Why virtual reality is a key city tech investment now

By: Lynn Laris and Frank Baumgaertner for EarthTechling

(CNN) — If the Wall Street dream factory known as General Motors were to begin to produce a virtual world today and sell it for $2.5 billion, could you afford it?

This time of year, with holiday ad campaigns pumping up big stock market swings, perhaps. And with urban and suburban housing prices rising steadily, perhaps not.

Even if you can, could you afford it. For investors in its young virtual neighborhood, though, buying Metaverse Real Estate makes sense. You can bet that it does.

Meanwhile, the for-profit world of virtual reality — or virtual worlds — is taking off. Facebook has acquired about a dozen virtual world companies and has been spending money to beef up virtual reality offerings. Zynga spent $180 million for the big-name game “Rage” and Disney just announced it would spend $75 million for a small studio that makes virtual play experiences for kids and even seniors.

Even the military is getting in on the virtual games action. Defense Department programs are moving to meet with research groups and start programs that use tech that would allow virtual reality into combat settings and field settings.

“Our first virtual world product will be developed in collaboration with DARPA’s Helmet Mounted Display Technology (HMDT) Lab,” said John Gerber, CEO of virtual reality innovator VR Systems. The company has partnered with Microsoft on its HoloLens headset, “which allows for user controlled, scene-based VR.”

The city of Seattle is driving these ventures. The region is one of the top locations in the world to work in the technology business. The city invested in a studio for Facebook and more recently announced a $6.3 million investment in Washington University for game development. Google is planning a number of development centers for virtual reality technology. Apple is recruiting staff to the virtual world business. Even independent places like Valve are breaking away from the virtual world games that they made for Bungie Studios to take control of their own virtual worlds development.

In Atlanta, EntrepreneurHive is developing the WatchHive platform to help communities put immersive world experiences online. Atlanta is both an established hub for business development and a growing spot for what the city’s leader refers to as “oasis-style living” — a thriving world of virtual worlds with city infrastructure that allows people to create immersive spaces that people really can’t get anywhere else.

“We’re kind of like an internet of things world where we have people who bring beautiful areas to life, not just because they have beautiful jobs, but because their businesses are really invested in this area,” said area representative Edward Golini.

WatchHive CEO Tanya Edwards pointed out that this isn’t just a mobile operating system to push a flash sale to smartphone users.

“What we do as a company is bring content and virtual entertainment that are fun, that people have an interest in,” Edwards said.

Still, creating virtual real estate may be the most valuable area of investment opportunity. Much like solar energy companies that have spent the past decade showing their worth as profit generators, virtual reality companies are also positioning themselves as valuable profit centers, Golini said.

For example, with the proliferation of smartphone cameras, VR creates different opportunities for landlords and tenants than what many venture capitalists foresee in less valuable areas, he said.

VR is also attracting business ideas from design studios and mapping companies. It’s not a sleepy sector that produces software or smartphone app ideas — it’s thriving, Golini said. There are already dozens of businesses entering the virtual world through patent applications and filings to gain market access for their products, and the U.S. Patent Office is proposing new laws aimed at improving the system’s efficiency.

WatchHive’s Edwards says that placing virtual reality into different neighborhoods will open up more of the US to the experience than simply placing it on the international map.

“If you look at some of the places that people go for home-buying and selling and places that people want to go and for education and recreation, these are places where you don’t necessarily have space for virtual reality in the current world,” Edwards said.

As the uses for virtual reality expand beyond tech, there will be increased competition for investment dollars. But if you can find a brand new virtual neighborhood, with some nice folks who want to live there for a while, you may win the initial investment.

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