Look! Up on the screen! It's a galaxy! It's a killer robot! It's . . . VIRTUAL, MAN!

Once the astronauts' toy, virtual reality is now an art, an arcade game and, for some, a humiliation

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The place seems amiable enough -- cozily Edwardian, beckoning, a lullaby for the senses. Period photos of adventurers, early editions of Jules Verne and Dorian Gray, a mahogany bar where a fellow serves "smart drinks," heavy on the ginkgo. This is the Explorer's Lounge, the front room of a Virtual World shop in the San Francisco suburb of Walnut Creek. But behind the paneled walls, some pioneering menace is afoot. Five kill-crazy nerdlingers will soon engage in mortal combat, 21st century style, against a tenderfoot with a cunning computer handle: Cyber Rick!

The game is BattleTech, a 10-minute interactive video extravaganza that plunks you down on a barren, monolith-strewn spacescape to neutralize a platoon of stealthy robots: your opponents. The process is called virtual reality. And Virtual World Entertainment, which besides the Walnut Creek showroom has retail outlets in Chicago, Tokyo and Yokohama (with a San Diego branch due in November), is just part of this burgeoning blend of art, science and razzle-dazz.

VR is almost everywhere now. Last week in Anaheim, California, a trade show for the Amusement and Music Operators Association displayed Sega's VirtuaRacer video game, Spectrum HoloByte's Star Base One and Visions of Reality's advanced Cybergate. Also last week, a U.S. Army show in Washington featured a VR tank simulator. This week the Guggenheim Museum in Manhattan's SoHo district presents a VR exhibition with works by artist Jenny Holzer and composer Thomas Dolby.

For more than a decade, VR has helped pilots in training visualize objects in graphic three dimensions and on a 360 degrees field. Recent advances in reducing both the size and the cost of hardware and software are bringing VR out of the flight simulators and putting it within reach of architects, designers, surgeons and other professionals. "Properly done, virtual reality has an opportunity to change the world," says David Bonini, CEO of Division Inc., whose VR systems help drug researchers assemble "virtual" molecules. "This is only the beginning."

Virtual-reality hype is gradually giving way to virtual-reality reality. "Finally," says Ben Delaney, publisher of CyberEdge Journal, "the technology has met up with the demand. I think we're going to see VR all over the place. It's a better mousetrap, and it's a better way to work with computers." John Latta, president of 4th Wave, a market research firm, predicts that the nonmilitary VR industry, already a $110 million business, will be nearly five times as large by 1997.

Now entrepreneurs large and small have seized on VR, hoping to turn Defense Department-bred technology into show-biz profit. Companies from the Hudson River to Tokyo Bay -- the brand names include Paramount Communications, AT&T, Viacom, Sega, Nintendo, Sony, Matsushita, Edison Brothers, Hasbro and Time Warner -- are betting cumulative billions on VR. Christopher Gentile of Abrams/Gentile Entertainment, which is developing a home-VR system in Princeton, New Jersey, predicts virtual game shows by 1996. How about 3-D TV? Shopping by VR? The Home Sex Network? "If someone gets there in the home with the right quality and cost," notes media investor Marty Pompadour, "it's a potential bonanza."

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