Todd Hooper has shown up early at the virtual reality party. He started Vreal in Seattle to create a livestreaming platform for streamers to broadcast their gameplay in VR to spectators.

It’s like Twitch, the livestreaming platform for PC gamers, and it is one of the ways that virtual reality will become more social. I tried it out in a demo using an HTC Vive VR headset at Vreal’s headquarters, and I was greeted by a big panda. It was Bryan Chu, vice president of marketing at Vreal. He was talking with his hands, and his avatar’s hands were moving all over the place.

We were in a pretty lobby-like area with a bunch of icons all over. There were some games, movies, and other kinds of experiences to go into. I could teleport around the lobby and hold a conversation. Then we beamed into a VR game, Surgeon Simulator. We watched another player pulling out body parts from the body on the cartoon surgery table. We could resize ourselves into tiny characters on the table and see the game from any vantage. The player didn’t see us at all, but we could talk about the gameplay and set up virtual cameras to record the experience. But I had fun, knowing I was in VR, watching a game with a giant panda as my companion.

It was quite an immersive experience. Hooper has 20 people working on it, and he’s bringing in money via sponsorships as he waits for the VR audience to materialize. If it comes, Vreal will be ready with the right livestreaming technology. We talked about the VR streaming opportunity, and here’s an edited transcript of our conversation.

Above: Todd Hooper, CEO of Vreal in Seattle.

Image Credit: Dean Takahashi

GamesBeat: It seems like you’re pretty far down the road.

Todd Hooper: Product-wise, as you saw in the demo, things have come a long way. One thing that’s probably new to you—we’re thinking hard about how to bridge the VR world, having the best streaming experience in VR, with the 2D world, where people will still be for a long time. How do we give them a view into VR?

Using the tools you just saw, we’ve worked with some streamers to launch a couple of new shows. HyperRPG launched a new Friday night show called ER VR. It’s filmed inside Surgeon Simulator. Zac Eubank, the head of the team there, pitched the show to us after he saw a demo last year. He said, “I want to do America’s Got Talent with virtual surgeons.” It came out great. It’s helped us understand what the audience wants to see. It gave us a good insight into how content creators are treated, too.

It’s interesting to see how people react. This is the format you just saw. This is a virtual camera in the space you were just in. They set up a bunch of these in the space, and then these are the judges. They run the show and we provide the tech platform. When we first looked into this, we thought we were just going to use this format. We weren’t going to show the backstage. But about a month ago, they accidentally flipped to the wrong video feed and the audience saw this, with all the cameras set up around there and the guy in the panda suit. The viewers had their minds blown. So now the audience wants to see more of that. The Twitch chat loves it.

The other show that came out, Rooster Teeth did Achievement Hunter last week with the same tech. I think it’s up to 300,000 views now. It was a different approach. They basically just took two of their creative people, put them in VReal, and didn’t tell them anything. They said, “Hey, take a shot of this.” It’s amazing. Just seeing what they do, the way they interact, it’s a lot of fun.

Surgeon Simulator 2013

Above: Surgeon Simulator

Image Credit: Bossa Studios

GamesBeat: How has the Surgeon Simulator show grown?

Hooper: I think they had about 2,000 viewers for the premiere. It’s been pretty consistent. Hyper is not a massive Twitch channel. They’re more of a variety streamer. This has been very good for them. The main thing we track—the relative number of viewers is interesting, but the main thing is engagement. What’s the chat engagement? Are people just watching it, or are they diving in? So far, this whole panda thing has been interesting, how the audience has glommed on to that.

GamesBeat: With some of these, could viewers pick the camera they want to see?

Hooper: When people have their own VR rigs and the native component of the platform is launched, they can do that. For this presentation, the streamer is setting it up. They pick the cameras they want and switch in between them, using that to create the content. We think this is a good way to evangelize VR. It’s better than the traditional capture-the-headset view. You can watch a headset view for five or 10 seconds, maximum. More than that and it’s too much motion.

