Sundance Darling Eyes More Funds for Virtual Reality Future

  • Vrse co-founder Chris Milk is making movies, developer tools
  • Fans at film festival wait in line to try out new technology

For a taste of where virtual reality is taking Hollywood, fans at the Sundance Film Festival lined up for music director Chris Milk’s “Treachery of Sanctuary” exhibit, which mirrors viewers’ movements to create bird-like shapes on a screen.

To see if he can convert that buzz into a big business, Milk plans to seek a second round of financing for his company Vrse Inc. (pronounced verse), which develops software and content for VR headsets. In April, the company raised less than $10 million from investors including Andreessen Horowitz and YouTube co-founder Steve Chen, according to a person with knowledge of the deal. This time, Vrse has the potential to raise even more from new and existing investors, said the person, who asked not to be named discussing private financial matters.

Milk’s traveling exhibit reflects the film industry’s growing interest in virtual reality. The world’s biggest technology companies are marketing or developing VR products for games and entertainment, and forecasts for the industry range from huge to surreal. Goldman Sachs Group Inc. predicts VR could be an $80 billion market by 2025 -- or $182 billion with “accelerated uptake.” That would make it bigger than TV.

“There is an incredibly bright spotlight shining on the industry right now, and it does seem like everybody is trying to do something,” said Milk, who co-founded with company with Aaron Koblin, previously with Google Inc.

Of course, the entertainment industry is littered with the remains of once-heralded technology, from the laser disc to 3-D television. Virtual-reality films and games require consumers to purchase new equipment, which can cost hundreds of dollars. And Vrse is one of many companies supplying software and programming for the technology, including Jaunt VR, which raised $65 million last year from investors including Walt Disney Co.

While 2016 may be the “year of VR,” analyst Ben Schachter of Macquarie Securities also cautioned in a research note that the technology is in its infancy.

“It is also inevitable that some of these devices will over promise and under deliver,” Schachter wrote.

Sister Company

In addition to being a technology supplier, Vrse has a sister production company, Vrse.works, where Milk has created content in partnership with Vice Media Inc., Megan Ellison’s Annapurna Pictures and most recently the New York Times. The Vrse website lists several titles, from “A History of Cuban Dance” to “Clouds Over Sidra.”

The company’s app will be available for use with VR products from Oculus, Samsung Gear VR, HTC Vive, PlayStation VR and via Android and iOS, according to the company.

Additional funds will be used to develop features that companies can employ in virtual-reality videos and games, said Milk, who has worked with the bands Arcade Fire and U2. His “Sound & Vision” film with the artist Beck is the first live-action, fully spherical virtual-reality film, according to Milk’s website biography.

At Sundance this year, organizers increased the size of the festival’s New Frontier section -- dedicated to the future of movie storytelling. Shari Frilot, Sundance’s chief curator of New Frontier, said that for the first time in advance of the Park City, Utah, event she fielded calls from studio executives interested in acquisitions from the festival’s VR lineup.

Among Hollywood studios, 21st Century Fox Inc. is one of the biggest proponents of the new medium. Fox showcased its virtual-reality experience linked to its box office, and Oscar-nominated, hit “The Martian” at Sundance. Mike Dunn, president of 20th Century Fox Home Entertainment, has called VR his No. 1 priority.

“There is no doubt in my mind that this is the future, this is the next great medium for storytelling and communication,” Milk said.

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