The R&D Tax Credit Aspects of Virtual Reality Technology
Virtual-Reality
Virtual reality (VR) technology is gaining
serious traction. It promises to forever change the way man
and machine interact. In 2015 alone, more than $600 million
has been invested in virtual reality by firms like Facebook,
Google, and Microsoft.
It is often thought that
virtual reality technology is a novelty reserved for the
computer gaming industry, but this could not be further from
the truth. Virtual reality will be a game changer for many
industries. Companies developing innovative ways to integrate
this technology into to their operations and products will be
able to differentiate themselves from their competition and
take advantage of federal and state tax credits.
The Research &
Development Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
criteria:
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include
employee wages, cost of supplies, cost of testing, contract
research expenses, and costs associated with developing a
patent.
On December 19, 2014,
President Obama signed the bill extending the R&D Tax
Credit for the 2014 tax year. As of this writing, proposed tax
extender legislation would extend the tax credit through
December 31, 2016.
The Future of Virtual
Reality
When people hear virtual reality, they
think video games, but the opportunities for this technology
are endless. The CTO of Oculus Rift, the market leader in
virtual reality, predicts that gaming will eventually account
for less than 50% of the time people spend using the
technology. Not everyone plays video games, and those
who do play, on average spend more time watching
movies/videos.
Global brands like
Facebook, Google, and Microsoft are paving the way for VR.
Facebook believes that virtual reality along with artificial
intelligence and drones are the technologies of the future.
Google is pioneering virtual reality by developing inexpensive
VR systems such as Cardboard, a device constructed of
cardboard, Velcro, and plastic lenses. Microsoft is investing
heavily in VR by purchasing companies such as HoloLens, a
developer of augmented reality systems and Havok the creator
of a 3D physics engine used in many video games.
Manufacturers of virtual
reality hardware and content will have to work closely with
various industries to ensure the success of this new
technology. It will be similar in how PC game developers
currently work with graphic processor manufacturers like
Nvidia and AMD to develop games that can fully realize the
capabilities of their advanced graphics cards.
Like a newborn baby,
virtual reality will need nourishment; this nourishment will
come in the form of content. Companies at the forefront of VR
technology will find it necessary to team up with
entertainment companies to ensure there is plenty of content
for early adopters.
How it Works
Currently the primary way to experience
virtual reality is to wear a pair of goggles that trick your
brain into thinking you are somewhere that you are not. Humans
have stereoscopic vision; this means humans perceive depth by
noticing slight differences between the images received by
each eye. Virtual reality goggles contain two miniature
screens, one for each eye. These screens simulate stereoscopic
vision by altering images delivered to each eye, thus creating
a false sense of depth.
Simulating stereoscopic
vision alone is not enough; various sensors are needed
to deliver a seamless user experience. Accelerometers and
gyroscopes are strategically placed so the movements of the
wearer’s head can be tracked. This allows the goggles to
deliver a 360-degree virtual experience to the wearer as they
look around the room. These sensors are constantly relaying
data so mistakes can add up. A camera is installed in
the room to correct any mistakes that sensor may make as well
as record body movements, which allows the user’s
real world movements to translate to the virtual world.
Types of Tracking
Systems for VR
Companies that design and develop sensors
used in VR systems can expect a major increase in demand for
their products in the years to come. The communication between
tracking systems and a processing unit is what allows users to
experience a seamless virtual experience no matter where they
are looking in a room. Tracking systems can use
electromagnetic, acoustic, optical, and mechanical
technologies to determine the yaw, pitch, and roll of the VR
headset.
Currently, high-end VR
headsets require a camera in the room to correct mistakes made
by sensors. The development of more sophisticated tracking
systems that do not require a backup camera will enable
VR to be more accessible, for example outside in a park or on
a crowded train during someone’s morning commute.
