Augmented Reality (AR) and Virtual Reality (VR) is changing our daily lives faster than it could be predicted. According to market intelligence firm IDC, worldwide expenses on AR and VR products and services will be up 69% this year, and the total annual growth over 5 years will increase to 70% from 2017 to 2022. So, what else do the forecasts tell us and why should businesses take a closer look at XR (Extended Reality)?
While consumer spending on XR is and will remain the largest part of the market, it is expected that it will grow at a slower pace than retail, manufacturing, government, and wholesale technology spending. Nevertheless, Virtual and Augmented Reality has the potential to become the next big computing platform, according to Goldman Sachs Research. They predict that the industry can reach a value of $80 billion a year ($35 billion software and $45 billion hardware) by 2025. Despite the fact that forecasts in different sources may vary, they all show the main – a huge increase in the next 10 years, and all studies show a cumulative annual growth rate of 40–80%.
Bigger players – bigger bets
Many innovative projects have shown the world that Extended Reality has a good commercial value and potential for the future. Large enterprises are witnessing the growth of AR/VR and planning to develop their future projects. The list of companies that invest hundreds of millions of dollars in the development of AR and VR, includes the leading global corporations: Facebook, Google, Microsoft, Sony, Samsung and others.
Apple’s CEO Tim Cook has often expressed his interest in Augmented Reality and his belief that the technology would eventually shape our lives. Recently the company applied for a patent on a mixed reality headset that includes a number of sensors to track eyes, gestures, and facial expressions.It’s just one of Apple patents, and like others, it indicates that Apple is broadly examining how AR might translate from phones to glasses. In March, Apple analyst Ming-Chi Kuo estimated that the company may start to produce its headset by Q4 of this year, and then publicly introduce it in 2020.
Tim Cook and Western companies are not the only one to see huge potential in Extended Reality. Improvements in technology have significantly affected the development of Augmented Reality and Virtual reality in areas around the world, including in the Asia-Pacific region.
Digi-Capital’s AR/VR Analytics Platform that tracked over $5.4 billion AR and VR investments in the last 12 months to Q2 2019, shows that Chinese companies were raising 2,5 times more dollars (or yuan) from their North American colleagues. Global deal value, or dollars invested, was up in the second quarter of 2019 over the previous one, driven by large late-stage deals on computer vision/AR.
Although the US beat China in VR/AR revenue last year, forecasts indicate China may surpass the States soon. The research mentioned before from Digi-Capital also shows that by 2022, China could take more than $1 of every $5 put toward these technologies. It is worth noting that governmental support is propelling this AR and VR growth in China. Last year the Chinese government has released a document entitled “Guiding Opinions of the Ministry of Industry and Information Technology on Accelerating the Advancement of the Development of the Virtual Reality Industry”. Briefly, it states that the government wants to see growth in all the areas that concern VR. It means that here we are not only talking about manufacturing headsets but also about innovating the technologies for what concerns data processing, 3D modeling, motion capture, localization and so on.
Although China has a leading position in the Asia-Pacific region, other countries (e.g. South Korea or Singapore) are not content with trailing far behind.
Why should brands invest in VR?
There is no doubt that VR and AR will continue to grow, and brands that ignore this fact will be at risk of being left behind pretty soon. Extended Reality provides businesses with a technology that assists with a variety of internal and external tasks: helps them save on an array of business costs, enhances marketing campaigns, and provides new visualization and design opportunities for product development. According to research provided by Accenture, XR is boosting employees’ productivity through human + machine collaboration.
On average, 21% of working time could be augmented by the use of XR.
As you can see below, this share can increase to 30% in healthcare and social services, manufacturing and construction.
If you’re doubting how beneficial investment in AR and VR could be to your business, consider the following ways you’ll get a return on those types of investment:
- Improve remote collaboration and business meetings. With access to VR technology, employees and business partners no longer have to be connected with geographic boundaries. The technology allows employees who are working remotely to be in the same virtual room, which increases employee engagement, communication and collaboration. It also expands the opportunities available to enterprises and reduces/eliminates the cost of moving.
- Strengthen consumer relationships. Virtual reality enables an entirely new interpretation and expression of the brand thanks to building deeper levels of human connection and cultural empathy. Touchstone Research put it in numbers. Brands that invest in VR are more likely to go viral. Brands that invest in VR are more likely to become viral. 81% of consumers using VR tell their friends about it. On YouTube, 360 videos have a browsing speed of 28.81% higher than fixed video. The clickthrough rate for VR reaches 4.51%, compared to 0.56% CTR for fixed video.
- Take prototyping to the next level. Consider how much of your budget goes to supplying or replacing expensive hardware for employees. VR can eliminate these expenses by allowing you to create a virtual office with screens, boardrooms, and presentation spaces. Proper software will definitely reduce your operational costs and time. For example, Virtualist app allows creating a shared virtual space just in 3 steps.
In architecture and design, where the decision-making process is crucial, virtual models and prototypes bring several advantages. While standard 2D designs may look acceptable on paper, nothing compares to giving clients a virtual tour where they can experience an interactive visual representation of the final product, and see the real scale. By using it at a proposal meeting, a designer or engineer can put the client into VR or AR and walk them through the critical aspects of the design.
As VR and AR both continue to prove their worth at reducing risks and costs, we are going to notice an increasingly rapid pace of investing in other industries involving work with expensive tools or demanding conditions the coming years.