The week of June 28, 2015

The virtual reality gaming revolution that wasn’t

By Aaron Sankin

On a crisp fall evening in 1991, an excited crowd packed into London’s Wembley Stadium, the storied venue that had previously hosted the 1966 World Cup final and 1985’s Live Aid concert. That was in the past. This night, about 2,000 people gathered to stare directly into the future.

Inside the cavernous stadium stood a line of a dozen large, gray pods. From the outside, it looked like dystopian science fiction: people in pods, their heads sealed in helmets. Inside, though, they were flying in a cutting-edge virtual reality flight simulator that networked all the players into a single, computer-generated world. The launch event celebrated the first time the public could buy all-inclusive VR. People played all night. Orders were taken then and there.

Behind the scenes, the team that’d built the machines, an upstart British company called Virtuality, struggled to hold things together. They’d never attempted to link that many systems together; Virtuality’s engineers were literally writing code on the spot, hoping everything wouldn’t crash and burn. The result—chunky graphics and simple gameplay—would seem primitive today, but in 1991, it was a revelation.

Soon the machines would be in arcades everywhere. InfoWorld declared Virtuality games “more fun and more addicting than anything you’ve seen in an arcade.” Computer Gaming World wrote that Virtuality “took cyberspace out of the NASA labs and put it into the arcades.” Even the New York Times, cheekily describing the arrival of a Times Square VR arcade—named, in a perfectly ’90s way, XS—lumped Virtuality in with Microsoft, Intel, Sony, and Namco, as the big names in gaming.

The Sultan of Brunei put a pair of machines on his yacht. Arcades across the globe re-centered their operations around Virtuality systems, letting more than 40 million people take their first steps into virtual reality. For a moment, it might have seemed that Virtuality might have opened up a new world.

But the moment didn’t last. Well before decade’s end, Virtuality machines looked like clunky relics, while the masses seemed content with the small, diminished worlds available on their television screens thanks to home video game consoles. Virtual reality no longer seemed like a world anyone wanted to enter. The portal had closed.


Born in London in 1960, Jonathan Waldern grew up immersed in technology. His father worked as an engineer at IBM. From a young age, Waldern used to visit the company’s campus in nearby Winchester and play around with the computers. He studied design engineering at Leicester Polytechnic (now called De Montfort University) in the city of Leicester, about 40 miles northeast of Birmingham, the U.K.’s traditional industrial hub. After graduating, he enrolled in a Ph.D. program at Loughborough University, just north of Leicester.

One of his projects was an acoustic digitizer: a cluster of microphones that used bursts of high-frequency sound to create 3D models on an LCD screen. It turned real-world objects into 3D wireframe models that users could manipulate onscreen—moving them, combining them, or breaking them into pieces.

Waldern admired legendary computer scientist Ivan Sutherland, who developed the first head-mounted virtual reality system in the late 1960s. The system had rudimentary virtual environments, and the head unit was so heavy it had to be attached to the ceiling by a mechanical arm to avoid crushing the user’s neck.

But Waldern saw his 3D models as the key to taking Sutherland’s early experiments in VR to the next level. With £10,000 in prize money from a startup competition, he gathered some friends in a garage in 1987 and formed a company called W Industries, after the first letter in his last name. Together they hacked together the first headsets, a project they called Virtuality—which would soon become the company’s new name.

Virtual reality no longer seemed like a world anyone wanted to enter. The portal had closed.

After Sutherland, others had worked on VR, but Virtuality had few guideposts on the path. In those early days, if Waldern’s team needed something done, they did it themselves. They built their own graphics cards and developed their own graphical subsystems to run on them. They wrote the entire operating system and firmware. Without libraries of 3D models to draw on, they created everything from scratch and ran it all Commodore Amiga computers.

The first public demo of Virtuality’s system came at a computer graphics trade show in 1990. Waldern’s team prepared in a mad rush; they didn’t have time to create a particularly in-depth world, let alone an actual game. Anyone donning the headset only saw a simply, blocky house they could explore. If they were feeling adventurous, they could look out the window.

But even with bare-bones content, even at a show full of professional computer graphics nerds, Virtuality had a hit. The line to try the headset stretched out of the building. People had heard about VR, but nobody had ever seen anything like this.

Out of that show, Virtuality got its first order: British Telecom bought two machines for $78,000 each. British Telecom never did anything particularly interesting with them, other than give the company’s engineers a new toy to play with for a few months, but Waldern and company were just happy for the income. In those early days, each sale was a life preserver.

From its new headquarters, Virtuality began taking over the world. It modeled offshore oil rigs so workers could practice escape drills, developed a shooting simulator to promote Olin’s line of skeet-shooting equipment, and worked with Ford and Kawasaki on virtual test drives for minivans and motorcycles. It even created a training program for anesthesiologists.

