Oculus VR has been the leader in virtual reality since it burst onto the scene in 2012 with the Rift, a personal "VR headset" designed for gaming that raised more than $2.4 million on Kickstarter. Last year, the company was acquired by Facebook for $2 billion, shipped out a second developer version of the Rift, and supplied the software for Samsung’s $199.99 Gear VR headset that was released last month. For Oculus, the next step is to release a consumer version of the Rift.

The company showed off its progress at the International Consumer Electronics Show in Las Vegas this week, giving demos of its Crescent Bay prototype, the first version of the Rift that produces 360-degree sounds to match the device's field of view.

I was given a Crescent Bay demo, which included being roared at by a Tyrannosaurus rex standing on the ledge of a skyscraper and moving through a slow-motion firefight between futuristic cops and an enormous robot as rocks, bullets and missiles shot past me in Matrix-like fashion. After the demo, I sat down with Oculus VR CEO Brendan Iribe to chat about his company and the state of the virtual reality market.

International Business Times: What’s new with the Oculus Rift at CES 2015?

Brendan Iribe: We’re showing Crescent Bay for the first time publicly with virtual reality audio for the first time ever, which completes the experience. You can start to hear sounds above and below you. They can be used for audio cues. This is a whole new virtual reality mechanic that developers never had. It’s going to be very exciting to see people get access to that quality of virtual reality vision and audio and see developers start to make really rich content for it.

IBTimes: And how important is content to the success of the Oculus Rift?

Iribe: If you don’t have content, you don’t sell hardware. We need a suite of content of really fun, compelling experiences that aren’t just hardcore game-oriented, and when that’s good enough it’ll be an easy decision to go to the consumer market. Today there wouldn’t be enough compelling content to launch. Is that day going to be in 2015 or 2016? We don’t see it yet. There’s also the need for access to the input device. Are we using gamepads or not? It’s a whole different game if it’s a touchscreen, if it’s a gamepad, if it’s a wand, your hand or a gesture. Input really, really does dictate largely what kind of content you develop.

IBTimes: And who will decide input?

Iribe: We’re researching and developing a ton of stuff internally. We’re figuring out what we should provide as input or if there’s something that’s already out there. We don’t see anything in the ecosystem that we would consider consumer quality. A number of companies are doing really cool stuff, but it’s really prototype stage at this point. Let’s see what happens over the next year.

IBTimes: Seems like the plan is to let the market grow on its own before launching a consumer version of the Ouclus Rift. Is that the case?

Iribe: We are. We’re taking these incremental steps. We want to make sure that when we go to the consumer market we can say, his is consumer version one. That a person who walks into a phone store can buy a device, take it home and have tons of stuff to do.

Most big companies work in stealth until they think they have a consumer product ready to go. Oculus took a different strategy. We opened it up from the very beginning with the first duct-tape prototype that we had. We went right to the public community and crowdfunded it. We could’ve chosen to not be open and suddenly have been silent, but we decided, Let’s just keep putting this out there to early adopters every step of the way. We’re going to continue doing that until we feel we have a mass market consumer product.

The Crescent Bay prototype, as of today, is consumer-quality level, experience wise. Now we need to figure out how to manufacturer that at scale. We need to make sure it’s durable and doesn’t just explode and break in your hand. There are a lot of challenges to manufacture consumer quality at scale. All of that we’re working on, but we’re still not ready to disclose when we would ship a consumer version.

IBTimes: Oculus VR may not be ready, but you did provide the software for Samsung’s Gear VR.

Iribe: Well, this is Gear VR Innovator Edition. It’s a device for developers, enthusiasts and early adopters, same as our developer kits. I think you’ll see that early adopter community continue to grow in 2015 ... without saying anything (he laughs).

IBTimes: What can you tell me about the video quality of virtual reality headsets? I just tried the Crescent Bay demo, and the quality was fine but far below the HD and 4K levels we see with TVs.

Iribe: Certainly, virtual reality headsets are behind in resolution, but it'll all catch up pretty quickly once there's a consumer market and there's demand. Display companies, many of them that we've spoken to, are really excited about virtual reality because they're actually running out of innovation opportunities in other markets. The smartphone, its resolution, is about as good as it's going to be. With virtual reality, we're at the very beginning. You do need four, eight times more than we have today. We're working with the OLED, smartphone-screen style technology now, but we'll need to most likely transition to a new display technology if we're going to get down to sunglasses.

You'll actually see that not just in displays, but in all kinds of different components. One of the analogies I give is look at a personal computer. How much of the personal computer, component wise, came from the TV? Not a lot. It was a new industry, a whole new market of companies that were created. How much of the computer carried over to the mobile market? Mostly it was new. A whole new industry was built with whole new sets of companies. With virtual reality some of the big guys will come over, but it'll be a whole new area. We'll have whole new chipsets that are designed for virtual reality.