By Piya Sinha-Roy and Lisa Richwine
BEVERLY HILLS, Calif. (Reuters) - In a Beverly Hills mansion on Tuesday, Facebook-owned Oculus rolled out "Henry," a movie that takes advantage of its virtual reality technology to tell the story of a hug-obsessed hedgehog.
The company's pitch is to lure filmmakers to use the technology and produce content that attracts consumers for the Rift, its virtual reality headset.
Oculus doesn't plan to sell "Henry," the second film from its film division, Story Studios, which employs both video game engineers and former Pixar animators. It is part of a slate of five short animated films that will be created over the next year.
The films use VR technology to immerse viewers in the story. In "Henry," viewers don a headset to virtually enter a treehouse in which they can look around the 360-degree environment and sit at a table as Henry celebrates his birthday.
"Right now there are no plans for the monetization of Story Studios. It's to develop experimental stuff," Oculus founder Palmer Luckey told Reuters in an interview.
Hollywood is debating whether virtual reality will take off and how producers will make money from the technology.
Award-winning directors such as Guillermo del Toro, as well as Walt Disney Co's LucasFilm, are testing out the platform.
But Netflix (NASDAQ:NFLX), one of Hollywood's biggest buyers of content, is not rushing in, chief content officer Ted Sarandos told Reuters.
"We're open to it and looking at different things," he said, "but there's nothing that has moved us."
Oculus's chief operating officer Laird Malamed acknowledges the technology is in early days but is confident in its potential.
Filmmakers will "see that VR is a place for them to bring their great creative ideas and make it available to people," he said.
Oculus will provide "Henry" and "Lost," its debut film about a mechanical creature that comes to life in a forest, free with its consumer Rift headset next year, Luckey said.
Luckey expects early adopters of the Rift, expected to cost roughly $1,500, to come from the gaming world.
Getting the masses engaged will require having people try the technology, Luckey said. Oculus plans to stage demonstrations at retailers and do tours of major cities to stoke interest.
"You can't really understand it by just hearing about it. You have to try it," Luckey said. "I'm a strong believer not everyone is going to love VR right now, but everyone has a use for VR eventually."
(Edited by Stephen R. Trousdale; Editing by Ken Wills)