Penrose aims to reinvent movies in VR

SAN FRANCISCO – As a reporter covering virtual reality, I've been chased by a realistic T-Rex and fake-trudged up the Khumbu Icefall on Mount Everest. But while both experiences temporarily took my breath away, they didn't take me away.

Then I visited the animated virtual reality world of Allumette, and quickly and completely vanished inside another realm thanks to a combination of nuanced storytelling and exquisite graphics.

Created by Penrose Studios, Allumette - a sneak preview of which will premiere at the Sundance Film Festival this week, along with another Penrose short called The Rose and I - tells the story of an orphan girl whose world consists of cloud-based cities and gondola-shaped floating ships. Thanks to sophisticated VR goggles and light boxes that track my movements, I was able to walk in and around this world as the animated movie unspooled before me.

When the title character hunches and begins to cry, I lean in close to see her tears. When her ship breaks down, I walk around its belly as the protagonist works to get the engine’s gears moving again. I’m both visiting this world, and of it.

The experience is so new as to be unsettling. Which is perhaps why its director, virtual reality expert Eugene Chung, likes to use an analogy from a techno-cultural leap of a previous century.

“In the late 1800s, opera and stage plays dominated as the immersive cultural art forms of their day, and then suddenly came cinema,” says Chung, CEO and founder of VR content company Penrose Studios. “Cinema will be transformed by VR, and this new artistic language will be as different as cinema’s was to opera.”

Virtual reality faces first big consumer test in $99 Samsung Gear VR

Chung’s merry band of 15 Pixar, DreamWorks and Oculus Rift veterans have been working hard for the past few months to prepare two VR shorts – the opening 10 minutes of the  aforementioned Allumette as well as a simpler five-minute short called The Rose and I – for this week’s Sundance Film Festival.

This is just the opening salvo of a coming VR-content war for consumer attention and dollars, as the year promises the arrival of long-awaited hardware from the likes of Oculus Rift, HTC Vive and Sony.

But such gear is lifeless without content. While video games will initially dominate VR usage, entertainment promises to come on strong soon. Industry advisers Digi-Capital estimate that by 2020, VR will generate $30 billion annually, with VR films gobbling up about $6 billion of that pie, with slightly larger hauls for VR games and VR hardware.

Penrose is hardly alone in its genre-defining quest. Its competition includes companies such as Baobab Studios, led by Eric Darnell, director of the $2.5 billion Madagascar franchise; Industrial Light & Magic, whose ILMxLab is working to create Star Wars adventures in VR; and Jaunt VR, a Disney-backed studio that provides creators with the tech gear required to go virtual.

“It’s the beginning of a new time,” says Jens Christensen, CEO and founder of Jaunt VR, whose slate in 2014 consisted of a short VR concert clip of Paul McCartney and today consists of nearly 40 works that are heavy on news and travel.

Christensen won’t say whether any animation shorts are coming soon from partners such as Disney – which led Jaunt VR’s $66 million Series C round last September – but sees few limits to VR’s ability to insinuate itself into all manner of entertainment.

“Serialized content will be very popular, because while people may not wear a VR headset for an hour straight right now, they will watch an hour broken into 10-minute segments,” he says. “Eventually though, the goggles will look like sunglasses. The technology will adapt to us, and then you will spend two or three hours in VR.”

At present, the bulk of new VR content is coming in the form of 360-degree videos produced by amateurs and professionals alike, thanks to smartphone-based VR (Google Cardboard, Samsung Gear VR by Oculus) and various camera gear (GoPro’s $3,000 16-camera rig to 360fly’s $400 spherical HD lens).  But the biggest challenge remains original film-like content, says Piers Harding-Rolls, director of games research with IHS Technology.

“The added complexity or storytelling means we will be waiting longer for a significant volume of content in this area,” says Harding-Rolls. However, “animation is a natural fit for more rapid delivery due to the capability of high-end game engines and their increasing quality of output.”

For Penrose founder Chung, creating stories in VR is less a business opportunity and more a passion. The thirtysomething (he’s coy about his age, as well the company's funding status) Virginia-born son of an opera singer father and mom CPA, he made films as a teen before eventually landing at Pixar in production.

Oculus CEO shares what keeps him up at night

When Chung spotted Palmer Luckey’s 2012 Kickstarter campaign for a new VR product called Oculus Rift, he ordered a pair and met with the team in Southern California. Soon he was the upstart company’s first head of content, continuing on in that role as Oculus was scooped up by Facebook in 2014 for $2 billion.

“What I saw right away was that what I thought would take 10 years to become reality will now only take one,” he says with a laugh, explaining his decision to form his own VR studio. “I want to help define VR movies as a new genre.”

His team is holed up in a large studio apartment coding and animating fictional worlds that operate “with six degrees of freedom that includes Euclidean space,” says Chung. In lay terms, he means the ability – thanks to the lightbox tracking devices that come with high-end VR gear – for the viewer to walk around a VR object that seems to be hanging in space. In the case of The Rose and I, the story of an alien and his rose, it means me walking around the small planet the alien calls home.

One interesting facet of such VR entertainment that bodes well for its monetization is the fact that the participant essentially is choosing what aspect of the story to focus on, which promotes repeated viewings. For example, while watching Allumette, "match" in French, I chose to walk up to the little girl as she interacted with a man on a floating bridge, and in so doing I missed another character's reaction to that encounter that made me want to go back and review the scene with a new focus.

Unlike traditional film, where a director shows you only what he or she wants you to see, VR movies seem to promise a new level of interaction with stories. And that there is why Chung is in this game.

“The holy grail of VR is something we call presence, that sense of being part of the world you're visiting,” says Chung, growing animated. “VR can and should be so much more than a cool marketing tool. It can immerse us in new worlds, and it's those hand-crafted world's that we're busy creating.”

Follow USA TODAY tech reporter Marco della Cava on Twitter: @marcodellacava