Several studies have attached massive numbers to the VR and AR sector, but VR, in particular, has suffered a number of setbacks from the likes of Google and the BBC. James Pearce takes a look at the immersive market.

man using virtual reality headset immersive

Seeing is believing: Virtual reality and augmented reality to contribute major economic growth in the next decade

Virtual reality has seen a bit of a mixed bag of late. While reports from the likes of Pricewaterhouse Coopers (PwC) have played up the impact VR might have on the global economy, at the same time a number of big players have shifted focus away from immersive.

Virtual reality and augmented reality will cause a significant boost to global economic growth over the next decade, according to the report from PwC. The professional services conglomerate believes VR and AR could add as much as $1.5 trillion, or 1.8% GDP, to the global economy by 2030.

The Seeing is Believing report claims the US could see the largest benefits from the immersive technology, with a boost of up to 2.8% GDP possible, and 2.3 million US jobs added. Growth in the UK could reach 2.4% because of AR and VR, supporting 401,000 jobs, while Germany could see a $104 billion boost, PwC claims.

PwC cites the training of employees and testing of procedures through VR and AR will see several sectors benefit from introducing the technology.

The report says: “Business benefits of VR and AR range from improved training to the reduction of risk and speeding up of product design and delivery. A major benefit VR and AR offer organisations is the training of employees and testing of procedures, including the simulation of realistic scenarios and even high-risk environments. For example, militaries use VR to train soldiers for parachute jumps and bomb disposal.”

5G will act as an enabler as the technology matures. PwC acknowledges that previous iterations of VR may have been “clunky” – think of the raft of phone-powered VR headsets launched over the last decade.

Headsets overall are lighter, cheaper and more comfortable, while there is also a large focus on boosting the field-of-view.

With 5G offering gigabit-per-second speeds and reduced latency which will support a smoother content experience, too.

Thomas Ffiske, editor of VR analysis blog Virtual Perceptions, tells IBC365: “The PwC report matches the business expectations of VR and AR over the next ten years. The report reaffirms the common sentiment among professionals in the industry that the technology will deliver returnable benefits to businesses that tap into its potential.

“But the real question is how much it’ll impact the economy, which the analyst houses have all been divided over. It is also difficult to track the adoption of VR headsets over ten years when the landscape of hardware development could look very different.”

The team behind the report team identified the business areas it would impact, analysed the extent it would improve productivity over a decade, and then fed the findings into an economic model to determine the global impact. It’s a cross-discipline approach which lends the findings some weight.

Ffiske adds: “Almost no-one in the industry is surprised that AR applications will outpace VR, but do not think that VR will be left behind. For specific use cases, such as training, VR offers benefits that AR cannot match.”

Mixing it up
Looking beyond AR and VR, the growth of mixed reality has been significant. Mixed reality overlays interactive digital images and videos onto the real world through a smartphone, tablet or smart glasses.

In a recent report, Juniper Research revealed mixed reality app installs are set to reach 10 billion by 2024, driven primarily by social media, such as Snapchat, and games like Pokemon Go.

Currently, mixed reality installations are around 3 billion according to Juniper figures, highlighting the potential growth of the sector over the next five years.

The data from Juniper also looks at monetisation in the sector, finding that 75% of the consumer mixed reality market, by value, will be attributable to in‑app purchases by 2024. But these apps will face similar challenges to that faced by the “freemium” gaming market – high abandonment rates.

Research author Sam Barker notes: “Despite temptations to continually grow the app user base, app developers must have a primary focus on retaining existing users. Successful mixed reality app developers, Niantic and Snap, have continued to leverage their significant user bases by ensuring that app content is consistently refreshed, therefore benefiting from continued user spend.”

Advertising is another growth opportunity for the market, with Juniper predicting that advertising spend on mixed reality apps will rise from $2 billion in 2019 to $11 billion in 2024. For this market to become appealing to advertisers, however, advertising processes must mirror advertising processes in the wider market.

This would include the adoption of fraud prevention tools and advertising attribution platforms.

Precarious position
Despite all of the positive assessments from analysts, the market is still in a precarious position after a number of setbacks in recent months.

In October, the BBC confirmed that it is closing its VR Hub which produced and commissioned content for the VR market.

Damming the Nile 1

Damming the Nile: One of the VR programmes by the BBC

The BBC launched the Hub in 2017 but the service only had two years’ worth of funding, with the BBC opting not to extend that.

A BBC spokesperson explains: “We’re really proud to have produced some award-winning projects in that time, and we’ve learned valuable lessons about producing unforgettable virtual reality experiences. We’re produced a guide sharing what we’ve learnt with the wider industry, and we’ve built up experience across the BBC so different areas will be able to develop their own ideas.”

The BBC’s decision came even though the VR and augmented reality headset is growing, albeit slowly, according to SuperData’s Q4 2018 XR market report.

That’s not to say the BBC is ditching immersive entirely. Far from it, according to BBC R&D senior development producer Alia Sheikh, who says the BBC learned significant lessons about VR storytelling from the VR Hub. In an opinion piece for IBC365, Sheikh explains that BBC R&D is looking at light fields and other immersive tech.

The BBC’s announcement was made just weeks after Oculus chief technology officer John Carmack offered a “eulogy” for Samsung’s phone-powered Gear VR mobile headset, calling it a “missed opportunity” as Samsung dropped support from its Galaxy Note 10 handset during the summer.

“It is probably time for me to give a bit of a eulogy for Gear VR,” Carmack told the audience during his day two keynote at the Oculus developers conference.

Another blow came from Google, with the tech giant discontinuing its Daydream View mobile headset and announcing it will end Daydream support for its recently-revealed Pixel 4 phone.

Daydream, which Google first unveiled in 2016, was the follow-up to its Cardboard headset project, which made VR content available on mobile handsets through use of headset adaptor.

“We saw a lot of potential in smartphone VR – being able to use the smartphone you carry with you everywhere to power an immersive on-the-go experience,” Google said to tech website VentureBeat. “But over time we noticed some clear limitations constraining smartphone VR from being a viable long-term solution.”

Like the BBC, Google has big plans in immersive, including significant research into AR and light field.

Even Facebook founder Mark Zuckerberg has acknowledged that the social media’s $2 billion gamble on Oculus has yet to pay off. But after five years, the Facebook chief remains positive. In a recent earnings call, he said AR and VR were “taking a bit longer than we thought. And I’m still optimistic…I think that the long-term vision and the reasons why I thought this was going to be important and big are unchanged.”

Why is Zuckerberg optimistic? Figures like those above surely help. But VR and AR also seems to be in transition. The big players such as Google are moving away from smartphone-powered VR towards standalone options. Sony (through PlayStation), HTC and Facebook are all active in the space, launching new or updated headsets.

Leo Gebbie, senior analyst for VR and AR at CCS Insight, notes, “We believe the time is right for standalone devices such as the Oculus Go and Oculus Quest to take the market by storm. With no need for a secondary device such as a PC, smartphone or games console, standalone VR is making the technology more accessible than ever. We’re absolutely convinced the market is picking up momentum.”

CCS Insight predicts there will be 75 million VR and AR headsets sold by 2023 – up from 14.7 million in 2019 -, valuing the market at $13 billion. For VR and AR to reach that, it needs to evolve. But it seems like the market is listening.