A long, long time ago, in…2016!

In January of 2016, Goldman Sachs published a report on the current state of the then mostly unknown, and lowkey market which consisted of the mystified words AR and VR. Augmented Reality and Virtual Reality has now become a normal term used by businesses, and marketeers worldwide.

But in 2016, it was new to everyone and Goldman shook the markets when the report was released by claiming that this unfathomed territory will rival the PC and the smartphone head on!

They had released three scenarios of this technology’s take at the market.

The ‘base case’ or the most likely size of the AR & VR market was a whopping $80bn in revenue by 2025! It would be divided $45bn in hardware and $35bn in software.

The ‘accelerated uptake’ or the most optimistic view, was a seemingly incredible $182bn.

And a ‘delayed uptake’, or a bit pessimistic scenario, had the market at $23bn.

Goldman’s report outlined the 9 key industries that need to take up AR & VR for this market to start making the astonishing revenues they predicted. The selected 9 were: videogames (obviously), live events, video entertainment, healthcare, real estate, retail, education, engineering & finally military.

Well, as you can see by the way that we have linked almost every of the aforementioned industry use cases for VR, just of the top of our heads, they were not wrong!

WHERE ARE WE ON THE TECHNOLOGY ADOPTION CURVE? INNOVATORS!

INNOVATORS

Back to Reality

Now, according to the latest figures released by Statista from December of 2019, we can see that the size of the AR & VR Market in 2018 & 2019 combined was $22.6bn and their forecast for 2020 alone is $18.8bn!

Now, this Statista report was not the only one to come out in December!

IDTechEx, has released an extensive report rivaling the 2016 Goldman market report on AR & VR in the impact it is having!

The IDTechEx’s report is all-embracing, factoring in historical data from almost 100 companies, and more than 170 products released for AR & VR markets. Their report is a bit more realistic than Goldman’s, as they’re now dealing with real hard data, one that Goldman didn’t have in 2016. They now estimate that the AR & VR (and MR) market is set to be worth OVER $30bn by 2030! And that is a realistic estimate at most!

When you look at the historical figures, the AR & VR market has grown by 107% between 2016 and 2019. Now a jump to $30bn by 2030 means ‘just’ a 46% increase, which is a lot, but is also LESS than certain trends show! If Goldman was right in their initial report, and we are in a ‘delayed uptake’ of the entire AR & VR market, we actually might expect an even higher jump than the 107% between 2016 and 2019! IF that turns out to be true, it could mean that this entire market is still currently UNDERVALUED, and that it will be worth much, much more than the $30bn forecasted by IDTechEx.

There could be a real chance that the market could increase in the coming years, and maybe not by 2025, but certainly by 2030, it could well be worth the initial $80bn that Goldman had predicted in 2016!

The Hardware

Hardware is a major part of the entire AR, VR and MR market, because, as stated by the Goldman report, it accounts for 56% of the entire market. We’ll take a look at the previous flagship VR devices, as well as the current high end HMD’s for VR and MR.

The hardware part of the AR & VR market wasn’t and still isn’t ‘cheap’ despite some attempts (*cough* cardboard *cough*), well go back to that a bit later.

The main player in the hardware department we will look at is Oculus (now owned by Facebook). In 2016, Oculus Rift was the frontrunner of the VR Head Mounted Displays’ or simply HMD’s. It went on preorder for $599, which is now, when you adjust that for inflation, $642! (you could get an new iPhone for that money then) and because you needed a ‘VR ready’ PC to run it, that bundle would cost you $1500 ($1600 today!)

Whereas now the severely upgraded version of Oculus’s flagship Rift, the Rift S costs just under $400 that’s a 46% price drop for better tech in just 3 years’ time!

Going Mobile

Now, that was the PC based VR hardware, the mobile based hardware is another story.

Mobile VR (and AR) was supposed to be a cheaper alternative to the expensive PC VR experiences, even though they looked nicer. Google had an amazing idea, to bring VR to the masses, with nothing more than cardboard. The cardboard VR headset was a great success actually. Everybody remembers when the New York Times, sent out 1.000.000, that’s right a million, Google Cardboards to their subscribers in order to promote their own VR app!

