Virtual Haircut?

One day when i was on Youtube looking at new videos, i came across this one!  I used it with my headphone and it sure does make you feel like you are getting a haircut.  As the person talks, you feel or have a sense of where they are.  I listened in carefully and figured that they manipulate the sound, basically have background music or the kind of background noise one would hear at a barber shop on one side of the ear then amplify the person voice talking on the ear but not too much that it hurts the ear.  It also made me realize that one can mimic the sound of a plastic bag being put over someone's head by using static noises.  If you guys have time..Check it out!  -Thinh