VR (virtual reality) and AR (augmented reality), or rather ARVR, are exciting – Google Glass coming and going, Facebook’s $2 billion for Oculus, Google’s $542 million into Magic Leap, not to mention Microsoft’s delightful HoloLens. There are amazing early stage platforms and apps, but VR/AR in 2015 feels a bit like the smartphone market before the iPhone. We’re waiting for someone to say “One more thing…” in a way that has everyone thinking “so that’s where the market’s going!”
A pure quantitative analysis of the ARVR market today is challenging, because there’s not much of a track record to analyze yet. We’ll discuss methodology below, but Digi-Capital’s new Augmented/Virtual Reality Report 2015 is based on how ARVR could grow new markets and cannibalize existing ones after the market really gets going from next year.
AR is from Mars, VR is from Venus
VR and AR headsets both provide stereo 3D high definition video and audio, but there’s a big difference. VR is closed and fully immersive, while AR is open and partly immersive – you can see through and around it. Where VR puts users inside virtual worlds, immersing them, AR puts virtual things into users’ real worlds, augmenting them.
You might think this distinction is splitting hairs, but that difference could give AR the edge over not just VR, but the entire smartphone and tablet market. There are major implications for Apple, Google, Microsoft, Facebook and others.
Where’s the beef?
VR is great for games and 3D films – that’s what it was designed for. However it is primarily a living room, office or seated experience, as you might bump into things if you walked down the street wearing a closed headset. Still a great technology with a ready and waiting user base of tens of millions amongst console, PC and MMO gamers, those who prefer 3D to 2D films, as well as niche enterprise users (e.g. medical, military, education). This has attracted a growing apps/games ecosystem around early players like Unity, Valve, Razer and others.
AR is great fun for games, but maybe not as much fun as VR when true immersion is required – think mobile versus console games. But that possible weakness for gamers is exactly why AR has the potential to play the same role in our lives as mobile phones with hundreds of millions of users. You could wear it anywhere, doing anything (well maybe not some things – that wouldn’t be polite). Where VR is like wearing a console on your face (Oculus), AR is like wearing a transparent mobile phone on it (Magic Leap, HoloLens).
AR could play a similar role to mobile across sectors, as well as a host of uses nobody has thought of yet. The sort of things you might do with AR include aCommerce (yup, we just invented a new cousin to eCommerce and mCommerce), voice calls, web browsing, film/TV streaming (in plain old 2D as well as 3D), enterprise apps, advertising, consumer apps, games and theme park rides. So while games feature prominently in most AR demos, they are only one of a multitude of potential uses for AR. See full analysis by sector here.
Digi-Capital forecast that ARVR could hit $150B revenue by 2020, with AR taking the lion’s share around $120 billion and VR at $30 billion.
So where do these big numbers come from?
Digi-Capital think VR’s addressable market is primarily core games and 3D films, plus niche enterprise users. VR could have tens of millions of users, with hardware price points similar to console. They anticipate consumer software/services economics similar to current games, films and theme parks, but don’t expect substantial additional data or voice revenues from VR. There could be meaningful enterprise VR revenues, but Digi-Capital think that AR could take more of that market.
They also think AR’s addressable market is similar to the smartphone/tablet market. So AR could have hundreds of millions of users, with hardware price points similar to smartphones and tablets. This could drive large hardware revenues for device makers.
AR software and services could have similar economics to today’s mobile market, as they both cannibalize and grow it. A large AR user base would be a major revenue source for TV/film, enterprise, advertising, and consumer apps from Facebook to Uber to Clash of Clans. Amazon and Alibaba would have an entirely new platform for selling to a mass audience. Together with innovative applications nobody has thought of yet, AR’s scale could prove a bonanza for mobile networks’ voice and data businesses. Someone has to pay for all that mobile data.
Their revenue forecasts by sector and geography from 2016 to 2020 are covered in detail here, and below is what the market could look like in 2020. Between now and then Digi-Capital will be refining regularly as more data becomes available, and expect a lot of debate about where the market is headed.
Vomit Reality and Glassholes
It’s not all virtual beer and skittles, as some VR applications give people motion sickness, and the privacy questions surrounding Google Glass raised a lot of scrutiny. So there are both technical and social issues to resolve as both markets become real.
One more thing…
From the perspective of current giants, there are pluses and minuses. Facebook placed an early bet on Oculus, which might win VR but not address the larger AR market. Google learned from Glass, and had the foresight to invest in Magic Leap. HoloLens could allow Microsoft to regain the glory it lost to Apple in the last decade.
The full report is here.
This article originally appeared on the blog of Digi-Capital.com in April of 2015. Full rights and credit belongs to them. To read the original piece please click here.
World’s biggest VR themepark to open in China
If you ever dreamed to travel the outer space then you may just be blown away by “Oriental Sci-Fi Valley”, the world’s largest virtual reality sci-fi theme park in Guiyang, China.
Oriental Sci-Fi Valley has projected to build 13 themed pavilions and cover approximately 13,000 sq.m, with an investment of over $1 billion USD.
The first phrase of the whole project is “Alien Base”, a feature rich variety of VR games and scene experience where you ride on UFO and battle mega dragon, providing an immersive space for you to live alongside aliens.
Landmarking the park is a gigantic transformer statue is 53 meters high, being the largest one in the world. It is constructed out of 750 tonnes of steel, the weight of two Boeing 747 aircraft.
In general, the groundbreaking of this VR theme park voices the tremendous potential of VR market in China for the Chinese has increasingly raised their awareness to enjoy this innovative technology. For VR & AR entertainment, the market scale in China has been skyrocketed in recent years.
A great number of foreign VR brands flood into China every year, let alone the burgeoning local-based brands.
One of the major events to find get a grasp of the developments with AR and VR in China is the VR&AR Fair & Summit, with the 2018 edition is slated for April 3-5, 2018 in Guangzhou China.
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