lot of frustration mostly around monetization and how to actually make money from the content that we created. And through that period I was also paying attention to the new media. In 2015 I tried my first VR experience and I was really blown away by the flexibility that they would bring to creators the ability to tell stories in completely new way and really immerse the user within the experience.

And as I was starting to do that and developing our first piece of IP NvR, I realized that a lot of the infrastructure, the tools that we used to rely on when we were building mobile, such as monetization or analytics or user acquisition. All of that was completely lacking for VR and AR as well, pretty much we had to do everything from scratch and therefore kind of the idea grew in my mind and eventually decided that this was the big opportunity was to help the creators by building this infrastructure for them. And that's really what makes aims to do. We're going to get into that. But you said you were an engineer. Were you a programmer? No, actually I was mostly a mechanical engineer. So I was programming. I was working in Formula One for Mercedes for two years and I was writing a lot of code for the virtual engine basically, which is mostly algorithms using meth lab and physical type of programming. So I had a couple of years experience in that, which obviously helps me to understand a bit of the code but I wouldn't classify myself as technical, as far as building the RNA are right now. You mentioned you actually created of your experience.

Can you tell us just a little bit about that? We actually didn't really go very far with it because as soon as we started building this and this was basically a simple shop experience at the time for one of our retail clients where we wanted to build a shopping experience in VR. And as we started this, we very quickly realized that we're going to hit all kinds of challenges in terms of monetization, user acquisition. The user base was not big at this time. So very quickly pivoted towards creating my new company, which is that and what was that first VR experience you tried, That blew your mind. Do you remember what it was called? Face your fears, It's not very original, Everyone knows it. It was actually on the Samsung gear, so not even high end, but just downloading it on the phone, putting the phone in the case and then being transported on the top of this building and then really looking the whole city from above, being able to move around and I thought, wow, this is just going to completely changed the game. I used to develop mobile games where really the screen is so small, right? We have this small real estate, this rectangle and we have to cram all kind of goofy Within this little space and then all of a sudden I had 360° all around the ability to move the depth that comes with VR and I just thought this is really going to change the way that we are telling stories at the same time.

It's also going to take time to adapt between these two completely different platforms. So I thought that was fascinating and that we're just scratching the surface. So why are you such a believer of er, and er, if you look at what happened in the past, initially we had this massive mainframe computers and then eventually we brought them within the home. Then eventually we put these computers in our pockets with the mobile and then the next step is basically to strap them on our faces so that, you know, it's always there and we don't really have to worry about it, it becomes really part of us. So I really see it not as a new device or a gimmick, but really is just a natural evolution of computing, which is why we call it a new computing platform. And so this is why I think it's just a natural evolution of the way that we're going to consume content. We went from telling stories with words then with pictures and videos. The next step is to be able to be transported within the story. However you look at it, it just becomes this evolution of computing platforms and really the ultimate way to be able to tell stories and share information for me, the big transition, it's not only the fact that it's V R A R, it's really the transition from two dimensional contents that is displayed on a screen and three dimensional content, the world around us is in three D, we think in three D and for the first time we're going to be able to convey information in three dimension as well, without having to lose a dimension because we projected on the screen.

So it's kind of just an evolution of where we should have been already. I agree with you 100%. It's funny that you say, we think in three d. Because whenever I do presentations on VR, I say that the interface of VR is the interface. We were born into the Z access when we open the door, we grab the handle, we don't push a button that says open door. And in the same thing with the are so 100% agreement with you. So tell us about ad mix what is add mix. Just give us a quick summary or overview, add mix. So that makes aims to build that ecosystem of tools for creators to be able to scale killer applications, which is a very broad vision. And the first step to do that, we believe is monetization. So it's giving the ability for the creators to capture value from the user base as little as this user base, maybe when a user is using your VR experience, you should be able to capture value from them whether it's charging for the game. Of course we know that paid content doesn't really scale. It's not the best way to get a million user in the application, for example. So there are other alternative business models that are going to become more and more popular, such as advertising virtual goods or in a purchase.

