The concept has been toyed with for quite some time and consumer adoption could never grasp a hold of the very concept but as technological progress is made with better battery efficiency out of custom silicon delivering quality speed, we'll be introduced to a new era of Augmented and Virtual Reality. Though there remain factors that effectively delay mass consumer adoption as the cost of these devices remain substantially high.
The LG 360 VR is a step in the right direction though it remains to be seen what quality comes in the form of the experiences offered. Based on the description in the video it doesn't seem a "true" VR experience is being offered though that remains to be seen. The thing that should be viewed as vital is that the headset connects to the phone which is powerful enough to deliver the experience suggested.
The connectivity to the smartphone makes sense and also signals as well as solidifies that the smartphone is powerful enough that it will be the main connective tissue for devices to come in the future, from smartwatches to VR and/or AR headsets. What's also at interest is the compact size of the LG headset and where other companies may follow in it's footsteps at offering products similar to size and weight while potentially more of a true VR experience. Obviously this wouldn't be used in public (¯\_(ツ)_/¯) though sounds like an optimal device to use while traveling (maybe/possibly). Though the smartphone will power the device one has to remember and consider the effect this would take on the batter, which one can assume will be severe.
Outside of the purity of consumption entertainment surrounding gaming and film, there are other applications that many tech companies have argued will benefit from VR and AR such applications in medical, engineering, and development amongst a few other industries.
As the cost of VR devices and headsets shrink and an increase in consumer adoption develops such a platform will be interesting to watch in the years to come when it comes to developers and other content makers and their adoption of the platform reaching a wider scale.
The anticipation steadily grows, we'll see how things develop throughout the release of VR headsets in 2016 and beyond.