VRguy podcast Episode 22: Wanda Meloni, CEO and Principal Analyst at M2 Advisory

My guest today is Wanda Meloni, CEO and Principal Analyst at M2 Advisory. This episode was recorded on January 30th, 2017.

Wanda and I talk about current market trends, verticals that can see early success in VR and the “million dollar question”: how to make money in VR.

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Interview transcript

Yuval Boger (VRguy): Hello, Wanda. Welcome to the podcast.

Wanda Meloni: Hi. Thank you. I’m happy to be here. Thanks for having me.

VRguy: Excellent. Who are you and what do you do?

Wanda: My name’s Wanda Meloni. I have been a market analyst for a number of years now. I am the CEO and Principal Analyst at M2 Advisory. They are a market research firm that covers VR and augmented reality technologies and trends. I just recently merged my company with Greenlight, so I’m really excited about that. My company is M2 Advisory. We’ve been doing consulting and market research for 3D graphics, technologies, and digital media trends for, as I said, a number of years. We look at pipelines and development issues and how do developers use the technologies and platforms, and what are their pain points when it comes to emerging platforms. Merging with Greenlight was a perfect fit for what they were doing. Definitely, I loved the team, so I’m super excited to be starting the year off with them.

VRguy: Does Greenlight focus on any particular area? On enterprise or consumer VR or AR, or is it really all of the above?

Wanda: It’s all of the above. They have market reports on the industry and trends. We have a group of analysts in China covering the Chinese market. Last year, in 2016, they were doing a lot of coverage in VR, but they’re definitely expanding into AR. We’ve got a couple of reports coming out this year. They have some reports on the consumer VR markets, surveying consumers and their insights on what their perception is of VR. They also have a developer survey that they run.

VRguy: I got to ask, what do you see as the big trends in VR and AR?

Wanda: There are several trends. I think last year was a bit of just all of the platform providers trying to position themselves. We just got back from CES. I think for the most part they are positioned. I think what we’re going to see now, moving forward for the year are a couple of things. One, partnering or acquisitions to develop maybe technology components that they are still missing, and a focus on content in verticals. I think we’re going to see more market dollars put into different verticals. Not that necessarily there’s one vertical over another. I think there’s just going to be more. Instead of blanketing the market from a horizontal perspective, a lot of the hardware manufacturers are starting to take some vertical approaches, which I think is the next part of any emerging platform trend. I think we’re going to see a lot more from a technology perspective and development, more around video capture. Easier, faster, cheaper cameras. Software solutions for developers to, again, around capture, but also stitching and 3D and animation and trying to create efficient development pipelines.

VRguy: One of the things that we’ve been focused on at Sensics is the, what we call the public VR market. We release goggles for public VR that take care of the special needs for amusement parks and public places. What other verticals are interesting, in your opinion? Maybe I should ask, is the public VR vertical interesting in your opinion?

Wanda: The public VR meaning the consumer?

VRguy: Meaning VR experiences that have lots of users. Arcades, amusement parks, shopping malls, and so on.

Wanda: I think that’s actually going to be one of the early successes for VR, especially in Asia. The thing with the Asian market that maybe a lot of people don’t realize is that they’ve had these PC cafes set up for years already for gamers where they go in and play these large-scale MMOs, which are multiplayer games. From a consumer perspective, those markets are already engaged and understand how the arcade model works. I think that’s going to be a very important area and trend as we move forward to build out the consumer focus. I think even from the US side of things, IMAX has just opened up their facility in LA. They’re booked solid from what I heard. I think there’s going to be maybe a little bit of education in the US market. But I think for the most part it’s a great way to seed and educate the consumer market.

VRguy: Any other verticals that you think are particularly interesting?

Wanda: Games are certainly interesting. They tend to drive a lot … If you look at the trends of different platforms over the last 20 years, games always drive markets. Even the mobile market was driven by the games industry for mass adoption. PC and high-end graphics at a consumer level were driven by games. Not that that’s the end-all, but that seems to be the initial touch point for early adopters, and then it trickles down into mass market. In terms of other really exciting markets that I’m very interested in, one, digital health and training at a medical level. Any type of training and education. Also, enterprise, manufacturing around automotive, machine learning. Anything that requires a process, a manufacturing process, is going to be really interesting, both for AR and VR. I’ve seen applications for AR in

I’ve seen applications for AR in enterprise where you have field workers that are out in the field, and they would normally lots of paperwork and they have to basically takes away that need for the paper and it can be hands-free. Whether it’s working on machinery on the floor or a large tractor or even going into buildings to see what water damage is there. All those things that require hands-on and annotation can be done much easier with some type of wearable.

VRguy: You mentioned early verticals, which implies that the market could grow of course much more. What do you see as the key barriers to either deployment of AR and VR? Is it just the passage of time? Is it a price point? Is it a specific technical feature? How do you see it?