And so we are building the infrastructure to support that. The first step, we're focusing on advertising, it's the low hanging fruit. So we have a sDK that can be integrated with Unity and that enables the creators of virtual reality or VR but also games and sports to create nonintrusive inventory. And what I mean by that is basically you can literally drag and drop a billboard in the street that you're building in VR or a video playing on the screen or even a three D. Product directly on the table, like a kind of coconut table or a car in the street. So you're able to play sponsored content within your experience. And the sponsored content is paid for by brands and every time one of your user engages or sees the sponsored content, the creator makes money. So it's a way to sponsor your content creating advertising. But in a way that doesn't interrupt or intrude on the experience because as we know, the last thing that you want to do is place a pre roll video or knowing banner at the bottom of the screen. That doesn't work in three D. Right, it works very well on the two D screen.

But we've seen that between the tv and the web, the mobile advertising has evolved to match the platform. Now we're moving into three D. With DNA, our advertising needs to evolve as well and we believe that the answer to that other product placement that we're building. So a couple of questions come to mind about that number one is obviously today, the market is pretty small still, what's the incentive today for companies, let's say not just with your system but in general to pay for advertisement. And the other thing that comes to mind also is the Ready Player One Oasis where they're talking about being blasted with ads everywhere. So have you thought about the market size and also about the user reaction to having ads in virtual reality and what's your take on those? For the first question? Obviously we're building this infrastructure for the future. It's not going to take that long to have a decent amount of users using the on a are we already have close to 10 million monthly users if you include mobile via as well. And for the brand, it's just a new audience. More and more. We're consuming three D content, whether it is already within a headset or its e sports or games.

And as I said before, the big transition is the two D. To three D. And if we look at that and we don't really bother about are we consuming it in a headset? Are we still consuming it? Only two D. Screen? It's still three D. Content. And this content is not being monetized properly. And if you look at what Millennials and even more, the new generation generation Z is spending their time on. It's mostly within three D. Content. This is how they interact with friends. This is how they spend time and that is completely untapped in terms of advertising because the existing advertising, which is the banners, the videos is just not adapted to three D content. So this is where we're starting to broaden the audience. So we're able to target all kinds of games, sport, but also via an A. R. And for the creators to look at what happened on mobile. Most of the apps were paid for. Initially only a fraction, about 15% were free apps monetized with advertising because the infrastructure was not there and fast forward 10 years now, it's less than 5% of the apps that are paid for on mobile and the rest is monetized through in a purchase or advertising and the same transition is going to happen for the on air.

So those alternative business model that you might think are not really useful now because the number of people is not big enough or it doesn't seem to be the preferred business model is going to be the business model of tomorrow. Historically, advertising has supported the growth of every single massive mainstream media and it won't be different for beyond What about what people will think about advertisement everywhere. NVR look, I don't think that people hate advertising. I think that people hate bad advertising, intrusive advertising or advertising that is irrelevant. We can see it right now with lulu for example, where 70% of the users are using the free account sponsored by advertising, even netflix is starting to think about how they can reach. Users who are not willing to pay $9 a month for their contents, I think if you do advertising the right way, and if you give the creator of the control over the advertising experience, then it's down to them to not mess up their own experience and create something that the user would like. And this is really what admits aims to do for the first time, every single bit of the advertising experience is controlled by the creator, they import sdK, they place the banner on top of their building, they can resize it, they can apply a shader on top of it, they can decide when it triggers how long it stays on the type of advertisers that they want to have.

So for the first time, they control the entire experience. And what it means is that they will not mess it up because it's their experience. And, you know, they would be free in theory to put as many ads as possible. But we see in practice that they don't do that because they want to make sure that the end user actually like the experience, not to mention that a lot of times, it actually adds to the realism of the scene. What are your thoughts and product placement? And like they've used for many years in filmmaking, where it's just part of the story. Absolute. And we actually just launched 3D ads, which are effectively product placement. So we started with banners and videos to get more volume because advertisers already support those formats. So it's a lot easier to get started and get feedback from the end users, but of course, the long term vision, it's not to stick to d banners in virtual worlds is to have three D product that can be really within the story. Part of the story, as you said, we've launched that, we've run a lot of tests with multiple brands in the Fmc G space or fashion, for example, or sneakers brands And the response has been just amazing at the moment, or 3D heads of three levels of interaction.

