Ericsson takes rosy view of VR, just as Nokia backs away from the market

Nokia and Ericsson are taking contrasting views of the much-hyped virtual reality market. Ericsson’s latest ConsumerLab report, on TV and Media, forecasts that one-third of consumers globally will be using VR by 2020 (see inset). But Nokia, despite a bid to be a frontrunner in developing VR technologies with its Ozo camera, has become the first major company in the sector to throw in the towel.

The Finnish firm has announced big cuts to its Ozo VR camera team, and says it will shift its focus to other new business opportunities within its Nokia Technologies R&D and licensing unit, such as digital health, as well as networking growth areas like cable access.

Nokia said the decision to halt development of its $40,000 Ozo professional camera, (which initially cost $60,000), was because of “slower than expected development of the VR market” and it will instead “focus more on technology licensing opportunities”.

Given the level of hype around VR in the past couple of years, there may be others following Nokia into pursuing opportunities with a more immediate, or certain, return on investment.

Disney, UEFA and Sony Pictures were among the biggest customers for Ozo hardware, while supporting vendors for the Ozo Player and Ozo Reality platform include Akamai, AWS Elemental, Accedo, Harmonic, NeuLion, Youku, 3stage Design, Haivision, Ideal Systems, Kaltura, LiveLike, Nibiru, Primestream, Ratio, Qello, and China Intercontinental Communication Center (CICC).

Nokia Technologies’ president Gregory Lee said: “Nokia Technologies is at a point where, with the right focus and investments, we can meaningfully grow our footprint in the digital health market, and we must seize that opportunity. While necessary, the changes will also affect our employees, and as a responsible company we are committed to providing the needed support to those affected.”

Virtually the entire business in professional 360-degree cameras – the sector targeted by Ozo, has therefore now fallen into the hands of Facebook, which has developed the Surround 360 camera for its Oculus Rift headsets. Facebook claims its hardware and software are easier to use than other technologies out there but the social media giant has made far less noise in the space than Nokia recently.

Yet central to the Ozo business are Nokia’s various software products, the future of which remains in the balance, except for the vendor stating it will “maintain commitments” to existing customers. We hope to receive confirmation soon if Nokia will continue developing its software product line, including Ozo+, Ozo Live 3D 360, Ozo Creator, Ozo Deliver and Ozo Player SDK (software developers’ kit), which have been integrated by a number of partners to provider a single interface for all major VR and 360 video platforms and apps.

The dream of overcoming the significant barriers holding VR viewing back from entering the mainstream could still be fulfilled, unless Nokia’s cuts spread to software. For example, the company has invested R&D dollars into slashing the amount of data being captured at the camera end, by only sending key parts of a screen which is being looked at directly, in full definition, and the rest in a lower resolution.

Another area of concern is the Technicolor Experience Center (TEC), which only launched in June this year in partnership with Nokia, offering a project in which artists and scientists in gaming, animation and traditional media and technology industries can come together to explore ideas in immersive experiences. The Ozo camera and content creation tools serve as the exclusive technologies for the TEC venture.

As it shifts away from VR, Nokia is highlighting some other areas where it hopes to expand its software and licensing business (housed in the Nokia Technologies unit), enabling it still to play in mobile devices and digital services even after selling off its handset division to Microsoft. Among these are digital health and – more closely tied to its core networking business – cable access. Nokia noted in the VR announcement that it is leaving its patent licensing business untouched.

In the digital health sector, Nokia bought French smart health wearables firm Withings last year for $191m, and so is coming at the market from the consumer side rather than going via hospitals.

Ericsson takes bullish view of VR market:

Ericsson’s latest ConsumerLab report, on Consumer TV and Media, has been published, based on 20,000 online interviews with people aged 16–69, in 13 countries (Brazil, Canada, China, Germany, India, Italy, Russia, South Korea, Spain, Sweden, Taiwan,
the UK and the US). Each had a broadband connection and watched TV or video at least once a week, or more frequently.

Ericsson suggests one-third of consumers are projected to use VR by 2020, though because this is a consumer survey, there will be a gap between respondents’ interest level – high, given the amount of media coverage of VR – and their real uptake. Anyone who understands the limitation of viewing VR, half blinded, with a phone strapped to their head, can see the commercial challenges in developing media for this format, because the viewing numbers are going to be a low fraction of all smartphone users.

Until a mixed reality format becomes usable and commercial, VR or 360-degree viewing is unlikely to be mainstream. There are also many improvements with codecs and broadband throughput which need to be made too.

Among the other claims are that half of all TV viewing will be on a smartphone by 2020. The survey found that 70% of consumers watch TV and video on a smartphone today – twice as many as in 2012. So smartphone viewing has doubled, and makes up 20% of the total, around six hours a week.

This leads to the next conclusion that by 2020, only one in 10 consumers will be stuck watching TV on a traditional screen only, a 50% decrease compared to 2010. Of course, they might watch on a connected TV, a tablet, a laptop or a phone, and more and more likely all of the above – so the coach potato is not about to die.

The next conclusion relates to content discovery with time spent searching for content rising – it has already gone up by 13% from last year and is now one hour a day.
And in the 16–19-year-old category more than 50% of time is already spent
watching on-demand, up 100% – or 10 hours a week – since 2010. On the other hand 60–69-year-olds still spend almost 80% of their viewing time, watching live and scheduled linear TV, unchanged since 2013.