The Major Players in
Consumer VR Headsets
Oculus Rift developed by Oculus VR
- Target release 2016
- 360-degree head tracking
- At least 1k x1k resolution
- Sub-20 millisecond latency
Project Morpheus developed by Sony
- Release: H1 2016
- 120 Hz refresh rate
- Sub-18ms latency
- 1920x1080 resolution OLED display
HTC Vive developed by HTC & Valve
- Release: 2015
- Two 1200x108- screens
- 90Hz refresh rate
Samsung Gear VR developed by Samsung
- Already released
- Uses smartphone as a screen
and processor
- Sub-20ms latency
- 96-degree field of view
- 2560x1440 resolution
Hardware Constraints
of Virtual Reality
Oculus Rift plans to release its virtual
reality headset in the first quarter of 2016, however the
headset has demanding requirements. The recommended system
specs for a home PC include:
- NVIDIA GTX 970 / AMD 290
equivalent or greater
- Intel i5-4590 processor equivalent
or greater
- 8GB+ RAM
- Compatible HDMI 1.3 video output
- 2 USB 3.0 ports
- Windows 7 SP1 or newer
Oculus’s
new headset will be able to deliver a stunning 3D experience,
however the quality of this experience is contingent on the
overall build of the desktop PC that will be running it.
Virtual reality
requires a frame rate of 90 frames per second to create
realistic 3D environments. This is a far cry from the 30
frames per second that most games run on. Laptops and other
mobile devices lack the power needed to simulate virtual
reality. This means that a rather small demographic will be
able to use this new headset.
On top of this, not
everyone who owns a desktop will be able to run the Rift. The
Rift requires a PC that has been built within the last 12
months. The cost of a computer that would satisfy minimum
requirements would cost over $1000. There are other,
less capable virtual reality units such as Samsung’s Gear VR,
which costs around $199 and relies on a smartphone for a
screen and processing power.
Cost will be one of the
leading factors determining how quickly people adopt VR.
Companies that find ways to reduce the computing cost of
running VR headsets will gain a considerable advantage over
their competition.
Virtual Reality
Sickness
When using virtual reality technology some
people may experience motion sickness, this arises from the
vergence-accommodation conflict. Normally when you are
looking at something, the lens in each eye adjusts and brings
the object you are looking at into focus. As stated earlier,
VR headsets trick your eyes into believing something is in
front of you by delivering slightly different images to each
eye. Unfortunately, looking at flat lit up display that
appears to be in the distance while focusing on a 3D image
that appears in front of you can cause nausea and dizziness.
Stanford University in
California is currently working on a way to overcome this
shortcoming. Stanford has developed a headset that essentially
allows the user to see an approximation of the light field
being generated by the backlit LCD screens contained in the
headset. This allows the user’s eyes to move around freely and
focus where ever they want in virtual space, which in
turns makes the whole experience feel natural, reducing the
potential for nausea and dizziness.
Virtual reality is not a
fully refined technology just yet. Speed bumps in VR
technology should be seen more as opportunities to be
monetized rather than major roadblocks.
Computing the Linchpin
of VR
When someone puts on a high-end virtual
reality headset for the first time their jaw will drop, but
this does not mean there isn’t room for improvement. The two
main complaints about VR headsets are that they are bulky and
sometimes cause nausea. Using smaller and more powerful
processors will solve this.
Smaller processors would
allow for the development of lighter and more ergonomic
headsets. In addition, increasing the frame rate per second of
VR headsets can reduce nausea. This cannot be done without
increasing computing power. Unfortunately, it looks like
Moore’s Law could be running out.
Moore’s Law states that
the number of transistors in integrated circuits will double
every two years, but technologist now believe that next
generation computer chips will start to take two and a half to
three years to come out. Technologists even believe that by
the middle of the next decade, Moore’s Law could even come to
an end. This means that the future of VR will be heavily
reliant on technological breakthroughs in computer chip
manufacturing.
Opportunities for
Virtual Reality
The limits of virtual reality are
boundless. VR will offer consumers a richer, more involved
entertainment experience. VR will also become an indispensable
tool in marketing and advertising. They say, “a picture says a
thousand words”, but virtual reality requires none.
Virtual Reality will
also change the real estate industry. It is one thing to see
pictures of a house in a video, but there is nothing like
experiencing the property in person. Visiting every house in
person can be costly in transportation costs and time. Virtual
reality will allow people to experience properties in person
while not actually being there. People may not make an
investment solely on a virtual tour of a home, but it will
allow them narrow down their choices. In the not so distant
future, houses for sale that do not include a virtual tour may
be quickly overlooked.
