Baobab Studios: An Emerging VR Content Creator
The nuances of VR content compared to content traditionally served on a 2D screen
Baobab studios is a production company focused on VR animation through the creation of “compelling stories, believable characters, immersive worlds, beautiful art, and high-quality animation.” Since its founding in 2015, Baobab has raised $31M in 2 rounds.  While video entertainment is an obvious use case for VR platforms, with industry observers predicting that 79M people would seek out VR video entertainment by 2025,  Baobab’s strategy and execution is differentiated in several ways:
- Instead of creating long form content, Baobab focuses on high-quality immersive short stories. This cuts the iteration cycle for finding the “killer app” or “killer content style” by orders of magnitude.
- Baobab creates stories that put the user at the center of the experience. In a recent film called “Invasion!” the viewer quickly discovers that he/she is in a first-person experience as a rabbit. 
- Unlike traditional films, VR content directors have no control over where a viewer is looking. To guide the viewer towards the most important areas of the story, Baobab director Eric Darnell scatters user-tested visual and audio queues to guide the user experience. “For example, during [a] moment in a film when a bunny sniffs at the viewer, the bunny suddenly looks to the right, which leads the viewer to look in the same direction.” 
- Baobab has already developed numerous relationships and partnerships with device manufacturers like Samsung Gear VR, Oculus, PlayStation VR, Google Daydream, and HTC Vive. 
- Hollywood hotshot celebrities Elizabeth Banks (the Spiderman series, Pitch Perfect) and John Legend (10 Grammy awards) have participated in voice acting roles for Baobab productions. Additionally, Legend has signed on to be executive producer for an entire series called “Rainbow Crow.” 
Fundamentally, Baobab creates value by generating animated content from start to finish that is viewable on VR headsets such as Gear VR, Oculus, and HTC Vive. Baobab films are unique because they allow the user to interact visually with the environment and even eventually alter the story based on their decisions. 
Additionally, Baobab’s creative team is uniquely talented with employees that have formerly produced Oscar-nominated shorts, and directed multimillion dollar box office movies such as “Madagascar” and “Antz.”  When the craze of a new and shiny platform wears off, Baobab is confident that its creative story-centered content will have a lasting effect on consumers.
Video 1: Teaser Trailer for “Invasion!” which was selected to the 2016 Tribeca Film Festival
Baobab captures value in several ways, not too different from traditional film creators:
- Like most studios, Baobab owns the IP on its characters and storylines. Therefore, it can monetize on the IP that it holds, just as Disney does, by selling products, merchandise, Broadway shows, etc…
- Baobab can also use contracts that specify licensing agreements, royalty agreements, or revenue share agreements to capture value from its IP. Roth Kirshenbaum whose founders produced movies like Alice in Wonderland and Snow White and the Huntsman are currently working out an agreement to create a non-VR feature-length film based on Baobab characters and storylines. 
- Lastly, Baobab can capture value via syndication – negotiations with cable television, Netflix, or others for access to film rights for specific time periods after the content has hit box offices.
Global platforms like Youtube and Hulu are already facing external pressures to accommodate VR content. Further, Baobab already has content showing in Hulu’s VR section. The company has done all this in less than 2 years and a small team of less than 30 people.
With a short-film strategy, Baobab has an opportunity to iterate and fail fast. The company should continue experimenting with different themes, character personas, and even production processes (e.g. – waterfall vs. lean). Additionally, Baobab should leverage the voice artist portfolio it has already established to bring on other familiar faces. Creating a solid production company brand name is rare. Disney is one of only few which have done it successfully (do you ever go to a movie because Fox produced it? probably not). Lastly, given the ability to visually interact with VR films, Baobab should keep an open mind when it comes to developing partnerships with additional hardware firms that could bring an immersive experience to the next level (e.g. – AxonVR).
 HBS Case: Making Virtual Reality Real, N9-617-013, Feng Zhu, Jan 2017
Student comments on Baobab Studios: An Emerging VR Content Creator
Great post Felix! Does Baobab release 2D versions of its films as well? If not, why not and do you think they should? Given the slower than anticipated adoption of VR, making enough revenue to fund its pipeline of high quality production might be hard if they only focus on creating VR films. You mentioned licensing its characters to Disney and other brands, but why not just adapt its films to 2D and sell those?
Great post! VR in the entertainment industry is so fascinating. 🙂
I agree with you – it’s a smart move for Baobab to go with short-films as it keeps costs down, allows Baobab to focus on the quality of the films, shortens the production cycle, and increases the number of iterations that can be done within any given timespan. Perhaps more importantly, it allows users to gradually adopt into not just a new type of technology but also a new behavior (I don’t think I my mind would be ready to be engaged in a virtual world for over an hour!). However, as individuals get used to VR, it will become more and more normal to watch VR for longer timespans.
On the topic of value creation, do you think VR will ever replace the 2D experience? I view VR content and TV/movie content as such different experiences. Surely, just because I purchase an HMD to watch VR content would never mean that I wouldn’t buy a TV.
I also wonder about the value capture model for VR content producers. While you mention it’s similar to that of 2D production companies, how do the costs compare? I imagine it would be more expensive to produce VR content, considering all the animation, interaction, and sound required; if so, how much more does Baobab charge companies to license out its VR content than what it might charge companies to license out the same content in 2D?
Lastly, I wonder how the parental ratings for these films will be affected. Even though the film in the post is animated, having a gun (albeit a cartoonish one) pointed at a child could instill heightened fears and anxieties that the child may not have experienced if the film were in 2D.
Again, great post. Thanks!
Love the post, Felix! Having worked for a VR content creator before, I relate to how difficult it is to reshape content for this immersive new platform. In your opinion, does VR has the potential for full-fledged cinematic experiences (ie feature-length movies)? There’s so much complexity, not to mention the fact that viewers can get worn out pretty quickly!