Virtual Reality Is Here. What Does That Mean for Developers?

SXSW Interactive is unpredictable. The eclectic mix of startups, brands, corporations, app developers, and media changes every year, with the only constant being a sense of playful innovation.

One other thing that never changes, though, is the tendency for what’s trendy at SXSW to become trendy with the general public within the year. (Think Twitter, live streaming.) So it’s no surprise that iPad app developers are taking a long hard look at this year’s “belle of ball”: virtual reality headsets.

While the idea of VR taking a share of the screen time currently dedicated to mobile devices and tablets has some Houston iPhone app developers concerned about implications for home entertainment, others are excited to jump into the fray. And they’re in good company; Google, IBM, Dell, Samsung, and even McDonald’s are in on the trend now and each held unique events at SXSW Interactive showcasing their applications for VR technology.

Overall, the biggest concern about VR in the app development community is the question of ad revenue. Traditional advertising has been on the decline as a revenue source across most content-based consumer technologies for several years now, and some marketers are seeing VR as the nail in the coffin.

This may actually be a good thing for app developers, and here’s why: the adverse effect advertising has on user experience is well documented in the app ecosystem. As a result, value-based monetization systems have been cropped up to fill the void (or if not the void, the pockets of iPad app developers).

Systems like “freemium” and integrated advertising via sponsorship have actually proven to increase profits, all while giving users what they want: more content, fewer ads. Snapchat’s sponsored lenses, for example, bring in as much as $750,000 in app developer revenue per lens. Daily. Meanwhile, apps with traditional advertising like banner ads churn users by the bucketload and almost invariably fail.

For marketers in VR, the road forward is a scary one. Agencies that survive will have to abandon old frameworks and develop a whole new set of data and best practices. The good news for app developers: new frameworks tend to outperform old ones, and those who thrive in a VR-infused digital ecosystem stand to make a handy profit.