So you can just look at the ad and something happens or you can interact with it. There's another layer of interaction, but in the future they will be fully interactive. You really be able to, as a developer integrated within your scene and assign any kind of action that you want. So if you have a card game for example, you could imagine that your car could be sponsored by Maserati for example, and this is something that would be able to do, bring the physics, the gaming mechanics as part of the ad as well, which is obviously a massive tech challenge, but that's really where we see things going. The beauty of that is as a creator, you're able to literally place 50 or 100 ads product placement within a scene and as a user, you will not figure it out. It really looks like it's part of the environment, that bottle that is, there is sponsored by coke, but it doesn't intrude. It doesn't create a bad experience is just they're just part of the story. Exactly. So you're able to actually place a lot more ads but creating a much, much, much better experience, which works for everyone because the creator makes more money, the brand get more exposure and the end user gets a better experience, which is the first thing that we really care about.

That makes a lot of sense. So let's move a little bit away from ads and talk about other ways of monetizing One of the trends that I've been noticing in mobile, at least I'm a big fan of mobile photography in a lot of the mobile photography apps. Now, the trend that I'm noticing is towards re occurring income. Right? Making it more of a membership where you pay yearly. How is that going to play in VR? I think subscription definitely has a place, you know, we're not saying that advertising is going to be the only way that you can make money as a creator, that's not what it is. What we're trying to do is to create optionality for the creators historically paid content is only a few percent. Not everyone is willing to pay up front. As you said, it's more and more subscription and of course the cheaper you can get, the more users are going to get. That's just a natural law because even if people think they hate ads, there's something they hate modern ad, which is paying for things. Exactly, right. You can always reduce the cost. I think subscription is working well. You know, we can see companies like Netflix or Spotify and that's obviously super successful.

But I think to ask for money regularly, you really need to provide premium service. You also need to have a brand that is probably already recognizing the space to convince people to actually give you money every month. And again, that's a really, really small fraction of all the creator, most creators, they're putting a game, they're putting an app in the store. They're not well known and the best way for them to get users and to build the name so that in the future they might be able to charge a subscription in my opinion, is to do a free application and marketed as much as possible to get to a certain critical mass before actually started monetizing if we follow the trend of the web, that's how it started. Right. It was all free than advertisements then went to freemium and now you have apps that you pay basically yearly. But it took many years to Get to that point. Right, right. I think actually studying by charging for the app, like we can see right now on steam, we actually made an analysis where I think it was 28% of the apps today are paid for in VR, which actually matches pretty well the number of paid app on the mobile in 2008 after one year, the app store.

So we're going to see the same trend. I think it makes sense to charge for the apps today because the audience is mostly early adopters and they've already invested a lot of money in the headset. They are willing to pay money for this stuff. They love the any money and we also they're much more likely to pay for a piece of content upfront. Especially today, as most of this content is games and gamers historically are happy to pay $30, $40, $50 for a piece of content. So today it makes a lot of sense to charge. Probably how you can make the most money, but I can pretty much guarantee that next year the number of paid apps is going to drop by about 50% in my opinion. So let's revisit this conversation in a year, 18 months. I'm pretty sure that they will be less than 50% apps that will actually be paid for. All right. It's recorded, we'll hold you to it and we'll check it in a year. All kidding aside. Yeah, I agree with you completely. Now we've been talking about at least with your system putting it into unity and unreal. But we're also there's a big portion which I think the future is of VR is web VR and bringing virtual reality through the internet.

I think that's when it's really going to be adopted in the mass and specifically in the enterprise. So how do we monetize for the enterprise? We are because really right now you're either making money by selling a game or you're making money by creating a VR experience for the enterprise. I mean those are the only two places where you can really make money today. So what's your take on web er and monetizing that for the future? We are definitely going to have a solution for that. It's just basically building another sdK for where we are. That's the next platform that we're going to support after Unity and Unreal. Until a few months ago we had very little amount of requests for it. So we didn't prioritize it. And lately you have to say that we had half a dozen requests from fairly big content creators in where VR to actually have a solution for them. So this is something that probably early next year we are going to start implementing. I think having the same quality of experience on the web, we still pretty far away from it. I know that there is a very strong community that feels very strongly about the potential of delivering VR on the browser.