Wanda: It’s a bit of a combination of all of those. Price point is definitely a barrier at the consumer level. It’s still quite high. But also even at the enterprise level, the price point of headsets are still relatively high. From an enterprise level, what’s stalling the market a little bit is that to really engage in a company’s process they need to see the ROI. They need to be able to say, “Okay. By implementing this, we’re going to be able to save x number of dollars over x number of years.” We’re just scratching the surface on some of that. Obviously there is an ROI. This is something that has definite ROI. But getting those case studies with real, measurable data points is the next piece of that. That’s one thing. The cost and measurable ROIs on enterprise and consumer.

I think it goes a bit back to the technology. Now if we can get cheaper, faster development in video capture, animation, 3D, those help. 3D has always been the hardest, heaviest media to create. It’s always been that way. If you look at movies, look at anything where 3D graphics are used to create and visualize, it takes someone with some expertise to develop those. Again, we need to find easier ways to do it so you don’t need to be a heavy programmer. I think once we can get those down, I think those are definitely barriers from a developer standpoint.

I think also very key right now is the discussions going on about having more open standards for APIs. We have so many different headsets and so many different APIs that a developer has to really think about when they’re developing that. That in and of itself becomes a bit of a barrier. If we can break down some of the development barriers, it will help with the final content. Ultimately, at a consumer level, the experience is more about the content once they have the hardware.

VRguy: Excellent. Speaking of standards and alliances, I know you’re executive director of the OGA, the Open Gaming Alliance. Can you describe a little bit what that is and how that might relate to AR and VR?

Wanda: The Open Gaming Alliance has been around for a number of years. It started out as the PC Gaming Alliance. It was companies that came together to help support and grow the PC games industry. Of course, that went on and has done very well. Over the course of time, they changed their name to the Open Gaming Alliance to really be focused on discussions around all of gaming, but more about the business. Really supporting the business of games and game development. We have several working groups that we focus on. One is a working group around VR and AR. Then we have a e-sports, and business intelligence, and then a research working groups. We have our members are generally corporate companies. We’ve got Intel and Unity and Razer, Ubisoft, a couple of developers, smaller developers and publishers.

The idea is we come together and, even though we’ve got different groups, like our VR and AR working group has Razer and Intel and Unity, we’re focused on initiatives that best support growth and opportunity for VR and AR in games. We’re working on a whitepaper around the different APIs at the moment. We work closely with the Khronos group, which is an open standards group. The goal is to network and build research and best practices for the games industry.

VRguy: Excellent. Taking the lessons from the gaming industry, how does one make money in VR? Is it selling hardware? Is it selling advertisement? Is it content? What do you think? I know it’s literally the million-dollar question.

Wanda: It is the million-dollar question. It is something that’s close to my heart, because I have spoken on a couple of panels about making money, monetization, for VR and AR. If you are a developer there are several ways that you can currently make money. One is getting subsidies or some type of funding from a platform vendor, like and HTC or an Oculus, and partnering with hardware manufacturers. That is currently a strategy. We are seeing, starting to see, some breakout titles, like Raw Data and Arizona Sunshine both are games that have made over a million dollars a month for the last several months. That’s from a revenue, straight revenue perspective. We’re starting to get those breakout hits, but you could count them on one hand at the moment.

Where does everybody else fit in? That’s the million-dollar question. I think it’s still really early days. I think if you are developing, I think most of the developers I speak with are in some way self-publishing until they can … Part of it is the learning process that they feel is necessary to be early in the market so they can build out content. But a lot of them are self-funding, which is really not a surprise, because it is exactly what happened with mobile. The early developers to mobile were fully primarily self-funded.

VRguy: Got it. As we draw to a close, if you could control the development plans of an HTC or an Oculus or a Sensics or other industry leaders, what would you have us do in the next, say, 18 months?

Wanda: I think there needs to be more collaborative discussion around best practices, what’s working, what’s not, and quickly iterate on those best practices. If it’s every month, every other month, just trying to come together. It’s like, “Okay. What’s working? What’s not? Where do we see opportunities?” I think the best thing for the industry overall is to be open, have open platforms and open discussions. I think the worst thing is to be closed at this moment. We’d be doing the industry an injustice if we don’t try and find ways to collaborate with each other.

VRguy: Excellent. Wanda, where could people connect with you or learn more about the work that you’re doing?

Wanda Meloni: I can be found at … Anyone’s welcome to e-mail me directly. My e-mail is wanda@greenlightinsights.com. That’s Greenlight Insights with an S. Our website is GreenlightInsights.com. I’m on LinkedIn. Pretty easy to find, on Twitter as well, as Wanda Meloni.

VRguy: Excellent. Thank you so much for coming to the podcast.

Wanda: My pleasure. Thank you so much for having me. I really enjoyed it.

VRguy: Take care.

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