It’s like watching a football game right now. If you tried to watch football strictly through helmet cam, it would be pretty rough. You need to extra cameras to give you context and stability in the space. Then you can cut to the first-person view occasionally. You don’t want that to be the primary view.

We see Twitch and YouTube, the video platforms, as complementary to what we’re doing. There’s already an audience there. That audience is already used to looking at things on a flat screen, so we give them great content there. When that audience has VR headsets, we can show them the experience you just had and take it to the next level. I’m conscientious of the fact that most gamers don’t have VR yet. They’re interested in VR. They want to watch VR. But the price points have to come down. The content has to get better.

The audience is out there today watching video, whether it’s on Twitch or Facebook or YouTube. They’re interested in VR. But they’re probably still waiting for that perfect headset for the holidays. The Vive and Oculus are great products. PlayStation is a great product. But the price point is still up there.

GamesBeat: Do people still stay engaged even if they aren’t VR users, if they’re just spectators?

Hooper: I think so. I think it’s a generational thing. You do find some people that just say, “I want to play the game.” But if you think about Twitch and YouTube and the other platforms, the people there are still gamers. They play games. But instead of watching cable TV or Netflix or whatever, they’ve cut the cord, so to speak. They consume YouTube and Twitch as their entertainment content. It’s still a mostly passive activity, but they’re doing it more and more for the social interaction and entertainment value from the influencers they love, versus strictly going and playing games themselves.

The huge majority of people that watch Hyper’s show or Rooster Teeth’s show, they don’t own headsets. We see ourselves as a broadcaster for VR content. When you have a VR headset, you can experience it in native VR. That’s the ultimate form of it. But the rest of it is finding the best way to go and communicate and broadcast these VR experiences to people. We’re managing the transition between today and the VR future we envision. We’re building that bridge for people.

The way we’ve approached the company—VR is going to take a while to get here. It’s the future of gaming, but it’s not next week or next year. It’ll take a few years. You have to approach it with that in mind. There was a boom mentality around VR for a little while, but I’ve always been very skeptical of that. I’ve never been running around saying there will be 10 million headsets this year. It’s not realistic to assume that. Gamers love VR and they’re excited about VR, but we need better hardware and better content. Over time, a big chunk of the $100 billion gaming market is going to move to VR, but it’ll take some time.

Above: Vreal has a lobby where players can gather.

Image Credit: Vreal

GamesBeat: Are you supporting Gear VR, or other mobile VR?

Hooper: Gear VR and Daydream are great platforms, but right now, most streamers and most of the audience are both creating and consuming their content on PC. Mobile VR is ultimately interesting to us, but we think there’s a lot of interest around the high-end native VR experience. There’s a lot of interest around this kind of experience. Mobile VR is still outside the bounds of that right now.

GamesBeat: Mobile VR aren’t viewing that kind of content?

Hooper: Exactly. It tends to be a lot of 360 video content, which is great, but it doesn’t have the agency that most gamers want to have inside a virtual world. In this example, they get agency through different camera views that can switch around. When you put the headset on earlier, you could interact and move around the world in the way you wanted to. It’s hard to deliver that experience on mobile VR.

Ultimately, because we have the native VR streaming and native VR replay—once you own and control that space, we can support content creation that works for those platforms. Once you have it, rendering it and outputting it is just a matter of what you want to do. We can essentially simulcast. If you have a headset and we’re watching on Twitch or YouTube and someone else is mobile only, you’ll be watching in native VR, we’ll be watching on our computers, and it’ll be rendered as a 360 video that he consumes later in a way that works for him.

GamesBeat: How is the communal viewing situation shaping up? Do you think that could be a big thing?

Hooper: That’s one thing Netflix has in their VR theater. We feel like for gamers it’s going to be a bit more interactive. The excitement of the experience that you just had, where there’s a bit more interaction and freedom. It’s less passive. In Twitch the equivalent is talking with a bunch of emotes and hammering away in the chat. For us, we think it’ll be the physicality of being in a space with people.

GamesBeat: How would you compare this to the social VR that Facebook was showing off?