Virtual reality sports
will also be a huge market. Last month, the Golden State
Warriors vs. the New Orleans Pelicans was broadcast live in
virtual reality. It was the first time a professional sporting
event was broadcasted using VR technology. Virtual reality
will allow television networks to charge premium rates for
people to be able to sit courtside while being thousands of
miles away from the actual game. The best part is since these
spectators are not actually taking up a physical presence,
television networks can sell and an unlimited amount of
courtside seats. If athletes wear, the proper equipment,
spectators can become even more immersed by viewing the game
from the player’s perspective.
Content and
Advertisements
If virtual reality is going to be the next
major technology in consumers’ homes, advertisements are
sure to follow. Currently, marketers are getting their feet
wet in virtual reality; their advertisements are more aimed at
showing people the awe-inspiring abilities of virtual reality,
as they should be. If marketers flood the virtual market with
advertisements from the onset, there is a possibility that
they will stunt the adoption of this new technology.
Major companies such as
Coca Cola, Volvo, HBO, Facebook, AT&T, and Nestle are
researching and developing ways to create effective virtual
reality ads. These companies are not yet sure how to marry
advertisements with virtual reality content. The immersive
experience is what will allow these advertisements to be so
successful but at the same time, this is the reason why it
will be difficult to integrate advertisements into VR.
User experience could
potentially be destroyed if they are immersed in a virtual
reality movie and then suddenly into another virtual world
featuring an advertisement. This could create stress and
discomfort for the user. Imagine doing whatever you’re
doing and then within a blink of an eye you are transported to
another reality over and over again within the short span of a
commercial break.
One way this stress can
be circumvented is to make the advertisements interactive and
as a means to access the content. MediaSpike is one company
that is creating in-game product placement ads. One of their
advertisements allows virtual reality gamers to test drive a
car through a city. Virtual test drive apps are an excellent
way to merge advertisements with virtual reality.
Incorporating
advertisements into the unchartered waters of VR will be a
challenge but with the right mix, marketing firms will find
themselves under a waterfall of new revenue.
Major Investments in
VR
Companies like Facebook are pouring money
into virtual reality at an unprecedented rate. In 2014,
Facebook bought Oculus VR for $2 billion. Today, mobile is the
platform of choice, but tomorrow it will be virtual
reality. Facebook’s investment in virtual reality is a
strategic move to place it in a dominant position as consumer
preferences gravitate toward virtual technologies.
Recently, Comcast and Time Warner Cable participated in a
$30.5 million funding round for Next VR Inc.
The Wall Street Journal reports:
“Walt Disney Co., Sky
PL, C and others invested $65 million in Jaunt Inc.-of
California, which creates and distributes virtual-reality
content. Comcast joined a $10 million funding round this
year for AltspaceVR Inc. of New Zealand, a social-media
platform for virtual reality, and is set to announce a third
virtual-reality investment this month.”
The list of companies
trying to get a foothold in the virtual reality industry goes
on and on. In less than ten years, the market for
virtual reality content is expected to be around $5.4 billion
while the hardware component is expected to reach as much as
$62 billion.
Military Applications
of Virtual Reality
Superior training is one of the many
reasons that the United States has the strongest military in
the world. Currently, all three services use virtual reality
for training purposes. The use of VR to train soldiers is only
expected to increase as the technology becomes more economical
and refined.
Practice
makes perfect; this saying has a completely different meaning
when it comes to soldiering, and performance is a matter of
life and death. Currently, virtual reality is used for flight
simulation, battlefield simulation, medic training, and
vehicle simulation.
VR flight simulations
help pilots to experience an unlimited supply of unique
engagements. These engagements allow pilots to have a wide
knowledge base that will allow them to make educated decisions
when they enter live combat. Not only does VR help pilots
obtain invaluable experience, it also reduces training cost
stemming from aircraft wear and tear and fuel costs.
VR also helps the
military learn from its mistakes. VR allows the military to
react to particular scenarios economically and safely. Various
strategies can be applied to a particular scenario in order to
find out which strategy will provide the best outcome. Once a
particular strategy is deemed the best course of action for a
situation, it then can be added to the military’s knowledge
database and disseminated to troops for maximum effect.
