Sennheiser co-CEO Andreas Sennheiser doesn’t think virtual reality is the be-all and end-all, but instead, an intermediate step towards a day when augmented reality experiences are commonplace.

“I personally don’t believe in mass VR usage because it encapsules yourself — it’s not very social,” Sennheiser told Yahoo Finance at CES 2018 this week. “But AR really takes the best from VR, and it combines it with the social aspect.”

VR and AR were the inspirations behind the 70-year-old German audio company’s push into 3-D audio technology: offering an authentic surround sound experience without having to place multiple speakers or audio sources all around you. At CES 2018, the company announced two new products that focus on recording or playing back 3-D audio: a prototype of a 3-D home theater soundbar due out later this year, as well as the Ambeo Smart Headset — headphones that record and play back 3-D audio with the help of your smartphone.

I tried out the 3-D soundbar and Ambeo Smart Headset this week at CES, and while both products seemed to deliver on Sennheiser’s claims, the 3-D soundbar was especially impressive. Setting up the soundbar involves a two-minute calibration process that’s somewhat similar to how sonar works: by sending out soundwaves which eventually bounce back, the soundbar is able to figure out the exact dimensions of the room and create an effective, personalized 3-D audio experience.

“We are using the room reflections to create the 3-D sound, therefore we need to have an idea of how far away the walls are and what the reflection pattern is,” Sennheiser explained. “It’s really about checking out the boundaries of the room on all different frequencies, and from the reflection, you can actually calibrate the reflection to sound perfect.”

The soundbar demo I experienced had me sitting in a living room setting, as a Sennheiser spokesperson played different video clips — a sports game, an ad, among others — while switching back and forth between the soundbar and a multi-speaker home theater set-up for comparison. The 3-D audio piped out by the soundbar wasn’t an exact match for the all-encompassing sound that came from the multi-speaker set-up, but it was pretty close.

Although the majority of Sennheiser products aren’t 3-D audio-enabled at the moment, the company’s co-CEO anticipates a day when most of its headphones and speakers are able to give listeners a 3-D sound experience. Forrester Research projects that the AR and VR market will grow from an estimated $11.4 billion in sales in 2017 to roughly $215 billion by 2021. If Sennheiser releases more compelling 3-D audio products that enhance AR and VR experiences during that time period, the German audio maker could see its bottom line swell quite nicely.