Innovating Immersive Reality: Demystifying UK Government Funding

Innovating Immersive Reality:  Demystifying UK Government Funding

Given my background in successfully deploying emerging visual technology – from video to games to streaming – it’s not too much of a surprise that I’m now helping companies strategically innovate immersive reality.

Immersive reality is the term for a collection of technologies:

  • Virtual reality (VR): A complete virtual environment that fully blocks out the real world
  • Augmented reality (AR): Information overlaid into the real world
  • Mixed reality (MR): Virtual objects that seamlessly integrate with the real world
  • Haptics: The impression of touch

If you see XR, that’s a blanket term for VR / AR / MR and other new realities. “Immersive experiences” includes the above as well as advanced visualisation and other sensory interfaces.

Immersive reality isn’t new. CAVEs (cave automatic virtual environments) have been around for over two decades. Even Google Glass’s augmented reality wasn’t new. I tried a demo of MIT’s 640×480 prism on a pair of glasses at SIGGRAPH in the 90s.

But now it’s taking off. Immerse UK estimates there are 1000 immersive-specialist companies in the UK, generating £660 million in sales and potentially representing as much as 9% of the global market share. Projections are for over £1 billion in sales in 2018.

Immersive Reality and the UK Government

In May 2018, California overtook the UK as the world’s fifth largest economy. According to the Global Innovation Index, the USA overtook the UK in 2017. And PWC’s report on global innovation in 2017 shows that six of the top ten firms are in the creative industries (Amazon, Alphabet, Intel, Samsung, Microsoft and Apple) – and all but one were founded in the US.

By analogy, California has Silicon Valley. The UK has Silicon Roundabout.

The UK Government wants the UK to be world’s most innovative economy. As a step, it has committed in its Industrial Strategy to raise investment in Research and Development (R&D) to 2.4% of GDP by 2027.

A number of funds have been made available, several of which provide funding opportunities for immersive reality and / or creative industries. One is the STEAM-focused Open Competition which I wrote about in January as it encouraged the combination of Science, Technology, Engineering, Arts and Maths to innovate. That particular one has closed. Another is the Creative Industries Clusters Programme (CICP) which creates R&D collaborations, led by universities, with the creative industries. That’s at shortlist stage. And there’s the Creative Industries Council (CIC) Sector Deal which funds research into augmented reality (AR) and virtual reality (VR).

There is also the Industrial Strategy Challenge Fund (ISCF), delivered by Innovate UK within the newly created UK Research and Innovation (UKRI). One of those Challenges is the somewhat confusingly named Audience of the Future (AotF).

Audience of the Future

Audience of the Future is a fund of £33 million for immersive reality in the creative industries. The official statement is: “To capture new global audiences and grow our leading market position in creative content, products and services by adopting, exploiting and developing immersive technologies.”

Remember that Creative Industries Sector Deal I mentioned? Well, Audience of the Future is central to that. In part, because it is expected that it will de-risk investment by identifying and testing viable audience propositions and business models. It is also expected to produce innovation in production tools and reskill the workforce.

Its objective is to make the UK a global market leader in the creative immersive sector by 2025, creating 10% of the global creative immersive content. Remember, Immerse UK noted that the whole UK Immersive Economy is at close to 9% market share now.

Audience of the Future is composed of several programmes:

  • Demonstrator Programme (£16m) – Pre-commercial content innovations.
  • Collaborative R&D (CR&D) (£12m) – Designing, content production and investment.
  • Industry Centre of Excellence (£5m) – Talent development and production. Part of Clusters.

Demonstrator Programme (£16m) and Design Foundations Competition (£1m from CR&D) launched on the 21st of May, 2018. The objective of this £17m is to invest in immersive reality projects to:

  • Test and generate new ideas for immersive experiences for audiences
  • Transform the creative industries

There are a few “musts” in common to both grants:

  • Must be for at least one of the nine creative industries:
  1. Advertising and marketing
  2. Architecture
  3. Crafts
  4. Design: product, graphic and fashion
  5. Film, TV, video, radio and photography
  6. IT, software and services (including computer games)
  7. Publishing
  8. Museums, galleries and libraries
  9. Music, performing and visual arts
  • Must be UK-registered, do project work in UK and exploit the results in or from the UK.
  • The lead must be a business. Can collaborate with others. One business must be an SME.

Watch out for:

  • Only a percentage of the project will be funded by grant funding.
  • Match funding will have to be provided from private sources.
  • You will need a good cashflow as the grant is only payable quarterly in arrears on costs incurred and paid. Claims may be subject to an independent audit.


Demonstrator is essentially a well-funded pre-commercial demonstration or proof of concept.

Funding: £16 million is available for four large-scale projects. Up to £4 million per project is available, where the total project cost is expected to be £5 million to £10 million. As this is classed as industrial research, the most a business can get back is 70% of the total project costs.