VR and STEM
The United States is currently facing
difficulties attracting and retaining students in the STEM
(Science, Technology, Engineering, and Math) fields, but
virtual reality technology could change this.
Close to half the
students who peruse STEM degrees in college end up
dropping out of their major. Many of these
students choose to leave stem programs because these programs
focus on theory and provide little hands on experience. VR
systems could be used to make challenging and dry content more
exciting and engaging. VR will allow engineering students to
bring to life whatever they design. The pride and
accomplishment that these students will experience from seeing
their ideas come to life will provide the needed encouragement
to complete their degrees.
VR Improving
Manufacturing
People may have different opinions on what
engineering truly means, but at its core, engineering is
simply the development of practical solutions to technical
problems. Virtual reality will further decrease the cost
associated with prototyping. Software designed by
companies like Autodesk can help manufacturers simulate
potential products two-dimensionally on computer screens, but
there is nothing like actually testing out the product in a
live environment.
Ford Motor Company is
leveraging VR technology to improve their designs. Ford is
able to link VR technology right to its Autodesk CAD system to
produce a virtual version of their prototypes. The virtual
experience allows testers to recognize subtle design flaws,
which can be quickly fixed.
University Research
Efforts
Stanford University
Stanford University’s
Virtual Human Interaction Lab is making major strides in
virtual reality technology. Stanford currently has a wide
range of projects exploring potential applications for VR
technology as well as understanding the potential
psychological effects of this new technology. One project,
Empathy at Scale, focuses on how VR technology can be used to
teach people empathy by allowing them to walk a mile in
another person’s shoes. While another project, Learning in
Immersive VR, aims to find out how VR technology can
revolutionize teaching and education.
Stony Brook University
Stony Brook University
is making headway in VR research. Stony Brook has constructed
the world’s first immersive gigapixel resolution display. With
more than 1.5 billion pixels, the Reality Deck will help
scientist to develop advanced data visualization techniques as
well as create a better understanding of how to manipulate
massive data sets.
Iowa State University
Iowa State University’s
Virtual Reality Applications Center is an interdisciplinary
research center that is making considerable advances in VR
technology. The center hopes to improve 3D sensing techniques
by increasing the 3D sensing field of sensors. Iowa
State’s research is also helping to improve the effectiveness
of soldiers in combat by developing the HomCam, a helmet which
has four cameras positioned around it.
These cameras broadcast
a 360-degree view of a soldier’s position over Wi-Fi, which
can be viewed by an individual anywhere. Any soldier wearing
this helmet will essentially have eyes in the back of his
head. This technology will greatly increase soldier
survivability in combat.
Brown University
Brown University’s
Center for Computation & Visualization conducts virtual
reality research with a focus on locomotion and navigation.
Current projects include dynamic modeling of online steering,
pedestrian interactions, multisensory control strategies,
avoiding multiple moving obstacles, modeling mobility with
peripheral field loss, integrating learned routes, path
integration, and navigational strategies.
University of Arizona
At Arizona’s Laboratory
for Immersive Visualization Environments, it is possible to
witness cardiac musculature and pulmonary veins protrude from
the center of a room. Wearing a motion sensory headset, users
can view and travel inside a human heart. Being able to
explore the human heart at this scale allows researchers
to gain new perspectives and insights like never before.
University of Washington
The University of
Washington is developing virtual reality technologies that
will help reduce the pain that burn victims experience.
Despite large doses of opioids, burn victims experience
excruciating amounts of pain during wound care, such as daily
bandage changes, wound cleaning, staple removals, and etc. The
amount of pain a person feels has a lot to do with their
conscious attention to the pain. VR technology is being used
as a way to distract burn patients so that they are not as
focused on the pain. Many burn patients in VR now consider
wound care as an annoyance, distracting them from their
primary focus of exploring a virtual world.
Conclusion
Virtual reality will transform the modern
economy. The applications of VR technology will only be
limited by people’s imaginations. Though this technology is
promising, it is only in its infancy, it is currently at the
brick-size cell phone stage. Companies who invest in VR
research and development early on will reap huge rewards when
VR technology reaches the iPhone stage. Federal and state
R&D tax credits available for those developing VR
technology.
