A virtual environment is a real‐time computer simulation that exploits human ability to understand 3D data. Virtual environments, especially those in computer games or training simulators, thus often look like depictions of real places. However, their form is only limited by our imaginations, and their utility is only limited by their ability to communicate information effectively. In terms of graphics, the current state of the art of virtual environments can be found in the games industry. Although successful as a medium, games provide a very simple user‐interface for interacting with 3D data: one must use the joystick or simple motion controls and the environments themselves are usually quite restricted in their behaviour. Compare this with our experience of the everyday world, where behaviour is very complex, and we experience multimodal sensory information from all around us.

Research in virtual environments falls in to three themes: hardware, software, and perception. Hardware research investigates increasing the display quality. For visual displays the state of the art are CAVE‐like displays. These surround the user with display surfaces, "immersing" them in virtual environment so that they see an egocentric view. The user's head is tracked, so images appear life‐sized and in stereo: a chair in a CAVE‐like system can be walked around and looks like it could be sat on. Despite their success in many applications, such displays still have many deficiencies: they aren't bright, their dynamic range is low and their end‐to‐end latency is tens of milliseconds. There are also significant challenges in stimulating other senses such as touch, taste, smell, hearing, balance, proprioception, body awareness, etc.

As virtual environments increase in complexity, the related software becomes challenging to manage. Different physical effects (e.g. weather and crowd simulation) are modelled in very different ways but must be integrated in our virtual environments. Perhaps the biggest challenge in this area is that of creating plausible virtual humans that can interact with the user. The final research theme concerns what is necessary for hardware and software systems from a perceptual point of view. Despite the relative primitiveness of our current displays, users have very strong reactions to the virtual environments in certain situations. Users in the UCL CAVE‐like system who experience standing on a virtual ledge over a precipice suffer strong stress reactions, even though they know the drop is an illusion; Thus the brain is quite successfully interpreting some set of minimal cues and if we can understand more about how the brain comes to an operational model of its environment, we can better design displays.

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