From my experience, it's a bit like the fight between html five and native apps 56 years ago, even before that, the argument was that people don't want to download apps anymore. I think that the native experience will always be better. So for premium content, I don't think that will ever go outside of the stores, especially that now we have a populace that controls the hardware and the store as well. So it makes it really hard to bypass it and distributed separately. But for more maybe casual experiences or a bit less premium when we might have newspaper that deliver VR experience or 3 60 content as well, That would make a lot of sense on the web. And therefore this is what we definitely want to help these creators monetize this type of content as well. What about the enterprise? What's your take on that? Because right now the only way to monetize the enterprises basically you're charging to create a VR experience for them. Are there any other forms that you see? Because advertisement for the enterprise really doesn't work right at companies don't want to see at what's your take on that. We've been really focused on the consumer apps.

That's where all of our efforts actually have focused on. I think for the enterprise, the business models that you mentioned before, whether it's someone charging a fee to build the apps or subscription, what is going to be used the most widely? What about social VR? Where do you see that social media is is really interesting. We're starting to have more and more apps that are joining our platform. We had been kind of a proof of concept for high fidelity about a year ago and now we're working with other platforms like Simian space. I think these are the apps that are bringing the most potential for several reasons. One main reason is because there will be a lot of people in the same space. So whether you place advertising, it's going to be seen by more than one player at the time, but everyone at the same time. But also people go there to interact with each other rather than follow a narrative or play a game. And so when you talk about in a purchase or virtual goods, that's really where I see most of the opportunity in social VR people will be able to collect objects traded with each other, maybe sell it or even by real products. And this is where the three D adds that we've developed become so interesting because it actually blends advertising within virtual goods because the product is in three D.

You can look at it, interact with it, that's kind of the advertising model which is pay per view, paper action. But you could also buy it, it's there, it's a three D. Product and that becomes another kind of transaction virtual goods transaction. And then you could interactive exchange it with other people. So with one single units, you'll be able to tap into multiple business models and I think that's really where this is going to grow now. This Question is mainly for my listeners that are filmmakers and there are using 360 to create 360 films or 3 60 experiences. How can they monetize that? Obviously you can't place interact well, you could place depending on the tool, you could place interactive ads but beyond ads because it is more of a narrative experience versus an interactive gaming experience. What's your Take on number one charging to watch? I mean are people willing to pay for 3 60 Films and # 2? What other ways can they monetize early on? You know, we had, especially in 19,016, obviously 3 60 video was really, I would say on par with what you could do with the game engines in terms of popularity because they can be distributed a lot more easily personally.

I've never been too excited about it. For me, it's a new type of video more than pr you can do cool experiences for sure. But it's just so different. Right? Like you said, there's no real depth so you can't really integrate elements within it to monetize it, you kind of have to look more into how you monetize video in the first place. So you could do, you know, pre roll 3 60. So before your film, you have another 3 60 sponsored content. That is great. You can put a hotspot in your video where the user can access more information that is also sponsored personally. I think that really breaks the immersion and not really, really native and we have seen platforms that are trying to charge subscription to see 3 60 films from my experience. 3 60 non stereoscopic is just not a great experience in my opinion. It just doesn't look natural, really feels like you've been planted somewhere and looking around, but there's no depth to it. And sometimes the stitching is just not perfect. It's generally blurry. I just don't see that as evolving as quickly. Now. If we do is stereoscopic videos a bit like Next VR was to do for the NFL for example, that was truly awesome.

And I think that's really what the future is. So I think the captured is to evolve so that it really makes you feel like you within this environment. And if it's content that is really interesting like live sports, for example, or things that people are already willing to pay for or passionate about, then I think it makes a lot of sense to charge subscription for it. But if it's just content where in the middle of the jungle and you can just look around you and it's just not something that people would water on a flat video. So the 3 60 is not that much of an upgrade to justify the cost. In my opinion, I can tell you watching the World Cup live, which I did in the last World Cup on 180 was 180. Actually, that was very cool. Actually one area is probably better than 3 60. A lot of experiences don't need to look 180 degree behind you, right? It just doesn't make sense. So having 1 80 I think it's great like the others that as well, I don't know if it's exactly 1 80 but you can only look at the pitch from above. I think that's truly awesome and it makes it for a much better quality, much easier set up as well because you don't have to hide the cameras and all this kind of stuff.

