Reality Channels

In this post I primarily want to convey an idea of the sheer size of the virtual and augmented reality universe that humanity is poised to gain access to, and why having access to this universe is likely to eventually change how most people view reality itself. I’ll begin with the following thought experiment.

Imagine that you live in a giant mansion with thousands of rooms. Each of these rooms represents a specific “reality” or “world” that is either purely virtual, purely real, or a mix of virtual and real. So in other words, only one room in this “mansion” represents the unaltered “real world” of our everyday experience.

How likely do you think it is that you would choose to remain solely in the “real world” room at all times, given that:

  1. There are thousands of other rooms in the mansion that you can go into
  2. The “real world” room is more restrictive and dull than the other rooms
  3. Most people in the mansion are in the other rooms

Obviously, this is a rhetorical question. Augmented and virtual reality wearables, and the virtual reality ecosystem that supports them, are soon going to provide individuals with access to a huge number of compelling alternate realities.  As people spend more and more time in these alternate realities, the real world is likely to be relegated in their minds to the status of a single “channel” on a vast spectrum of “reality channels.”

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After Automation

In his famous essay “Economic Possibilities for our Grandchildren,” John Maynard Keynes wrote the following words about life in a largely automated society:

Thus for the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well. [1]

When Keynes originally wrote these words, casual readers may have envisioned that most people would spend their days in such a society lounging around with little of real interest to do, since machines would take care of essentially everything. Perpetual boredom probably seemed like a real possibility.

Estimates today about the aftermath of widespread automation include Jeremy Rifkin’s belief that there will be significant growth of the non-profit sector [e.g. 2, 3], and concerns mentioned by Martin Ford [4, 5], Erik Brynjolfsson and Andrew McAfee [6] about the potential for spikes in economic inequality. These views tend to focus on the future of real world human activities in the aftermath of automation.

In this post I will focus instead on the fact that virtual and augmented reality technologies are soon going to change the entire context within which we view Keynes’ statement above. As these technologies achieve their promise over the next three decades, humanity will gain access to a vast universe of engaging and challenging virtual world experiences, which automation will provide us with significant time to explore. The most surprising thing about the majority of jobs and social activities of the future is thus not what they will be but where they will be!

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A Marvelous Medium

In this post I’ll discuss an important advantage that augmented and virtual reality wearables (which I’ll refer to as “AR/VR wearables” from now on) have over all other forms of visual media.  A clear authority on the social influence of media was the great Marshall McLuhan, who wrote that:

All media work us over completely. They are so pervasive in their personal, political, economic, aesthetic, psychological, moral, ethical, and social consequences that they leave no part of us untouched, unaffected, unaltered. [1]

McLuhan also wisely observed that:

…the “content” of any medium is always another medium. The content of writing is speech, just as the written word is the content of print, and print is the content of the telegraph. [2]

I infer from these statements that although society has successfully adapted to many forms of media over time, it is particularly important to be aware of the arrival of new forms of media that are capable of entirely “containing” the currently dominant form(s) of media. This is quite a rare occurrence of course, but when it does happen we may expect a lot of social change to follow, given McLuhan’s words above.

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The Virtual Reality Spiral

As virtual and augmented reality substitutes for “real world” oriented experiences get better and cheaper over time due to technological progress, the public will be increasingly incentivized to choose these experiences over exclusively real world ones. This will cause downward pressure on the revenues of many traditional companies that provide real world oriented products and services.  In turn this downward revenue pressure is likely to trigger further automation, layoffs and improvements in operational and logistical efficiency as these companies struggle to compete with constantly improving and cheapening virtual and augmented reality substitutes for the experiences they offer.

As corporate demand for human workers falls, the labor force participation rate is likely to drop to alarming levels as more and more jobseekers simply give up on finding new jobs.  Increasing unemployment and underemployment will also incentivize more sharing of real world resources between consumers (and thus drops in consumer demand for those resources), as they clamor to cut living costs by using these resources more efficiently.  Weakening consumer demand for these resources will in turn put more downward pressure on corporate revenues, which will further hamper the competitiveness of traditional companies versus the constantly improving virtual and augmented reality alternatives to their products and services.

