THE BLOG

AR And VR: Will They Stay, Or Will They Go?

10/11/2016 12:53

It's not hard to see why new Virtual and Augmented Reality technologies could shake up everything from marketing and gaming to commerce and education. But while one offers a closed and fully immersive experience and the other is open and only partly immersive, does either have a chance of moving beyond the hype to enter the mainstream?

The buzz surrounding VR has been intensifying for some time, having received a particular boost from Facebook entering the fray via its acquisition of Oculus for a hefty $2bn in mid-2014. Names like Sony and HTC have also given it a substantial backing through recent offerings. But given that VR to date has only really been available to a select few, much of what the industry has to go on is expressed consumer interest. Here, our data confirms a decent level of potential. Across our 34 markets, it's around 4 in 10 internet users who report an interest in using VR headsets in the future. As we might expect, demographics have a big impact: the youngest consumers are the most enthused, men (on 44%) have a 12-point lead over women, and the top income group is notably ahead of the lowest one.

Despite this, it's difficult to ignore the significant hurdles that stand in the way of VR achieving mainstream adoption. First and foremost is cost; with starting prices for Facebook's Oculus Rift and HTC's Vive hovering in the region of $600-800, many consumers could quickly find themselves priced out of the market. On top of this is the state-of-the-art hardware required to support VR - either in the form of an up-to-date games console (in the case of PlayStation's VR), or high-spec PC hardware. Given that the top income group are 3x as likely at the lower 25% to own a smartwatch, it's not hard to see how VR headsets could be consigned to a similar fate - remaining premium, niche devices reserved purely for the most tech-savvy and wealthy.

Augmented reality has an obvious advantage here. Other than Microsoft's Hololens (which relies on smartglasses), AR's addressable market is much bigger given that it can already be used via any connected device and doesn't require a headset to function. Another strength stems from the ability to experience AR on-the-go through just a phone screen. While high-end VR is an at-home experience, AR offers a more social experience that can be used whenever and wherever you please.

This focus on mobile is a lesson for VR, especially as these devices are likely to be the first port-of-call for the majority of first-time VR users. Last year's Google Cardboard offered an affordable alternative which relied on nothing more than a smartphone, but many were unimpressed by the cardboard-box-strapped-to-your-face approach. This is something that Google's new DayDream is hoping to rectify, representing a major step in bridging the gap between mobile and tethered high-end VR.

2016 was the year that many consumers first experienced AR. Before the launch of Pokemon Go, the AR market was nascent and small but Niantic's app quickly became a global phenomenon and a shining example of the potential of AR to make a considerable impact among smartphone owners. The difficulty now is in sustaining levels of interest in AR; Pokemon Go might have taken AR to the masses, but it was building on a much-loved concept that may not be easy to replicate.

Overall, VR and AR's biggest obstacle of all is a lack of quality, compelling content. Investment has poured into the hardware supporting this tech but, as yet, the same cannot be said for the content across different genres which might help to justify the hefty price tag. With a poor selection of games or interesting content, consumers aren't going to be buying, and brands and companies aren't going to be investing.

All this acknowledged, the success of Niantic's game does provide a glimpse into the possibilities of the technology as well as the public's willingness to embrace new types of interactive content. And secretive startup Magic Leap is certainly a name to watch in the AR space, while high-end VR and AR propositions such as the Oculus Rift and Microsoft's HoloLens will continue to push the boundaries of this tech. But for as long as high price-points combine with a dearth of killer content, don't expect these technologies to get any more mainstream than the smartwatch.

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