“The goal of film has always been immersion… [to] get lost in the show.” – Mike Schroepfer, CTO at Facebook.

We spent time this week at the Cannes Film Festival talking with industry leaders about the future of film. We explored virtual reality, storytelling, empathy, and new ways to immerse audiences. Here are the takeaways from our conversations at the festival:

• Storytellers Love VR. Filmmakers know that VR will enable new ways to engage audiences. VR will expand storytelling on three levels: First, the 360 degree experience increases the viewers sense of presence. Second, immersion promotes empathy as it puts the audience in another world – in someone else’s shoes. Third, allowing a viewer to control spatial movement in a scene opens the door for a choose-your-own-adventure framework. Any one of these three warrants a paradigm shift in film, but all three will happen in time.
• Established Filmmakers Will Supplement with VR. Established filmmakers see VR as a tool to supplement traditional content. Content creators are increasing the availability of free 36o-degree smartphone VR experiences to, for example, dive deeper into one scene of a film. Next, free VR experiences will begin to appear in the lobbies of theaters to promote films. Last, paid branded VR experiences will command $10-$30 for a 15 minute experience; e.g., the VOID and Ghostbusters. It’s important to note that today established filmmakers are steering clear of producing VR films. Steven Spielberg’s Ready Player One would have been the ideal first VR film but several factors prevented that including cost and the time it takes to retrofit theaters.
• Aspiring Filmmakers Will Take an All-In Approach. Cannes was filled with startup storytellers going all-in on VR, inspired by the success of once-unknowns like Pixar and Netflix that changed the film industry 15 years ago; e.g., Penrose Studios (Arden’s Wake). Separately, Facebook’s recent closure of Oculus Story Studio (launched in January of 2015) bodes well for startup studios. Facebook’s efforts will now be focused on supporting external VR content creators.
• Gaming Will Lead The Way. The gaming segment will be a leading indicator for the ramp in VR film adoption. Gamers will be early adopters given they are the largest segment of Rift and Vive users. Many of the tools that game developers use to build VR environments will be used by VR storytellers.
• Hardware Is The Hold Up. Loup Ventures estimates there are about 2 million high immersion VR headsets in use globally today, including game console-powered VR headsets and  computer-powered VR headsets. We expect that number to increase to 146 million in five years (2022), including game console-powered VR headsets, computer-powered VR headsets and standalone VR headsets. We see hardware as the gating factor to VR film adoption. Hardware today is: 1. Expensive – $1000 plus for Rift & Vive. Daydream from Google headset and phone is $700. 2. Uncomfortable – screen resolution causes sickness and headsets are heavy and can only be worn for 15 minutes or less. 3. Clumsy – given Rift & Vive are both tethered experiences.

Today, consumer VR behavior is marked by a try-it-and-forget-it reality. Over the next 5 years, hardware will improve and costs will come down opening the door for daily VR usage and a new paradigm in film.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.