Expert says NZ has a potential gold mine of virtual reality innovation - if we play our cards right.

New Zealand can be a hi-tech superpower, as Israel has become, if it successfully catches the virtual reality wave sweeping the technology world, says a leading expert.

Brett Telfer, Head of AR/VR Garage - a collaborative R&D facility launched in Auckland by ATEED just over a year ago - references recent US$26 billion of investment in Israel from the US, tapping into Israeli technology know-how.

Telfer, who also works with science co-location space Level Two who helped the development of Rocket Labs and Lanzatech (now billion dollar tech companies), says New Zealand has a similar opportunity - but will need central government support and some fresh thinking to achieve it.

The virtual reality (VR), augmented reality (AR), mixed reality (MR) field is widely accepted to be the world's next big disruptive influence - though it is mainly known so far for its presence in the entertainment industry.

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Telfer aiming further than that. A graduate of the University of Auckland Business School's Master of Commercialisation and Entrepreneurship (MCE) programme, he studied emerging technologies such as the Baby X solution for emotionally responsive avatars - an innovation from Mark Sagar that won international acclaim after Australian film star Cate Blanchett voiced the Soul Machines avatar designed to help disabled people around the world.

"VR and AR will disrupt almost every sector you can think of," says Telfer. "It will affect pretty much everything - health, education, transport, energy, media - you name it, I can tell you how it will disrupt commercial life as we know it today.

"It meshes perfectly with big advances already under way, like the Internet Of Things, which will see all manner of devices talking to each other, and Artificial Intelligence."

VR (most commonly seen when people wear goggles or headsets to view/participate in a virtual world) is an animated immersive environment in a virtual space. AR is when users can see the real world but interact with augmented data or objects (like the Pokémon craze that saw many out and about, using their phones to capture characters). MR is almost a mixture of both, with users seeing the real world but interacting with virtual objects, like holograms.

Telfer says it is still an immature science - which is New Zealand's opportunity; it can, he says, hugely lessen our dependence on primary industries.

There are various claims about the coming value of the VR/AR industry; one of the more bullish was the August 2017 International Data Corporation prediction that worldwide revenues will increase by 100 per cent or more over each of the next four years. Total global spending on AR/VR will grow from the current US$11.4 billion to US$215b by 2021 - not much more than three years away.

"My belief is VR/AR will not only focus on entertainment and gaming," says Telfer. "We are moving more and more towards training, compliance and industrial areas already.

"Think about it - health and safety, for example. You can train a worker by getting them used to a virtual environment that is exactly the same as the physical environment they will be working in.

"In health, a company at the AR/VR Garage (Staples VR) have proven children can be soothed and de-sensitised to scary procedures like an MRI scan by using VR in the same way, so that the actual experience is easily negotiated; parents love it."

The AR/VR Garage is working with film and entertainment partners in the US and pursuing foreign direct investment opportunities from China, including theme parks with VR/AR capabilities. They are exploring with Stanford University topics such as the psychological benefits of VR - for example, working with phobia like fear of heights, using VR to help people conquer their fear safely.

Climate change and transport (driverless cars) are also areas where New Zealand can benefit; Telfer says various iwi have begun to look at VR/AR as an investment - not just in financial terms but also training their people for an inter-generational change of magnitude.

"We are talking to various people about developing world-leading innovation labs with adjacent apartments with VR/AR capability, as well as theme park functionality here in New Zealand," he says.

When launched, the VR/AR Garage was "world-leading", says Telfer, ahead of anything in New York, Melbourne and many other international cities.

"The next iteration needs to be industry-led but must be supported by central government," he says. "There are countries round the world - Korea, Israel, Australia, Taiwan - who have profited from such government backing. The rise and rise of VR/AR is almost a no-lose investment for governments."

"We need early investment in globally significant infrastructure, allowing us to build R&D environments here attractive to global investment and effective for multinational proof of concept and prototyping. We have to move away from governments waiting for individual companies to succeed by themselves and then taking the political credit for it."

New Zealand's success so far - and the AR/VR Garage's approach - is to assess and identify "international movers and shakers" in the new industry, understanding the problems they face, solving them and encouraging economic development here through partnerships and collaborations.

"It's a substantially different approach to the way business has been done in New Zealand for the last 30 years - where Kiwis figure out what we do very well , make something and try to sell it to the world against strong competition. We are now talking to major players who already have the infrastructure and reach to take things to the world," he says.

"If we do that and if we get the right government support, then we can leverage the revolution of the VR/AR industry to become digital masters of our own fate."