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Going to the next dimension

March 18, 2008 | Chris Payatagool
nextspacelogo.pngBy Karyn Scherer

So, you've just splurged a few grand on the latest plasma TV and now you're waiting for the broadcasters to get their act together and start sending out their signals in high definition.

Sorry, but that's sooooo last century. 3D TV is now where it's at, or rather where it has been for some time, according to Dr Roy Davies.

And Davies should know. A Kiwi who completed his masters degree in robotics and rehabilitation engineering at Auckland University 15 years ago, he has recently returned home after more than a decade in Sweden, where he headed Scandinavia's leading virtual reality research centre.

Now CEO of an Auckland-based think tank and mentoring organisation known as Nextspace, his mission sounds almost impossible: to build a billion-dollar virtual reality industry in New Zealand in just seven years.

"There's a lot of countries that have the pip on us in terms of just being more technologically aware, like most of the Asian countries, America and Germany," he concedes. "But, at the same time, I think we do have the possibility of really getting in there and doing some serious damage, so to speak, in the area of 3D real-time graphics for all sorts of interesting business problems."

Of course New Zealand is never going to be able to compete with the likes of China and India on sheer numbers, but it is true that we are still innovative, he enthuses.

"We're doers. We're the people who can take the problem and solve it, and come up with an interesting solution that, hopefully, other people wouldn't have thought of, and what's more we can do it on a tight budget. That's the sort of brand that we've got to get out there."

From its flash new offices in Greenlane, Nextspace certainly gives the impression it is not just at the cutting edge of the industry, but is so sharp it risks injuring itself. As its moniker suggests, everything about its interior is state-of-the-art, from desks where people can work standing up, to flexible furniture, to fancy screens displaying giant images of sexy cars and not-so-sexy engines.

A declaration of interest is required: Nextspace approached Business Herald columnist Peter Bromhead to do the design. What he has come up with is not so much Clockwork Orange as Clockwork Red & White.

The day I drop by, a 3D TV is flickering away in the boardroom. TV screens are distracting at the best of times but I've never seen one like this before, and it is utterly mesmerising.

"Oh that," Davies chuckles. "That's old technology. That's an autoscreen."

It turns out you can already buy auto-stereoscopic TVs off the shelf. The one in the boardroom is a Philips. They work, Davies explains, by splitting what the left and right eye each see, by using a special filter that contains two tiny lenses. The lenses do the same job that coloured glasses do when you go to see a 3D movie.

The very latest technology, apparently, is holographics - the sort we have got used to seeing in science-fiction movies, where people in strange uniforms suddenly materialise from very thin air to impart their step-by-step instructions on how the universe should be saved.

In fact, the world has already witnessed a true-life version of this situation, when Prince Charles addressed a green energy conference in Abu Dhabi in January. Supposedly concerned that he might be criticised for using too many air miles, the environmental enthusiast chose to appear as a hologram, using technology developed by British multimedia firm Musion.

"We're only just now getting computers that can generate holograms in real time," Davies enthuses. "It's still very expensive but it's getting there."

The practical applications are obvious, particularly in the design industry and for medical training.

One of the projects Davies was involved with in Sweden, and continues to be involved with in New Zealand, is what are known as mixed reality operating rooms. These are real operating theatres with virtual patients, which - thanks to the newest holographic technology - can not only be seen but touched as well.

In the meantime, Nextspace is able to show off the latest big-screen 3D technology, using expensive glasses with built-in LCD shutters. At its first open day this month for invited guests, it demonstrated how you can not only see virtual objects in 3D, but walk around them from all angles.

He is convinced that within the next decade, or possibly even the next five years, holographics will develop to the point where such displays will be possible without glasses.

Computers are also becoming much more intuitive, he notes, and even now technology is available that enables businesses like car dealers to show customers what a customised car will look like before it is made - shiny metal, textured upholstery and all.

The oil and gas exploration industry already has technology "I can only dream about," he sighs. And as for the defence industry: "It's just a matter of letting your imagination run riot and that's probably what they've got."

Eventually, Davies expects, the entire concept of the computer will probably disappear.

"In other words, we are no longer really going to see the computer as the computer. You're doing a job with a device. The fact that it's a computer is almost irrelevant because you are communicating with it in a means that is natural and intuitive for you. 3D and virtual reality are really going to be terms that are going to disappear, because 'of course it is 3D - it wouldn't be anything else' sort-of-thing."

The problem, of course, with this virtual new world is that someone actually needs to produce the images in the first place. With 3D TV, someone still has to record the images in stereo, which is not as straightforward as it sounds. "There's a whole infrastructure that needs to go into place around that."