Hooper: Some people are building worlds themselves. Altspace and Rec Room and High Fidelity and Project Sansar are building worlds to take you to. We’re building a freeway to take you to worlds that publishers have created.

The Facebook stuff is great. I saw it before they announced it and thought it was very cool. But it’s not around broadcasting or streaming games. It’s a different experience. It’s more of a social experience. That’s part of what VR needs, though. It needs better social experiences. To see Facebook commit to that—it’s good to see the redoubled commitment to Oculus. What Facebook’s doing in social VR is good news for the industry.

GamesBeat: They seem to be working on getting the exact facial expressions.

Hooper: It’s awesome. Having that avatar technology which can then be part of other social experiences that can come around is important for the industry. You saw in our experience that our feel is much more game-like. It’s less about your real identify, how you really look, and more about how you want to be, your gamertag. We think that’s a better match for gamers, but it doesn’t mean you couldn’t pull in some of that Facebook stuff.

Above: Vreal lets you put cameras to record a VR scene from any angle.

Image Credit: Vreal

GamesBeat: Over time, would you want to add things like facial expressions?

Hooper: If you look at what they did with Oculus, the avatars they offered with Oculus were basically an SDK that developers could push in. My understanding of the way Facebook is building that avatar system is that any developer on their platform could pull it in and leverage those. As their avatar tech gets better and the headsets get better, you could render full facial expressions, which is great. The social interaction now is fun, but it’d be great to take it to the next level over a year or two, where there’s more input and we can capture social interaction cues that currently get missed in VR.

Even as it stands now, the body language and the physicality—there’s a level of presence there. We’ve seen that people follow social norms. When someone’s speaking, you turn your head and look at them. You tend to feel like you’re in that space with somebody. I was watching a video of you in there. You have a very distinctive way of talking with your hands. You cue into that quickly. I don’t even have to see the nametags or hear the voices to know who is who in the space. You see people that are very active, moving around a lot, and others that are more focused on individual interaction. They want to high-five, do things like that.

One thing I’ve learned in the last year is that those things are emergent. The behavior of people in virtual spaces is an emergent behavior. We don’t know what that’s going to look like in every case. We want to make sure that we capture it and we take our time to get it right. We’ll see what the audience wants to do. I don’t think we could have predicted this kind of social immersion and interaction five years ago. If you show it to a lot of people today they still don’t understand the emotes and all that kind of stuff.

GamesBeat: I just did a demo of Wilson’s Heart. That was pretty scary. Horror seems to be a good genre for VR.

Hooper: That’s something we’ve seen. A lot of people stream horror. They like that rush, the intensity. That could be a lot of fun. We’ll have to put a screaming filter on the audio. I must admit, I find horror games fun, but I think it might be too much in VR. When I play those games, it helps me to be able to look away, to leave the lights on. When you’re in a headset and you’re in a dark room, that doesn’t work.

Have you seen the Microsoft headsets that were showing at GDC?

GamesBeat: Not really? I’m a bit confused by what they’re doing. I don’t know whether they’re just putting a spec out there or if they’ll be doing something serious for Scorpio.

Above: Vreal

Image Credit: Vreal

Hooper: There were images of real development kits out there. I can’t say if we have them or not. [laughs] But I think it’s good. The big companies have come in and committed to the space. Facebook redoubling their commitment is great. Microsoft, being one of the prime movers on the PC platform, is great. It’s just a matter of—we need better performance in the headsets. We need better form factors. We need lower price points. We need better content. All of those things are coming.

We have a Slack channel for interesting games. I’d say that every day or two there’s some interesting new piece of VR content. If you go back and look at the state of the art two years ago, people have learned and figured out how to create better VR content. That’s the wave we see VReal riding. People will want to share that content. We want to be the best way to broadcast entertainment content to an audience.

