My first time using the Oculus Rift was almost exactly one year ago, when I spent a couple of minutes walking around an Alien-inspired spaceship. Since then, a lot has happened. Oculus has shipped its first version of the Rift to developers, who have taken their first steps towards making a real catalog. The company has raised $75 million in funding from Mark Andreessen and other big-name investors. And today, I got a look at the next step: a high-resolution, motion-tracking prototype known as Crystal Cove.

If the original Rift put the world behind a coarse screen door, this one uses a fine mesh

Crystal Cove has a few big advantages over the original development kit. That edition is an impressive piece of engineering, but using it is often a blurry, dizzying experience that's unbearable in more than light doses. Most obviously, its successor has much better resolution — it's built with a high-definition OLED display that brings down latency substantially. Oculus is also using a technique called low-persistence-of-vision, which alters how images are displayed on the screen to further reduce blur. In practice, that means that motion blur is virtually invisible compared to the original. Oculus showed me the prototype with and without low-persistence turned on, and if I had to estimate the difference, I'd guess it's responsible for the last 10 to 20 percent of the improvements. The image quality, meanwhile, isn't close to matching what you'd see on a decent monitor, but it's a lot less distracting now: if the original covered your eyes with a coarse screen door, the new prototype gives you a fine, mostly transparent mesh.

Oculus wouldn't give me any details about the new screen, but founder Palmer Luckey says that the company's success has opened new doors. Manufacturers, he says, have started looking at the Rift as more than an untested product, which means they're willing to work with Oculus on displays that aren't just repurposed phone and tablet parts.

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The new Rift doesn't just know where you're looking, it knows where you're leaning

The visual changes are complemented by something Oculus has been planning to add for a while: positional tracking. The current development kits can tell which way your head is oriented, but they don't know where it is. Crystal Cove, though, knows when you're leaning or hunching. In the first tech demo, my in-game viewpoint hovered over the edge of a minature fortress. At first, part of the lava moat was obscured by the walls. But by leaning forward a little, I could see inside like a diorama. If you're already used to having the Rift track your head, this isn't a mind-blowing change, but it makes everything feel a little more natural. In a prototype of Eve Valkyrie (the same demo I played back at E3), for example, I could move forward in my seat and actually see the camera shift.

Oculus has said that by giving you a little bit of body tracking, Crystal Cove dramatically reduces motion sickness (which, as Eve Valkyrie developer Ian Shiels pointed out to me, is properly called simulation sickness.) Unfortunately, I couldn't stay VR long enough to test this, and in any case, the Rift demos played to its strengths: neither involved walking, one of the surest ways to make yourself sick.

It's hard to tell exactly how Crystal Cove will look when the final version comes out. After all, I was pretty impressed by last year's Rift until I saw this one. But there's no denying that it's a big step forward, and Oculus CEO Brendan Iribe says the team has made many of the most vital changes. Now, the question is how to get it into consumer's hands with a decent catalog of games — and, in the short term, just finding a way to mass-produce the delicate, hand-built prototype that I held today.