That is where Nextspace comes in and, if Davies and his team gets it right, where New Zealand could really make its mark.

While many Kiwis - and many people from overseas for that matter - probably realise that we are at the forefront of the movie graphics business, and TV graphics too, few probably realise that we are also the world leader in digital asset management. In other words, we're really, really good at developing the tools that allow other people to show off their 3D wares.

Davies is not the only person who is convinced that we hold the key to an industry that is highly likely to be the Next Big Thing. Politicians and bureaucrats have also been persuaded, to the point where they agreed in 2006 to loan $14 million of taxpayers' money to 3D graphics company Right Hemisphere to prevent it from moving offshore.

The three-year, interest-free loan comes with several strings attached: the company is required to keep the bulk of its research and development operation in New Zealand and it has to develop a cluster of similar companies in which its American backers are also expected to invest. If it fails to create such "spillover" benefits, it has to pay 25 per cent interest on the loan.

What excited officials is the fact that Right Hemisphere has managed to develop a turnover of more than $20 million in less than a decade.

It has decided to specialise in the lucrative aeronautics and automotive industries, supplying giant companies like Boeing and Chrysler with products such as online interactive instruction manuals that make life a lot easier for workers like aircraft engineers.

Davies was, in fact, surprised to learn that it was a Kiwi company. He was well aware of its reputation when he was working in Sweden but, until then, had only had dealings with its American staff.

"You've got to think that what Right Hemisphere has done is quite unique. Also, the area they're in is one of those areas that is burgeoning and just starting off and is going to be big, so obviously the right people were listening at the right time in the Government.

"If we can get New Zealand in at the start of this particular area then we can capture a portion of this for our country. Right Hemisphere is leading the way in the world in this. It's one of those world-famous-but-not-really-in-New-Zealand companies - although that's not surprising because their market isn't really New Zealand."

So far, it is the only company to get such a deal from the Government. But it's not entirely a one-way street. The spillover agreement also requires the Government to be supportive, and after a lot of discussion it was eventually decided what was needed was another organisation that would help build an industry using the tools that Right Hemisphere, and other 3D graphics companies like Virtual Spectator and Animation Research, had developed.

Although Nextspace is an independent, not-for-profit organisation, its two founding partners are Right Hemisphere and the Ministry of Economic Development. The ministry has provided some funding for the next three years, and Davies' job is to generate enough money to keep it going beyond that.

So far, he has hired 13 people, but is already looking for more money to enable him to hire more.

He intends to raise funds by charging New Zealand organisations, including universities, a membership fee to access its technology and its time. If they need more time, they get it at cost. However, overseas organisations with R&D money to spend will get charged market rates - which, it is fair to say, are not cheap.

Nextspace will also sell commercial licences to use Right Hemisphere's technology. And take a slice of the profits made by New Zealand companies it helps to nurture.

"We've also been very, very careful not to trample on people's toes. Animation Research, for example - they're really big in this area and we're not trying to compete with them or anything. We're just trying to work with them."

Unlike business incubators that have sprung up around the country, Nextspace does not employ any specialists in venture capital.

It expects companies to have their own premises, but will provide the technology, platform, and expertise to enable them to grow.

"One of the criteria for us to take on a project is that there is a well-developed business plan and, if someone can't present us with at least a halfway well-developed business plan, then we'll send them away to do their homework, because that's not really our role."

So far, there has been no shortage of potential projects, with about 30 looking promising. Of those, Davies believes about six are ready to sign on the dotted line.

"At this stage, we haven't needed a sales and marketing team - it's more a case of needing to turn people away. But that will change obviously as we finish the low-hanging fruit. That said, of all the deals we've worked through so far, it's quite hard to get that last little bit and get that signature. There's a lot of interest but turning that actual interest into work is quite tricky."

Because of the highly competitive nature of the industry, most companies have required Nextspace to sign a non-disclosure agreement, so that sensitive details of their top-secret projects don't leak out. "One company that we're talking with, it's vital from their point of view that what they're doing does not get out too early."

However, a couple of companies have already gone public. One of those is SimDrive, started by a former manager for The Warehouse, William de Hamel.

De Hamel has developed a driving simulator which has managed to achieve something few others have: it is not too expensive, its software is easily upgraded and it doesn't make drivers feel ill. Animation Research helped de Hamel develop the content, and he used Right Hemisphere's tools for the behind-the-scenes machinery.

Davies has been impressed at de Hamel's approach - which has included getting officials keen on the idea of using the simulator to help train young drivers, and developing a franchise model that could see it become a common sight in shopping malls and outside large retail stores.

But he admits he was still pleasantly surprised when de Hamel recently returned from a sales trip to England and the United States, having struck a deal to sell about 150 of the units.