If you think about the birth of TV, watching the really early TV shows, those were radio shows where someone stuck a camera in the room. It wasn’t until it started to progress that people figured out what the medium could do. When people realized they weren’t limited by the bounds of what they used to do—that’s a lot of what we’re trying to do. We want to give people the broadest playground, developers and content creators, to make interesting things and create these emergent experiences. They’re more creative than we are. But even they don’t know what the ultimate shape will be. Trying to form that experience into something specific isn’t going to help anyone.

The HyperRPG experience and the Rooster Teeth experience are totally different. One thing we found that was interesting when we showed the demo—when he showed you how to spawn a camera, I bet you held it up in front of your face. 90 percent of people do that. I did it. The content creators do it for two seconds, and then they spawn another camera, and then they move the cameras all around. They’re thinking about how to create entertainment. They approach it from a different angle than technologists. The people in the team here who are streamers and content creators take that approach, whereas others think of the camera like they do when they take photos of their dog. Content creators turn the cameras around and put it on themselves. They want to put on a show. It’s a different approach. Working with content creators early has been very valuable for us.

That panda-in-a-jar thing I was showing you, it took me about six months before I figured that out. The Rooster Teeth guys came up with it in an hour. It’s in the first show they did. Then they did another one, a panda hiding in the instrument drawer in Surgeon Simulator. They found stuff in an hour that we hadn’t come up with after doing demos for a long time.

GamesBeat: You talked about sponsorships being important. How do you generate revenue while you’re waiting for everything to materialize?

Hooper: The shows we’re working with so far, we’ve been sponsored by Akamai and Alienware. There are corporate sponsors out there looking to support VR and show that they’re on the cutting edge. Akamai has been fantastic to work with. They sponsor both the Rooster Teeth show and the HyperRPG show.

Ultimately, if you look at how Twitch and YouTube monetize, it’s definitely advertising, subscriptions, premium content. We think all those things will be in the future for VR. They’ll take a little while to get here. We’d be interested in experimenting with those things over the next year. But the focus is delivering an awesome experience, getting an audience that’s engaged, and then the audience will tell you how they want to pay for the content. If they want to watch advertising, if they’d rather pay for premium content, those are the things audiences are pretty good at signaling.

Also, the audience in VR is so much more engaged and so much more present. There are other opportunities based around that. You’re in there as an avatar. Things are moving around. You can imagine people saying, “I want this sort of avatar with this kind of item.” The digital goods model is pretty interesting for us. Especially when you’re in VR. It’s one thing to have a digital good in a chat or something like that. But in VR it feels more like a real object. A lot of the Asian video platforms have moved to this model of virtual objects as donations. That kind of idea is pretty interesting.

Above: Vreal

Image Credit: Vreal

GamesBeat: Twitch seems to be getting there with their gifting features.

Hooper: Right, absolutely. Twitch is doing a lot of that. In VR those things could be even more powerful. It’s one thing to buy an icon on the screen, and another to hand you a virtual object.

GamesBeat: How many people do you have right now?

Hooper: 20 of us. The VR market is definitely maturing. There’s less hype, but more reality. Enough people are out there with headsets that we’re getting to a point that you can put a product out, build a community around it, get people engaged in things like this, and people understand what you’re talking about. A year ago it was still pretty hard for us to explain what we were doing. People just didn’t understand it.

A year ago, when we did the demos, people were just amazed to be in VR. Getting through that to talk about what VReal does was actually pretty hard. Now, most people we’ve been speaking to have had some VR experiences. They can absorb the difference between what VReal is and simply being in VR.

The interest level in VR from audiences like the HyperRPG viewers is really good. We surveyed the audience, and 28 percent of them said they either own VR or plan to buy it in the next year. That was a lot higher than I thought it would be.

GamesBeat: What’s your process for getting to new platforms? The Surgeon Simulator guys integrate you and you’re in the game. If they go to PS4, are you on that platform too?

Hooper: We aren’t today, because again, we’re focused on the PC. But we’re platform agnostic, yes. PlayStation is interesting as a consumption platform. It’s the platform that a lot of the audience—as a first VR option it’s the best combination of performance and price point. A lot of gamers, I think, will put that headset on and want to watch stuff in VR.