Both Virtual and Augmented reality technologies have been around for at least a couple of years, and are now poised for significant market traction. The first consumer Virtual Reality (VR) product was back in 1995 with Nintendo’s Virtual Boy, which was a video game that flopped and was taken off the market within a year. The beginnings of Augmented Reality (AR) are more recent, with the introduction of Google Glass in 2013. It reached Beta user phase before being put on hold (temporary hold it turns out – more on this later) by Google for mostly social issues that included privacy concerns because of the built-in camera, and a dorkiness factor that earned wearers the nick name “Glassholes.” Well, lots of new technologies get off to bumpy starts before gaining market traction. Let’s have a look at what’s happening in both of these alternative reality worlds.
First we need to draw clear distinctions between VR and AR. VR is completely immersive – you only see what is displayed in the headset. This makes VR awesome for games and 3D movies as it puts you inside the action. The below screen shot is of the left and right eye view in a VR headset. This results in a 3D image. As you move your head and “look around” the image you see follows your movements, immersing you in the environment. The appeal of this for gaming is easy to understand.
Another popular early VR application is “virtual tours.” Google has had over 500K students use their Cardboard VR app to take tours of different places. A similar application could be used on a treadmill or stationary bike to take a virtual ride or run. What these applications share is a limitation on the wearer’s mobility while viewing VR images, as they don’t see the physical environment around them.
AR is only partially immersive. You can see through and around it. AR inserts virtual images onto the actual physical world the user sees, thus “augmenting” it. The below image is of an AR glasses view a driver sees navigating in a city. There are 3D images added of blue directions guidance, indications of parking facilities, street signs, etc.
Or imagine walking up to someone, the camera on your glasses captures their image, and a facial recognition app finds them in your database of contacts (LinkedIn), and displays useful information images on the glasses. The distinctions between the VR and AR applications will have an impact on the market for each. Even though VR doesn’t fit well with mobile applications, there is a large and growing user base of video game players and 3D movie watchers. The virtual touring application could grow to have significant market traction, and there may be niche applications in the military and medical areas. There remain a few technical issues to resolve such as privacy concerns, and the motion sickness some VR applications induce in some users. A games ecosystem is building around early players, and with the popularity of eSports, there will be a significant revenue opportunity for VR.
The mobile capability of AR gives it the potential to have a similar role as mobile phones and tablets, and with that comes a user base in the hundreds of millions of users. VR means wearing a video screen on your face, AR is like a transparent mobile phone on it, with the potential to become the next evolutionary step in mobile communications and applications. This opens up a wide variety of applications in social media, sports, navigation, and advertising, etc.
How does this translate to revenue? Below is a forecast from Digi-Capital:
I believe the ratio of VR revenue to AR revenue to be a pretty good estimate, but the absolute revenue numbers are too aggressive. The assumptions for this data for VR are a market of tens of millions of users, hardware price points similar to video consoles, consumer software and services economics similar to games and theme parks, and maybe some enterprise VR revenue. The AR market assumptions are hundreds of millions of users, hardware price points similar to smartphones/tablets, and software and services economics similar to today’s mobile market.
An important evolution is happening with regard to AR glasses. While VR can get away with large face-gear:
AR will ultimately require an unobtrusive solution for the viewing experience, as users will be wearing them in public. One company, Carl Zeiss, is working on socially acceptable AR glasses that look like normal glasses. Zeiss had some on display at CES. They claim the lenses can be made in any prescription and in a variety of fashion frame styles, meaning applications can be specialized, say for sports, or generalized for maps or on-demand search results.
If you want to learn more about how these glasses work, there is a good article here.
As hinted at earlier in this blog, Google Glass is re-appearing in a second edition. It may share many characteristics of Zeiss glasses or Microsoft’s HoloLens. This picture may not be the final version of what the glasses will look like. For now the focus is on enterprise AR applications.
A large AR user base could potentially be a major new revenue source for TV/film, advertising, consumer apps, and a new platform for Amazon and other retailers selling to a mass audience.
This blog wouldn’t be complete if I didn’t address the delivery of VR and AR content streams to users. Happily these streams are similar to what are delivered today to mobile devices and game consoles, the difference being dual screen data for 3D effects. Today’s CDNs are well provisioned to handle this traffic, and will deliver the broadcast quality experience users demand.