"He's done his homework. He's really thought it through and come up with some convincing arguments, and thought what's possible and what's not possible."

Another promising project is software that enables a virtual art gallery to be developed. Not only does it allow large galleries to permanently display art that would otherwise be in storage, it could also be a valuable teaching tool, or even a resource for galleries to provide extra information for patrons.

"That's a good example of a company that's using our technology - we just provide a little bit of support here and there. They're at the stage of saying, 'We've got the idea; got a prototype; got some local art galleries interested. Let's go for the big game; let's go for the Louvre; let's go conquer the world with this now'. It's doing very nicely I might add - very nicely indeed."

Other obvious opportunities are in medical and geospatial data management and visualisation, learning online, and what is known as just-in-time training (aircraft engineers needing instant access to a virtual database or manual).

In fact, says Davies, Nextspace itself is starting to "chug along nicely". But the real test of its success will be whether it manages to develop other crucial markets important to New Zealand, such as tourism.

For the tourism industry, he can already imagine something like a GPS system installed in campervans that's an interactive version of Alaska's famous Milepost guide, providing real-time tips and information on everything a tourist sees around them. Or perhaps marketing tools, such as a virtual taste of what a bungy jump is really like.

"Those are just my ideas, but we need to get a group of people in a room and come up with their ideas. It's a typical case of two communities of practice meeting and exchanging ideas and doing due diligence on it, and seeing if there is any sense in working together."

A bigger challenge, perhaps, will be ensuring the education system also jumps on the bandwagon, by developing qualifications for those keen to work in the industry.

Davies has hired a former teacher as an educational strategist, whose job is to work with schools and tertiary institutions. Initiatives already under way include a drop-in centre for young people in Otara to work on computer-related projects and an online portal where kids can share their own 3D content. Nextspace is also developing specific teaching packages for primary and secondary teachers.

"What we're trying to achieve is make kids and teachers realise there's more to 3D graphics than film and games."

It is also talking to tertiary centres about how 3D technology can benefit a wide range of departments. One of the reasons he was able to get funding for the research centre at the University of Lund in Sweden, says Davies, is that the centre was available for anyone in the university who needed it, from computer scientists to psychologists to architects.

"This is something I want to see happening here as well. AUT University is starting to go down the same path. I'm seeing different departments at AUT asking more or less the same questions, and one of my jobs in the future is to put them all together in a big room and say, 'Let's talk about this'."

That said, Davies acknowledges one of the reasons he decided to move back to New Zealand was that his wife, who is a hydrologist, was finding it increasingly hard to get funding for her own research. He believes universities still have some way to go before they fully exploit the commercial possibilities of some of the work they are doing.

"They really need some help doing that in a general sense. We didn't do that much in Sweden either and I think universities could be a lot better at that. It doesn't mean you have to sell your soul but it does provide some extra income. It's a changing world, unfortunately. Governments are no longer able to pay universities to the full extent they should."

But he also believes New Zealand needs to do more yet if it is serious about "economic transformation".

While he was delighted by this week's announcement of a $700 million fund for the food and pastoral sectors, it's not going to be much use for other industries that are also crucial to the economy, he says.

"What the Government did for Right Hemisphere was great but it's really just a one-off thing. They've got to do that for a lot of companies or find some other mechanism that encourages other companies to stay here rather than go away, and that's my big concern for the moment. Nextspace is not going to be successful for what it wants to do if the Government doesn't get behind it and provide some encouragement. What that looks like I don't know. Whether it's tax breaks or whatever, I don't know really."

However, he is acutely aware that he has just seven years in which to keep up his end of the deal.

"It's fairly arbitrary but put it this way: if we haven't managed to do it in seven years then we've missed the boat anyway, because this a very fast-moving industry, so really within the next couple of years we need to be well on the way to profiling New Zealand in that direction."

Given our country's sorry history of "picking winners" that have turned out to be anything but, isn't rather a lot resting on Davies' shoulders?

Indeed, he agrees, but it's like the old saw about eating the elephant - the only way you can do it is to take one bite at a time. Or maybe a more appropriate analogy for this part of the world would be looking down a steep ski slope.

"You've just got to keep pointing in the right direction and just hope you get down to the bottom in one piece. If you sway and go the wrong way it could get very messy indeed."

There is, he concedes, "great potential" for failure, which is why he is trying to consult as many people as possible, and listen to their suggestions, and get them involved.

"It's fascinating not only from a 3D graphics view, but also from a business perspective, and from the Government's perspective it's a very brave thing to have done. It's an experiment from their point of view as well and it could go horribly wrong. From our point of view, it will be a success, but there's a lot of hard work to be done."

[via The New Zealand Herald]

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