Editor's note: This article is part of Inc.'s 2016 Best Industries report.
In August 2014, fans of Sir Paul McCartney were treated to a decidedly high-tech view of the former Beatle's work: from an onstage seat, via virtual reality, of the musician's performance at Candlestick Park in San Francisco.
The concert was delivered by Jaunt, a virtual reality hardware and content creator in Palo Alto, California, whose patented 360-degree, spherical cameras filmed the event, and allowed those with access to virtual reality headsets and the company's phone app to view the performance as if they were within arm's reach of the performer, even though they were nowhere near the park.
Among other details, spectators could see the cheering crowd from McCartney's perspective, the sheen coming off his piano under the heavy stage lights, and orange blasts from the onstage pyrotechnics during a rendition of the classic "Live and Let Die."
Jaunt, founded in 2013 by Jens Christensen, previously an entrepreneur-in-residence at venture capital firm Redpoint Ventures, and Arthur Van Hoff, formerly the chief technology officer at Flipboard, is one of dozens of companies toiling away to create the hardware, software, and content driving the nascent virtual reality industry.
The field has a great deal of promise--some industry observers liken it to the early days of cinema--though it's not yet clear the exact moment when all these disparate parts will fuse together as a cohesive phenomenon. Businesses are still sorting out the seemingly endless applications for the technology in areas ranging from news and entertainment to education and health care.
But the next year is likely to be formative, as consumer companies such as Sony, Samsung, and Facebook's Oculus release state-of-the-art VR headsets for consumers that amp up the voltage on immersive visual experiences. "2016 will be when the first real headsets come to market, and we will see traction, and a huge demand for content," says Van Hoff.
Although virtual reality has been around since the 1960s, it's been only in the past five years that it's gained significant momentum, as visual technology including cameras and visual mapping has become increasingly sophisticated. Another key consideration has been smartphones, which virtual reality experts say are the most efficient distribution point for the industry.
Since 2010, $4 billion in venture capital has flowed into 353 deals in the VR sector, according to VC and private equity researcher PitchBook. In 2015 alone, $708 million flowed into 144 deals.
Hardware and content.
For its part, Jaunt, which has 75 employees, is among the top 10 virtual reality companies in terms of venture capital investment, having taken in $100 million from Redpoint, Highland Capital, and the Walt Disney Company over the past couple of years. Other big deals in the industry include, of course, Oculus, purchased by Facebook for $2 billion in 2014; and augmented reality company Magic Leap, which has received nearly $600 million from Google Ventures and other investors. (Augmented reality, a technology where projected images take their place among the other objects in your environment, is considered the next step in VR's evolution.)
Unlike some of its competitors, Jaunt does not make virtual reality headsets. Instead, the startup is tapping two markets, the founders say. (They declined to comment on its revenue or profits.) One is for its patented spherical stereoscope camera, and the other is for content creation. While Jaunt does not create virtual reality content itself, it wants to be the go-to platform for others that do. For that, it uses its Los Angeles-based production house, Jaunt Studios.
In addition to musical events, the company has partnered with ABC News, which took Jaunt's cameras to Syria to show the impact the war has had on Damascus. Jaunt Studios also has worked with consumer brands--for example, by giving viewers a look at crevasse climbing out West while outdoor-gear maker the North Face not-so-subtly pitches its products.
Investment bank Piper Jaffray forecasts that the VR hardware market could reach $62 billion, and the software market $5.4 billion, by 2025. But significant barriers remain, for Jaunt as well as for the industry as a whole. For one thing, the potential audience is by some standards still small, numbering between three million and 10 million people globally, says Nizar Tarhuni, a virtual reality analyst for PitchBook. And many consumers may be turned off by the current $500 price tag for some headset models.
Questions also linger over the quality and quantity of content, which is a particular concern given that consumers don't like to be strapped into headsets for an extended period of time, Jaunt's founders say. "The industry has to make sure there is good, high-quality content, and enough of it for people to enjoy," says Christensen.
Then there's the possibility that the fervor around VR could prove short-lived. By way of comparison, there was huge excitement only a few years ago about 3-D television that went nowhere, says Dave Cole, founder of NextVR, a virtual reality company in Laguna Beach, California.
"It was a flash in the pan, it was overhyped, and led to over-enthusiasm from TV manufacturers," Cole says.
Still, Jaunt says it's in the right place at the right time, even if there is a way to go before virtual reality becomes a mainstream hit. And Van Hoff points to things like Google Cardboard, the low-cost virtual reality headset that has shipped to a million consumers since 2014, as something that could pique mass consumer interest.
"Virtual reality is a truly a different medium, and in some form or another it is going to be enormously big," Van Hoff says. "I am convinced of that."