Several start-ups and many of the biggest names in technology are lining up to show off their virtual reality headsets at this year’s Consumer Electronics Show in Las Vegas.

All hope to make the sort of impression that Oculus did last year. Inside a private room on the fringes of the event, hidden away from the crowds, a prototype of its Oculus Rift virtual reality headset wowed with its immersive 3D representations of demonic dungeons and Star Wars-style space battles. Its ascent from the back rooms to the main stage of the technology world culminated in March’s $2bn acquisition by Facebook.

“There’s been a huge amount of dollars invested in what’s next that goes on your head,” said Jay Wright, vice-president of product management for connected experiences at Qualcomm, the chipmaker, who leads Vuforia, the company’s platform for “digital eyewear”.

“It’s not just that people believe this has the potential to disrupt the smartphone,” he added. “It has the potential to disrupt anything with a screen.”

CES this year is expected to see the technology move from prototypes towards finished consumer product, with backing from the likes of Samsung, Sony and Intel.

They will all be searching for a “killer app” that takes virtual reality beyond its early foothold in video gaming and makes the unwieldy-looking headsets appeal to a wider audience.

“The emotional experience of communicating in VR is going to be really powerful,” said Eric Romo, chief executive of Altspace VR. At CES, the start-up will be demonstrating its virtual spaces where friends can feel as if they are chatting together in the same “room”, even if they are on different sides of the country.

Others see entertainment as the first mass-market VR application. Jaunt, which raised $28m in funding in August from backers including British Sky Broadcasting, has released VR apps ranging from an onstage view of a Paul McCartney concert to a walk around the Shire with Gandalf and Bilbo Baggins from The Hobbit.

“It’s a really different experience to watching it on the screen,” said Jens Christensen, Jaunt’s chief executive. “When you put on the headset and the headphones, you feel like you are right there next to [McCartney’s] piano.”

Not everyone is so excited by VR’s near-term prospects. Fred Wilson, a prominent venture capitalist and an early investor in Twitter and Tumblr, predicted in a blog post on Thursday that VR “will hit some headwinds” as Oculus and its rivals “underwhelm”.

“The virtual reality will eventually catch up to the virtual hype, but not in 2015,” he said.

Some are instead backing a related but different kind of headset technology: “augmented reality”.

While Oculus-style headsets immerse the wearer completely in a virtual environment, augmented reality glasses, such as Google Glass, overlay digital graphics and information on top of the real world.

In October, Google led a $500m investment in Magic Leap, whose work is focused on developing a headset that can show realistic digital images that appear to hover over the real world. While the company is seen as unlikely to release a consumer product this year others, including Epson and Osterhout Design Group, are unveiling “smart glasses” at CES that boast high-fidelity digital graphics.

Privately-held ODG has invested some $60m over the past six years into its range of smart glasses. The products began as devices aimed at military applications but are now broadening out into other industrial applications, such as providing hands-free instructions or messages for people working in hazardous environments.

At CES, ODG will unveil its first consumer smart glasses, likely to cost less than $1,000, featuring high-definition stereoscopic displays and a 5 megapixel camera all running on Google’s Android operating system.

Some in Silicon Valley predict that Facebook’s long-term plan for Oculus also involves augmented reality, as well as VR.

For those hoping to win over more converts to these devices, CES provides a key opportunity to give people a first-hand demonstration.

“You need to experience it in order to understand why this is so amazing,” says Altspace’s Mr Romo.

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