Waldern took the interest from other companies as a sign he was on the right track: Virtual reality was the future. If the suits at Ford and Olin knew it, it wouldn’t be that hard to get the public on board. Ultimately, though, he wanted to fundamentally shift the way people interact with computers. But these partnerships weren’t enough on their own to achieve that. To land a VR headset in every home, the company needed another income stream, one that would let Virtuality produce units en masse. That road led through through the arcade.


If you remember anything about Virtuality, you probably remember Dactyl Nightmare. Released in 1991, it played like a blocky combination of Halo and Jurassic Park, with a simple objective: survival. Up to four players could traverse a landscape resembling a minimalist, outer space Roman ruin and blast one another to pieces while avoiding the deadly pterodactyl flying overhead.

Dactyl Nightmare was in many ways revolutionary. It featured a virtual world that moved as players turned their heads, handheld controllers operated their guns, and headsets with built-in microphones that let the trash talk flow. Conceptually, it resembled what you’d expect of today’s home gaming consoles—but 20 years ahead of its time.

“There really wasn’t a lot of 3D then,” recalled Don McIntyre, a designer who worked at Virtuality during the mid 1990s. “To move in and out of an environment was mind-blowing. What stuck with us all was, shit, the potential on this was just incredible. It was exciting. We were at the bleeding edge.”

The bleeding edge came at a price, of course. But arcade owners were willing to pay—even at $75,000 per machine, at a time when 1992’s Mortal Kombat, for example, cost about $4,000. (And remember, Dactyl Nightmare worked best with multiple players, which meant multiple machines.) “We came in with this high-tech product aimed squarely at them. As a demographic group, I don’t think they had ever either had A, the publicity, or B, this sort of attention,” Waldern said via phone from Silicon Valley. “It instantly became a fanboy club; we all loved each other.”

If Waldern’s team needed something done, they did it themselves. They built their own graphics cards and developed their own graphical subsystems to run on them. They wrote the entire operating system and firmware.

As loyal fans, arcade owners reconstructed their entire operations around Virtuality’s machines, a pricey spectacle that brought in new customers. People who’d never thought of funneling quarters into Street Fighter II would pony up $5 for a few minutes in virtual reality.

Still, Virtuality had a few challenges to prove VR more than a fad. After Dactyl Nightmare players, convinced they were being carried 20 feet into the air by a killer pterodactyl, fell to the ground, the company installed padded rings around the machines. And perhaps inevitably, there were flare-ups of mainstream concern about this new thing, virtual reality—including this news report featuring a baby-faced Brian Williams:

Fad or no, Virtuality’s future looked bright. A 1993 IPO turned Waldern and a handful of other early employees into paper millionaires. A second generation of machines, released the following year, took the quality of the games to a new level. Virtuality looked like a company that really could redefine gaming—and maybe spearhead the VR revolution.


“Virtuality was a leader internationally in virtual reality in general and gaming in particular,” said Ben Delaney, publisher of CyberEdge Journal—the paper of record for the nascent VR industry during the first half of the 1990s (later anthologized as Sex, Drugs and Tessellation: The Truth About Virtual Reality). “Everything about it was very professional, very grown-up, very consumer-friendly. It was easy to use, it was easy to get in and out of the system. They got most of it right.”

Consumer-friendly, professional, grown-up. Virtuality looked like an innovator, a leader. It had produced the first popular, mass-market VR machines—no small feat. But once virtual reality became an actuality, Virtuality found itself contending not just with technical or market issues, but something much more ineffable: the inevitably disappointing distance between hype and reality.

As he trudged through a seemingly endless stream of VR trade shows, Delaney always carried a pocketful of homemade buttons to hand out like candy. “The most popular button was one reading ‘No VR Hype,’” he said. “Everybody recognized the hype was extreme and no one could meet the expectations that were being raised by the most hyperbolic of the over-excited people making absurd claims about what virtual reality was going to do.”

People had heard about VR, but nobody had ever seen anything like this.

Anyone who believed the VR hype would stick his or her head into a Virtuality machine expecting to see the future, only to be greeted by chunky, simplistic models. It didn’t matter that Virtuality had pushed the era’s microprocessors nearly to their breaking points; it just didn’t look like a future anyone would want.

So what had made the hype so compelling, even if only temporarily? Virtuality launched as the Internet had begun to go mainstream. Linking computers together into a giant decentralized network began creating a new, virtual world. William Gibson had coined the term “cyberspace” a decade earlier, but early-to-mid-’90s films such as The Lawnmower Man, Virtuosity, and (full circle here) Johnny Mnemonic showed virtual reality bleeding into the mainstream in all its terror and glory. But VR wasn’t just a fantasy from the movies—it was here, today. And how else would you reach the virtual world of the future if not through a VR headset?

