The virtual reality industry may not be profitable right now, but once it takes off, the numbers look staggering.

Menlo Park consulting firm Digi-Capital predicted that the market in virtual reality — technology that immerses people in a virtual world — should be worth about $30 billion by 2020. The market should take off in the next 12 to 18 months, said Digi-Capital Managing Director Tim Merel.

That’s good news for a small but growing community of Bay Area entrepreneurs who are betting virtual reality’s future is bright.

To be sure, the most publicized virtual reality playback equipment — like Facebook’s Oculus Rift or Sony’s PlayStation VR — won’t be available to consumers until sometime next year. But the local entrepreneurs’ projects go beyond gaming, ranging from education and physical therapy to space exploration.

“So far, we’ve tapped only about 10 percent of the potential of what virtual reality can bring to us,” said Han Jin, CEO of LucidCam, which has developed a consumer-grade virtual reality camera it hopes to sell for GoPro-level prices.

Entrepreneurs like Nicole Lazzaro, CEO of Oakland’s XEODesign, want to be ready to take advantage when virtual reality becomes commonplace.

“It’ll take some time to take off, but we’re learning our lessons now,” said Lazzaro, whose Oakland firm is working on a virtual reality game. “Anyone who is in VR these days needs to be looking at two to five years out. But when something hits, it’s going to be big.”

Digi-Capital tracks hundreds of companies in virtual reality and augmented reality — an infusion of virtual reality into real-life situations. The greatest concentration of companies is in the Bay Area, according to Merel. The market for augmented reality technology could be four times larger by 2020, he said.

And there’s been about $4 billion invested in virtual reality companies since 2010, according to a report from market research firm PitchBook last week. Half of that came from Facebook’s $2 billion purchase of virtual reality headset maker Oculus VR in 2014.

$632 million in deals

But the report also said there have been about 120 deals worth an estimated $632 million in 2015. PitchBook said the most active investor is San Francisco’s Rothenberg Ventures, which virtual reality expert Tony Parisi called “ground zero for VR in the Bay Area.”

Industry insiders say there are roughly 500 to 1,000 employees in the region employed by firms tackling some part of the virtual reality puzzle. They range from Leap Motion, making hardware that adds hand and finger motions to virtual worlds, to SpaceVR, which has the lofty goal of placing its VR camera on the International Space Station.

Lazzaro, whose design and consulting firm has seen many tech waves in its 23 years, said the virtual reality groundswell reminds her of the 1990s. That’s when software firms loosely aligned with the South of Market area’s “Multimedia Gulch” were trying program content to take advantage of a new medium: 650-MB CD-ROM discs.

“At that time, we were (asking) what are we going to do with all that space,” she said during a Thursday virtual reality meet-up in Berkeley where she demonstrated a prototype of her firm’s game, “Follow the White Rabbit.”

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Lazzaro, who also helped create the first iPhone game in 2007, said VR companies are just starting to learn about “this experience that makes you feel like you’re really there.”

Panelists at another event last week talked about how virtual reality can help train welders without exposing them to dangerous burns, or help one top surgeon train thousands of others around the world.

Sports, medicine uses

Kenny Lauer, the Golden State Warriors vice president of digital marketing, explained at a Tuesday panel that Stanford medical researchers are experimenting with techniques that can help amputees visualize their old limbs to help speed recovery.

The basketball team is also experimenting with broadcasting games live in virtual reality for fans who can’t attend in person.

“We know that 99 percent of fans are not ever able to go to a game, let alone sit at courtside,” Lauer said.

Virtual reality content is already available using the Oculus-designed Samsung Gear VR headset, which requires a compatible Samsung phone, or an inexpensive Google Cardboard VR viewer.

Aaron Luber, head of Google’s virtual reality and Cardboard partnerships, said the medium represents the “future of computing” because it’s on the same trajectory as other technology, “from the original Macintosh computers to the first smartphone.”

He noted that Mattel is marketing a View-Master branded virtual reality viewer to 7- to 10-year-olds. In 10 years, those 17- to 20-year olds might opt to wear their TV screens on their heads instead of buying a monitor, he said.

Philip Rosedale, who founded the virtual world Second Life, is building a virtual reality platform with his new company, High Fidelity. He envisions a world where people will carry on a conversation in a virtual reality environment that is just like real life.

‘Replace desktop displays’

“What we’re all betting on is that the experience of using the device is so radically better than the normal experience of using a flat-screen computer,” Rosedale said. “They’re going to replace desktop displays, which is a crazy idea, but it’s going to happen.”

Eric Darnell, who directed DreamWorks Animation hits like “Madagascar” and “Antz,” also has a Redwood City startup, Baobab Studios, which last week landed a $6 million round of investment led by Comcast Ventures along with HTC and Samsung Ventures. The company is creating a virtual reality short film titled “Invasion!”

‘Medium of 21st century’

“In the short term, I fully expect there will be ups and downs, but in the long term, virtual reality is going to be the medium of the 21st century, the way cinema was in the 20th century,” Darnell said in an interview.

And he goes further, predicting that the virtual reality room depicted in TV’s “Star Trek: The Next Generation” is not far behind.

“I’m convinced that before the end of the century, if not a matter of a decade or two, the kind of experience like the Holodeck will be available,” he said.