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Really Virtually Here: The Emergence of Virtual Reality as a Viable Film Medium and the Implications for Film Licensing and Clearances

Anything that appears in a film or television scene that is independently protected by copyright or trademark law generally must be licensed or cleared by its owner or rights holder. This can and does keep producers and production counsel very busy, and is often why many run-and-shoot reality television scenes include those blurred-out soda cans or background posters: somebody didn’t (or couldn’t) clear the rights to use those trademarks or copyrighted works in the production.

On the opposite end of that blurred-out-trademark spectrum are productions that actively sell strategic (often shameless) product placement. Obviously, permissive “clearance” for use isn’t the issue here; nonetheless, the terms of those agreements tend to be very specific and require significant legal negotiation.

In the copyright context, not obtaining the proper licenses can be especially costly. Even the intermittent or fleeting use of a seemingly common background prop can lead to litigation if the work is protected by copyright and not cleared for use.

Clearances are nothing new for experienced producers and production counsel. But clearances present an entirely new set of issues in the growing world of interactive 360˚ filmmaking and virtual reality (VR) experiences. With the first VR film festival, Kaleidoscope, premiering this month in ten cities, it appears that VR films may be gaining momentum. Add to that the first decent consumer VR headsets hitting the shelves in 2016 (at least for gaming) along with ever-increasing graphics processing capabilities in devices and theoretically unlimited cloud-based data storage and streaming solutions, and it’s safe to say that VR is (virtually) already here.

To understand how VR may present both problems and opportunities for filmmakers, legal counsel and third-party rights holders, it’s helpful to first review the basics of VR films and filmmaking. VR footage is shot using a camera (or linked array of cameras) that simultaneously captures a 360˚ field of view and sound. The result is a “scene” that includes footage from the entire surrounding environment. Upon playback on (or in) a VR headset, the user essentially decides what specific perspective or field of view he or she wants to view in a given scene. This immersive experience is thus inherently subjective and infinitely dynamic due to its “interactive” or viewer-controlled nature. That is, in theory, no two viewers will have the same experience, and each individual viewer can experience the film in a new way every time. This is not easy to describe, so to get somewhat of an idea of how it works, check out this two-dimensional preview (and be sure to move your cursor around a la Google Maps Street View).

Now that we’re hopefully on the same page, let’s compare the workings and control processes of a traditional movie scene’s production to those of a VR scene. On a traditional set, the filmmaker knows what’s in a given scene’s frame; that is, there are the things within the camera’s (or cameras’) field of view and the things outside and behind it. As such, what will ultimately be visible on film is relatively easy to select and control. More importantly, the extent to which something in the frame is visible or prominent can likely be further manipulated during post-production and editing. With a VR film, however, it’s difficult to even call the environment a “set” or “scene” in the traditional sense; the set is the camera’s entire perceptible environment, and a scene is more akin to a moment in time than a staged or controlled series of frames. Editing, at least for purposes of controlling what the viewer sees and for how long, is nonexistent if all of the viewer’s perspective options are to remain open.

Now consider the implications of these fundamental differences to traditional film licensing and clearances. A comparative hypothetical of a short scene shot in the two different styles will help illustrate the issues. Assume the following ten-second scene is shot for a traditional movie: a handheld camera operator follows an actor into a bar. Rock posters and neon beer signs cover the walls. The patrons are drinking labeled beer. There seems to be a live band playing to the far right of the screen, but out of the shot. Cut.

Now assume also that the camera operator shot the same ten-second scene with a VR camera. Cut.

The first scene requires a slew of clearances. A license must be obtained from the owner of the copyright in the posters. Any rock stars on the posters may have rights of publicity that must be cleared. All of the beer trademarks on the signs and bottles might need to be cleared. The actual bar owner needs an agreement outlining the scope of permissions and responsibilities for using the venue on film. As for the music, licenses are needed for use of both the composition and – if it’s not a live-band – the master recording. If it is a live band, the license will change accordingly. And the price of each example above will depend on the scope and type of use the filmmaker requires.

With the VR scene, however, it is impossible to know or control the scope of the use up front, because the individual viewer will control what is viewed, from what perspective, and for how long. The VR viewer might look at one of the posters for the entire duration of the scene or not at all. Or might focus on an attractive bar-patron actor for the whole ten-seconds, thus giving that patron’s beer trademark a much bigger (and valuable) brand impression than did the passing glimpse in the traditional scene. As for the music, if the scene is intended to have a live-band feel, then it better have a live band; and the viewer may just watch that and ignore the rest of the room.

Obviously, this paradigm shift drastically alters everything about how scenes are shot and how stories are told. But for this blog, I’ll focus on how filmmakers and production counsel might account for these ever-dynamic variables in clearing rights. Initially, I suspect, these issues will prove quite difficult. Eventually, however, I foresee two main licensing schemes proving practical. First, and most obviously, the clearances and licenses will simply need to be broad enough to cover the maximum scope of viewer “use” or experience. This will likely require more money up front to licensors. Alternatively, the licensing paradigm could shift more toward a back-end compensation model, with film distributors, rights holders and advertisers all recognizing an opportunity here: if they keep up with the technology and integrate audience metrics and analytics into VR headsets, they can track users to measure their view, impressions and reactions. Where the VR content is live-streamed (which, assuming adequate bandwidth for zero-latency, would be the preferred delivery given the size of the files), this could be done in real-time as the viewer’s perspective “demands.” While all rights holders would potentially stand to make more money under this model, access to the audience data alone may be sufficiently valuable to some licensors for them to give clearance. A licensing scheme that incorporates this quantifiable, value-added model into clearance negotiations could also curtail exorbitant up-front licensing fees, and streamline the process.

Admittedly, a purely viewer-directed, feature-length interactive VR film featuring live actors and a video-game-type realm of possible scenarios will not be coming soon to a headset near you. But it appears close. And, as someone prone to claustrophobia and motion sickness, I hope to find the legal implications of VR as exciting and immersive as the films themselves.

— M. Ryder Lee

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