Virtuality couldn’t escape the hype, even if it wanted to. “It was a full-circle completion of everybody’s either desire or fear. That’s where the hyperbole came from. It was pre-amped by the Internet and, looking back, yes there was huge hype,” Waldern said recently. “But, then again, we were in the business of selling entertainment machines. It was my mandate from our shareholders.”

Virtuality had succeeded in making virtual reality a destination, a place you could only visit for minutes at a time. Even if it wasn’t quite the future you’d been promised, it might be worth $5 a pop. A new generation of video game consoles, though, arrived in homes with a different proposition.

“I’ve thought long and hard about this since those days and. … I think VR was punctured by the proliferation of consoles in the home, especially the [original] Sony PlayStation, [which launched in 1994],” said McIntyre. “By the very nature of owning the device, [users] could spend hours exploring an environment and honing skills. The difficulty trajectory could be relatively shallow.” They may not have been as immersive, but they were easy to learn, you could play them as long as you wanted, and you never had to leave the house.

“If virtual reality was the only experience in town, if there was no other way to experience 3D world, then, sure, people might forgive the fact they might have to pay a few pounds to put on a headset someone else has been wearing two minutes ago,” said McIntyre. “When you could probably have a similar experience in a 2D environment with a 3D world in it, that becomes less compelling.”

Virtuality machines were too expensive for home users, but the company partnered with Atari to develop the first consumer-headset VR system. It showed at 1995’s E3 consumer electronics expo to positive reviews. And then, out of nowhere, financially shaky Atari scrapped the project.

As Virtuality’s living room hopes faded, its arcade business also faced trouble. In 1996, Waldern was pressured to step down as CEO and moved to Silicon Valley to head the company’s research division. He eventually sold most of his stock and started a company called Digilens. For Waldern, the future wasn’t just in creating entirely new computer-generated spaces, but building systems that allowed virtual worlds to be superimposed on top of the one we inhabit, an idea called augmented reality. Digilens has spent the past 15 years developing a new type of materials system for ocular lenses in augmented reality products.

Virtuality couldn’t escape the hype, even if it wanted to.

Around the same time Waldern decamped to California, new management in the U.K. had pre-bought a lot of inventory it couldn’t move. Arcade owners, similarly feeling the pinch from home consoles, stopped ordering Virtuality machines.

In 1997, rights to the machines were sold to CyberMind, a German firm that ran a network of Internet cafés. Virtuality systems were distributed throughout the cafés, but mass expansion effectively died.

• • •

Virtuality’s wind down coincided with the wider tech community’s general loss of interest in virtual reality. As it turned out, immersive VR headsets wouldn’t define the future of human-computer interaction. The real revolution came in the form of computers small enough to fit in your pocket.

It’s partially thanks to the ubiquity of smartphones that the past few years have seen a resurgence of interest in virtual reality. Oculus, which Facebook bought last year for $2 billion, can sell its headsets for $350 because technology like gyroscopes and accelerometers are in every iPhone and therefore a fraction of the price they cost Virtuality in the early ’90s. And two decades of rapid advancement in microprocessors and graphics cards power Oculus’s incredibly realistic virtual worlds.

It isn’t just Oculus, now a billion-dollar company. Google Cardboard can turn a smartphone into a VR machine. “To get the equivalent of Google Cardboard and some of the stuff that runs on it—which, including the phone, might have a total cost of $500—back then would have cost you $100,000-200,000,” said Delaney. “And you wouldn’t get the same quality. Moore’s Law has allowed virtual reality to progress tremendously.”

It gives Waldern hope that the current wave of VR hype will become something truly world-changing. “We haven’t really tapped the full opportunity for interactivity and virtual social networking,” he said. “You don’t even need a lot of elaborate environments to really make that take off. What you need is accessibility. And a level of quality that is tolerable.”

He hears the same over-hyped predictions and ridiculous promises surrounding VR as in the early ’90s. But he’s a true believer, and the possibility of seeing his dream realized—after being deferred for nearly two decades—is too good to discount out of hand.

Waldern believes in these new systems because, by making everything cheaper and easier, they’re doing what he tried to do all those years ago: bringing VR to the masses. He imagines virtual reality remaking the world, fundamentally changing human experience in ways we can’t now predict.

“That’s going to be the interesting part—to see how that all unfolds,” he said. “Is it going to be a fad? It won’t be because once you get the mainstream community around it, it’ll reach a critical mass. Then it’ll just explode.”

Photo via Dr. Waldern/Virtuality Group/Wikipedia (C) Used with permission | All other photos via Don McIntyre