Samsung also joined the party with the Samsung Gear VR, produced by Oculus, a dedicated headset, with a connector, that allowed only Samsung phones to be connected, and when so, triggered the Samsung VR app. This also proved to be an ‘expensive sport’ as the flagship Samsung S6 that was being branded as compatible with the new Samsung Gear VR glasses went for almost $700 and the Samsung Gear VR, if you hadn’t got a deal and got them together, went for as high as $120 at the time. This meant that you needed to spend more than $800 to enjoy mobile VR, which was still in the early adopters phase.

Things seemed good for mobile VR, as it was beginning to be frequently used for marketing purposes, and for exhibition displays. Even Google joined the proper headset game, when they released Google Daydream View.

Then in October 2019, disaster. Both officially, and unofficially, Phone based VR had ended. You could still order a custom app made for you, and Unity, or a similar engine would produce an .apk file for you to install on your device (or upload to the Play Store) but Daydream was no longer up to date, as no new phones supported it, which lead people to believe that Google had abandoned the project. Samsung also hadn’t released a new Gear VR for two years, despite shipping a total of more than 5 million units just in the first year. Up until now Samsung hasn’t stated officially that the project was put on hold or discontinued. But as the headset is made by Oculus, Oculus’ CTO John Carmack, stated that that VR device’s days are numbered.

What the Future Holds…

The future for VR in general though is much brighter than it is for mobile based VR. the PC based headsets are coming out and have good reception with users. But PC based VR has always been in its own league when quality is concerned. The thing that is replacing mobile based VR is the new ‘Standalone VR’ headsets.

Google has replaced their aforementioned Daydream View, for the ‘Daydream Standalone’. HTC is giving it a go with the HTC Focus, Lenovo brought out the Mirage Solo (this one’s powered by Google’s Daydream) and of course, we’ve saved the best for last, Oculus has two main players, the Oculus GO, and their flagship Oculus Quest. The last two cost $150 & $400 respectively.

As these do not require you to be separated from your phones, waste their battery, and generally are optimized specifically for VR, people just accepted them, and are fonder of them then mobile VR. The Standalone VR headsets might just be what the overall market needed to go and transfer the consumers, and ‘trigger’ the early majority to kick in and drive the market to a peak.

WHERE ARE WE ON THE TECHNOLOGY ADOPTION CURVE? EARLY ADOPTERS!

Early Adopters

Back to (Mixed) Reality

We won’t dwell to deep here. We’ll just be mentioning a few key players in the Mixed Reality, MR, market.

Why not start with the biggest of them all? Microsoft.

People might still not be fully aware of it, but there is a whole part of Windows dedicated to MR. The Windows Mixed Reality Platform. This consists of dedicated VR headsets and titles, but it also has exclusives for Microsoft’s flagship MR device, the HoloLens (well actually the HoloLens 2).

But arguably the biggest name in Mixed Reality is Magic Leap. The company that patented and released a novel technology for presenting holograms needed for proper MR, it only recently released its product, the Magic Leap 1, but it began hitting the headlines when the big names started to fund it out of the blue. After the most recent funding round (December 2019) it raised a totally unreal $2.6Bn! Some of their investors include Google, Alibaba Group, and AT&T.

…Back to the Future (again)

VR is still young, 4 years ago, nobody really cared, then there was an initial craze for it, with everyone throwing everything at it, before natural adoption took place. Now things have settled down, and we are in for a steady growth phase. The invisible hand of the market has spoken (or has it moved!?) and it pushed mobile based VR away, and brought us standalone VR headsets, even better PC based VR, and it brought magic to life with Magic Mixed Reality.

WHERE ARE WE GOING ON THE TECHNOLOGY ADOPTION CURVE? EARLY MAJORITY!

Early Majority

TAC 25%

Everett Rogers Curve

If the numbers are right, and they tend not to lie, with AR, VR & MR as technology adoption is concerned, we are heading into the Early Majority, and it is unclear how long it is going to stay there, as there are more innovations on the way, and even more drivers for true mass adoption. The great thing is that according to Professor Everett Rogerss curve, the entire market is only at, or slightly above 25% of total market share, which means there is a lot more room for growth, innovation, new devices, new ideas, new use cases, well we could go on and on. We’ll leave you with the following, as one optimistic indicator for 2020 and beyond. It’s not by accident that Gabe Newell and Valve are stepping into the Half Life territory once again, and are taking it straight, and exclusively to VR!

 

Written by: Nikola Stojsavljevic