Otoy makes tools that artists can use to create stunning 3D art that looks as real as anything captured on film. The company recently launched its X.IO App Streaming service so that developers can create cloud graphic services such as next-generation cloud games, streaming virtual reality media, and workstation applications that can run on low-end devices.

The service is the latest cloud-based innovation from Los Angeles-based Otoy, which has also created cloud-based tools for filmmakers via Octane Render and for gamemakers with its Brigade tools. Those tools enable artists to create photorealistic images for games or movies using cloud-based computing resources, said Jules Urbach, the chief executive of Los Angeles-based Otoy, in an interview with GamesBeat.

Otoy has funding from Russian investor Yuri Milner, former Morgan Stanley boss John Mack, and Autodesk. Its advisers include Google chairman Eric Schmidt, talent agent Ari Emanuel, former IBM CEO Sam Palmisano, and former IBM exec Irving Wladawsky-Berger.

Here’s our edited transcript of our interview.

Image Credit: Dean Takahashi

GamesBeat: Tell us what you’ve been doing.

Jules Urbach: X.IO has launched. That means developers can upload any application in a zip file. It could be a game. It could be a Windows app. It’s a little bit like YouTube. You just get a link back that allows you to play back the stream from a URL. There’s no App Store here. This is just running Unreal Engine 4 from my iPhone, and it works.

We’ve been doing this for a while, getting it to run in the browser in pure JavaScript. You now have no barrier to entry for deploying high-end content. You can use one graphics processing unit (GPU) in the cloud, four GPUs, scale way beyond anything that consoles or PCs have. A lot of the promise of gaming is finally realized.

Going forward, we’re going to port to devices that are different from just a 2D screen – things like Gear VR, the Samsung device, which is launching shortly. You have things like Project Tango, Google’s play on VR, where you can take your tablet and move it through space. We’re working toward streaming not just a video of what’s happening but almost a hologram. We announced this technology at [graphics conference] Siggraph. The idea is that when you have a holographic video stream, it allows you to look around, like through a window. You have a portal into that world. It’s super low latency.

This is something we’re doing specifically for VR streaming. You can have the ability, whether it’s with Oculus’s Development Kit 2 (DK2) or the Samsung Gear, to connect with this perfectly rendered virtual world and get a stream. It solves a huge number of problems, especially with Gear VR, where you have very low rendering power and you don’t have a lot of storage. That’s the plan. We’ll migrate from streaming existing 2D applications in the browser to doing full VR immersive streams.

Then you have some of these interesting new device categories, like Magic Leap, which is working on AR. The closer you get to the wearable glasses or contact lenses, the more you need the cloud to stream this stuff. That’s what we’re working toward. A big part of that is the developer backend we now have, and improvements in the codec that allow you to stream things like depth and multiple layers to give this holographic effect.

GamesBeat: I wonder about virtual reality. When you’re streaming VR to something, do you have to have everything there, everything sent to you? If you’re looking this way on a screen, it can just deliver what is visible in that direction. You don’t have to render what’s over here or there.

Urbach: We created a solution to get around that. This is an example of rendering on Octane, where I’m rendering everything. This is the entire 360. With ray tracing, it becomes pretty easy. This is one of the things we’re watching at Amazon. You don’t have to render one view. You’re rendering everything that’s around you, so the latency doesn’t matter, because as you look around, it’s all there.

It’s hard to do that with traditional rasterization, but with Octane and Brigade, we can render this stuff in 360 with multiple layers. That makes the whole effect in VR work much better. Even without that, we’re able to stream — this is streaming on the Samsung Note 4. This is already the speed we’re getting – better than the browser – with our native VR app. It’s pretty low latency and 120 frames per second.

We have two modes. We have the ability to stream what’s in the view at 120Hz, and we also have what you were seeing before, where we use a second stream to send the entire ray traced panorama as well. If you look around or the connection drops, you still don’t see any missing pieces. That’s the plan for VR. As we go forward, we also can send out more complex information that allows you to even, with one chunk, move around and see without having to re-download any new information from the server.

First step is just getting the 360 parts down. Step two is rendering the layers behind that so you can navigate through the scene to a certain point. All of those things are already part of the codec that we’ve built.

In the Galaxy Gear VR, this is what you see in your view port as we’re streaming it down, from Amazon and X.IO. If you look too quickly around, you’ll see a black edge, but I’m over LTE and there’s no black edge. It connects right into the time warping that Oculus’s John Carmack created, which re-projects the view very quickly so you don’t get nausea. We use that to send the server predictive information to send down the next image based on where you’re going to look. We never had that in traditional cloud gaming. It helps.

Image Credit: Otoy

GamesBeat: I wonder what the quality of the Samsung’s Gear VR is like.

Urbach: It’s way better than the desktop VR. It’s a higher-res screen. This is the device. It’s 2560 by 1440. DK2 is 1920 by 1080, so this is double the number of pixels. It’s a higher quality screen. My assumption is that when Oculus launches the final version of a consumer desktop system, it’ll be this quality or better. But the better VR experience is on mobile. Mobile is the bleeding edge.

We’re working toward getting mobile VR to be a replacement for desktop VR. I think Carmack believes in that. He devoted his last nine months to getting Gear VR to work. That’s his big thing. We’re the software complement to that. We want to make that happen. The cloud and streaming and all these other tricks we’re doing with panoramic streaming and depth streaming and layers are the ways to make it work. He’s been very supportive. He got us in the development program for Gear VR very early on.

Our business model with X.IO is pretty straightforward. Normally at Amazon, you need to buy a server for an hour. At scale, we’ve figured out how to slice that into per-minute costs. We announced our pricing today. If you want a quick one-minute game experience on Gear VR, we can deliver that for five cents. It’s five cents a minute. Costs will go down as we get more users.