Four themes have been identified with significant enough disruptive, creative and commercial opportunities to grow new audiences through immersive technologies:

  • Moving image (film, TV, games, interactive media)
  • Sports entertainment (e.g. remote access to live events)
  • Visitor experience (e.g. location-based cultural and heritage, museums, galleries, exhibitions, visitor attractions, theme parks etc.)
  • Performance (production or consumption, including theatre, music, live entertainment etc.)
  • Other (as long as it meets rest of scope)

Sounds great, but there are some key “musts”:

  • Must significantly advance the state-of-the-art. Can’t be just a bigger version of something that already exists. For the two years of the project, it must also be pre-commercial.
  • Must deliver a consumer audience experience. Can’t be authoring or production tools or a generic technology such as e-commerce, streaming or social media.
  • Must reach more than 100,000 users across the lifetime of the project. Yes, those users can be global and the product can be international. Just the company, work and commercial benefit has to be UK-based. The objective of this scale is to a) generate user insights to test viability of revenue streams and business models b) demonstrate scalability and the potential to be exploited and replicated across the creative, cultural, live events and entertainment industries and c) avoid excessive audience acquisition costs.
  • Must combine creativity, technology, human-centred design and data analysis in order to innovate creatively and technologically.
  • Must use “globally-recognised IP” or partner with a rights holder or cultural brand. IP in this context is the “Intellectual Property” that belongs to a globally-recognised content provider or rights owner, where the IP already has value. Whether that’s a film, a game, a theme-park, a sports event, or something else. So, you will need to pay to legally acquire the rights. The objective is to demonstrate a viable rights model. At the briefing Innovate UK expressed that “if rights-owners make it too expensive, they’re not interested enough”.

Key dates:

  • Written application: 21 May, 2018 – 1 August, 2018 (noon)
  • Interviews: 18-19 September, 2018 (20 minute presentation + 30 minute Q&A)
  • Successful interviewees notified: 21 September, 2018
  • Complete project set-up online including Collaboration Agreement: 21 October, 2018
  • Estimated project duration: 2 years
  • Project start by: 1 November, 2018
  • Project end by: 31 December, 2020


Design Foundations are early-stage human-centred design projects or feasibility studies based on customer research.  These studies explore or confirm a design idea before it gets to technical R&D. Ideally, they significantly de-risk innovation in immersive audience experiences and increase future innovation in technical R&D.

Funding: A total of £1 million is available for design projects. The total project cost must be between £20,000 to £60,000. Small or micro businesses can get a grant for up to 70% of the total costs. Medium businesses can get up to 60% and large up to 50%.

The project lead needs to be a business. An SME can work alone. Large companies will need to collaborate with at least one SME.

One or more of the following themes can be explored:

  • The nature of the immersive experience
  • Tools, processes or services used to create and distribute immersive content
  • Hardware and / or software used to deliver immersive experiences

Projects must use established human-centred design principles (such as the Design Council’s ‘Double Diamond’ process). This involves four distinct phases: Discover, Define, Develop and Deliver. Specifically, for Design Foundations the project must:

  • Discover (problem insight): audience perceptions, motivations and behavior
  • Define (focus area): the problem statement
  • Develop (potential solutions): a broad range of ideas for new products, services or experiences using immersive technologies that support the creation and delivery of immersive content
  • Deliver (workable solutions): clearly communicated, de-risked, user-validated designs ready for further technical R&D

This £1 million funding is part of £2 million available for designing for future audiences. Successful applicants will be able to apply for the remaining £1 million in 2019 to further develop projects. This could include further design or technical R&D. All funding has to be spent by end of March 2021.

Key dates:

  • Written application: 21 May, 2018 – 4 July, 2018 (noon)
  • Successful applicants notified: 17 August, 2018
  • Complete project set-up online including Collaboration Agreement: 16 September, 2018
  • Estimated project duration: 2-6 months
  • Project start by: 1 October, 2018
  • Project end by: 31 March, 2019

To find out more about both grants visit ISCF Audience of the Future Challenges.


Immerse UK . (2018). The Immersive Economy in the UK.

1 Comment on “Innovating Immersive Reality: Demystifying UK Government Funding

  1. I’ve had questions on the pre-commercial Demonstrator issue.

    Andrew Chitty confused a lot of people as he answered this incorrectly on the webinar on the 13th of June. Avoid that webinar.

    It is accurately addressed in the webinar on the 28th of June.

    Essentially what they say is:

    1) Public funding of “Industrial Research” – i.e. the Demonstrator – has the condition that it must be pre-commercial.

    2) So any revenues generated as part of the project risk being deemed commercial revenue.

    3) That revenue would be subtracted from your grant at quarterly audit.

    4) In the Demonstrator proposal, outline the “trials” you want undertake, but do not model it in your budget.

    5) They will then work with successful applicants to develop guidance for those trials.

    What that says to me is that they haven’t modelled use cases – as industry would – for the Demonstrator and don’t have specific answers at this point.

    I’m not applying myself to Demonstrator and no one’s paid me to model it, but it seems that you could do:

    1) Freemium. Free model with trial uptake modelling uptake to Premium. That gives you commercial growth projections. An example is Dropbox.

    2) Ad-funded if you can extend ad rights as tiered based on volume. Kind of like extending TV ads with ads for OTT/VOD. The more people you reach, the more valuable it gets.

    3) Transactional and subscription are more tricky and depend on the value of content intellectual property. Some markets are more viable than others. We never could have had a grant like this for what I did as CTO at Disney / Sony JV FilmFlex, for instance. We had the volume – 3.8m users, 1m transactional buys per month, but the content was so valuable and popular that we were profitable from year one and could never have had grant funding.

    Unless someone wants to hire me and pay me, putting together the article and this explanation is as far as I go here.

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