So I would recommend to start with that any other monetization model that you see coming up in VR or a are beyond ads and everything else we spoke about that. You think there's going to be a trend towards Yeah, there's one virtual land ownership. I know it's very early on. There's a cool platform that we work with that is pioneering that where you can literally build on top of virtual land that you buy and I think this is going to be really interesting. You know, a lot of people look at this and I don't really believe in it. But in my opinion, what I call virtual estate, which is owning these virtual spaces, if there is traffic passing through it, it's as valuable as real estate because then you can monetize it. We are building the tools to monetize these virtual worlds. So if you go to this happened, you just buy a land in the middle of the app and it's a social VR app and everyone that logs in passes through your property. You can put product placement, you can put banners, you can even charge people to come to listen to virtual concerts. So anything that you do in the real world, you will be able to do it in the virtual world. The only kind of variable for that of course is there needs to be enough people for it to work.

But if we all believe that we are is going to be a mainstream media within the next decade, then there's no reason why buying virtual land should be any different from buying real land. So I think this is almost a bit like crypto where it's going to take a lot of time to actually get stabilize and really become something that most people would be interested in. But it's completely undervalued at this stage, you can buy parcels for a couple of bucks I think an investment that should be made just in case it actually works out. It could become very, very valuable if you end up backing an app that ends up having becoming the next facebook in VR and you have a couple of million users passing through your property looking at your stuff in a virtual world that could just be massively valuable. That's very interesting and I do believe the same as you that in 10 years from now, everybody is going to be living in between reality and virtual reality. Just like people live in reality in their mobile phones because if you think about it, a lot of people disappear into their mobile phones throughout the entire day. Right? And I think that's really going to happen with the are especially as our H.

Mds become smaller, lighter, more socially accepted. Absolutely. Every time a new media comes in it doesn't replace the previous one right? We always say like oh tv is dying, it's not really there will still use it is just not the ultimate way to consume content. And basically right now the ultimate way to consume content is the smartphone that's where we spend most of our time on and I think the on a are are going to progressively overtake the smartphone but of course the smartphone is not going to disappear. So we're going to have these virtual worlds that you can consume in VR But if you want to leave your house and see some friends you will still be able to bring it with you on your smartphone. It's just going to be a different view of it may be a two D. View seen from above but you can still manage traffic through your virtual world. So you know it's not going to be just that we're going to spend all our life in VR. It's just going to be different ways to interact with it. And I think this kind of cross device experience makes it really interesting, agree now for the last question I'm going to give you full control and power of virtual reality, what do you change today? That's a good question.

I think the idea is of course use it for good. I love everything that is being done around education for example and how we can bring kids that don't have access to education to good teachers. I think the fact that again this transition from two D. To three D, the fact that we are trying to teach teenagers about things sometimes hard to conceptualize the ability to view it would be amazing. So I think building something along those lines would be really useful, always giving the power to the creators So if I could do anything would be to kind of speed up the process and be able to build more tools for the creators because they are the ones that are going to really build this revolution and enable us to consumer this content creators are always the future of all media for sure definitely anything that we can do to help them out that's really to call my passion. Alright well SAm unfortunately we're out of time but this was a lot of fun man, I appreciate you being here. Thank you for having me. People want to get a hold of you, do you want to give email twitter Euro whatever you like. Sure, yeah, so you can follow me on twitter at SAM huber recommend you to check out our community as well which we haven't talked much about but we are providing a lot of value for creators, all for free.

If you want tips around how to market, we are how to acquire users, how to monetize it. Of course go to VR. They are pioneers dot com sharing a lot of free resources. They're excellent. Thank you so much SAM and to the rest of you, I'm glad you were here with us. Just a quick reminder if you want to access all of our content, including tutorials, podcast interviews and more. Register for free at how to create VR dot com. So until the next episode on marcelo Lewin cheers everyone.

E66 | Monetizing VR Content | Samuel Huber
E66 | Monetizing VR Content | Samuel Huber
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