A number of industry experts in the AR/VR domain foresee convergence of the two technologies into one unique spatial computing solution. However, Digi-Capital has predicted that mobile AR, smart glasses, and VR may in fact be separated in the medium-term from a commercial point of view.
AR is estimated to reach 2.5 billion installed base and $70-$75 billion revenue and VR is expected to hit over 30 million installed base and $10 billion to $15 billion revenue by 2023. Installed bases, form factors, prices, use cases, business models, and unit economics, are the likely reasons that bifurcate the two. The main challenge for mobile AR is critical use cases — transforming user experience in a way that they care about and that could not be done in any other way. As a start, there are certain use cases like Pokémon Go and Google Maps, but more of these critical use cases are required.
In regards to VR, there were less than 20 million mobile and console/PC-tethered VR installed base in 2018. The market’s inflection point might need a second generation of premium-standalone VR around 2020/2021, with greater performance, better content and lower prices to scale. VR makes most of the profit from hardware sales and games/entertainment, with enterprise software/services a growing part of the mix.
A study conducted by Magid last month revealed that both VR and AR could play a crucial role in enhancing brand perception, and while VR content was found to drive emotion, the AR content was making more sense for daily integration. The study also found words like ‘realistic’, ‘immersive’, ‘curious’, ‘exciting’, ‘fantasy’ and ‘escape’ are the one that consumers are connecting with VR.
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