I have dubbed this process the “virtual reality spiral” (illustrated below), and in my opinion it is the most important socioeconomic process to be aware of in the decades ahead.  In the long run I expect that the spiral will lead to nearly continuous virtual reality immersion by most people, in conjunction with the nearly complete automation of real world industrial, agricultural and logistical processes.

vr spiral pdf

Along similar lines, I noticed a recent article of interest on Mish’s Global Economic Trend Analysis Blog.  Author Mish Shedlock mentions the opinion of one of his readers (named “DT”) from Brazil, who suggests that Microsoft’s Hololens has “huge deflationary potential” because users will be able to mimic a variety of physical objects in their homes with the technology.

My view is that the virtual reality spiral is going to make many traditional jobs, activities and businesses completely obsolete.  The effects of the spiral will probably be amplified even further in some countries due to public demands for governments to slow the resulting drops in wages and tighten restrictions on layoffs. Such actions will unfortunately make traditional companies in these countries even less competitive, as substitute virtual and augmented reality experiences that are unconstrained by national borders continue to improve and cheapen versus the products and services they offer.

Although this situation may seem very bleak at first glance, I see a relatively positive long-term outcome to all of this if handled properly by society, which I plan to discuss further in future posts.

To better understand why the virtual reality spiral is inevitable though, consider the table below.  Using hypothetical values I illustrate that every human experience can be catalogued at least subjectively by how necessary each of the five senses is for that experience to be replicated reasonably well.

activities diagram pdf

For example, it may be possible to drive a car without feeling the steering wheel against your hands or the vibration of the cabin through your seat, but sight of your surroundings is absolutely essential and hearing is nearly essential, while smell is rarely important and taste is irrelevant. Similarly, the senses of sight and touch are very important in tennis but hearing is less so, while smell and taste are irrelevant. And in typical office meetings, aside from having to shake hands occasionally or move office materials around for example (which both involve the sense of touch), hearing and sight are the essential senses, while smell and taste are irrelevant.

Thus there are numerous “real world” activities for which anywhere from one to three senses could be completely omitted if necessary without significantly reducing the quality of the experienceSo incorporating the ability to mimic visual stimuli alone into our networked technology, in conjunction with our existing skill at mimicking audio stimuli, would lead to dramatically improved simulations of a huge number of activities.

For example, virtually attending a sports game in the future using audiovisual virtual reality apparatus is likely to pose huge competition to live attendance of the same game, even though the senses of smell, taste and touch would be absent from the virtual experience. This competition is likely to become even more fierce as soon as a number of friends can virtually attend the same sports game while socializing with each other in a customized virtual reality environment. The same thing goes for virtually attending office meetings – if an in-person office meeting can be faithfully replicated in a virtual reality environment in every relevant detail except handshakes between participants, the availability of the virtual reality substitute seriously undermines the need for them to waste time and energy commuting to a centralized office for that meeting.

This makes it clear that virtual reality technology, even if it provides only immersive 3D visuals and stereo sound in the near term, is in fact extremely disruptive because it will enable us to create dramatically better substitutes than we can today for a whole host of real world experiences. And of course, any substitute that replicates an experience, however imperfectly, has some economic value. This is precisely why we pay money for telephone calls.

Even though phone calls only replicate the experience of speaking in person with someone for 1 of our 5 senses, this is good enough to have financial value for us.  So can you imagine the power, convenience and value of a technology that can replicate the experience of speaking in person with someone (as well as numerous other experiences) with both immersive 3D visuals and stereo sound?

Although the companies that ultimately deliver great virtual reality experiences to the public are likely to benefit economically, companies that fall behind with respect to the technology will conversely be leaving themselves exposed to significant downside risk.  A quality virtual reality ecosystem is thus inevitable in my view, as very few companies whose industries are exposed to transformation by the technology will be able to ignore it.

Future generations of wearable virtual and augmented reality devices are going to increase personal convenience so dramatically that it will become as unthinkable to leave your home without them as it would be to leave your home without a cellphone today.  Eventually of course, technologies like these (and other supporting technologies) will probably make it unnecessary to leave your home at all.