During the AR/VR Think Tank panel and subsequent panels on gaming and LBE (Location-Based Entertainment) at CES this week, representatives of production and tool companies put the current state of the medium in a broader context. We are past the initial “everything should be shot in 360” stage, and are now asking, “what are you trying to say?” Ultimately the experience must be purpose-driven. Game developer Don Daglow noted that killer apps usually happen by accident when someone’s passion taps into an unrecognized mass market demand. He noted that VisiCalc was a killer app for the PC, for example.

Responding to press accounts that VR has failed as a product, Digital Domain’s John Canning commented that this isn’t the first time that consumer products have been launched into the marketplace before they were ready, only to fail, advance, and eventually reach a mass market.

In order to use “reality” you have to understand “reality.” Google’s Neil Parris said that his Daydream group is working on understand the physical and psychological aspects of perception. The ergonomics of VR currently “sucks,” and we have to get beyond that, Canning added.

The Third Floor’s Dane Smith pointed out that VR has been a story trope in Hollywood for decades, but when someone puts on the headset today the experience rarely lives up to the hype. Unity’s Tony Parisi pointed out that success like VR game “Beat Saber” (below) illustrate that consumers will put up with a significant hassle if the experience is engaging enough and a cultural meme.

Verizon Ventures’ Kristina Serafim said that she evaluates startups in VR and AR as separate and distinct investment opportunities, rather than one converging industry.

When creating branded immersive experiences such as “Lord of the Rings” or “Harry Potter,” consumers expect to have the same high-quality image and experience as previous media types and experiences delivered.

As for LBE, Spaces’ Brad Herman said the biggest challenge in LBE is finding the fun. You cannot lose on a rollercoaster. Games are all about losing and learning. Spaces has learned that people do not like to lose in LBE. Spaces designs its LBEs so participants score somewhere between winning very well and winning poorly.