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Estimating The Value Of Augmented And Virtual Reality

How much will these industries be worth by 2020?

19May

The Google Glass remains an outstanding technological accomplishment. Whilst nobody can deny this, it did however fail to capture the attention of the public, many of whom passed it off as a fad or grossly overpriced.

Google has never actually released its sales figures so it’s difficult to make a prediction about the amount of units which the Glass sold, but the fact that it’s not even available for purchase anymore proves that for whatever reason, Google didn’t get it right this time.

The Internet-giant’s been keen to accentuate that the Glass didn’t fail, and that from an exploration standpoint, it’s opened doors for future products. It’s been suggested that Google is close to releasing a second version of its Glass range.

Microsoft’s Hololens, which combines virtual activities with a real-world setting, is set to be the next big foray into the Augmented reality (AR) space by a major technology company. The product has yet to be given a firm date for release, but it’s expected to be offered up to the public at about the same time as Windows 10 is.

Satya Nadella, Microsoft’s CEO, has made reference to the hype which surrounded the Google Glass prior to its release and is wary of tarring the Hololens with the same brush.

In an interview with Fortune she states; ‘I don’t want to overhype it like Google Glass and say this is the next - I want us to be deliberate about what it is.”

The Hololens, like the Glass, is expected to be expensive, and will be priced in excess of what it costs to buy a latest generation games console. Whilst this may be a sticking point, Digi-Capital, a research firm based in San Francisco, estimate that AR and Virtual reality (VR) products will generate around $150 billion is revenue by 2020.

The AR market, spearheaded by Hololens, Meta and Google backed, Magic Leap, is likely to produce $120 billion in revenue. VR, although a smaller market, will hit mainstream status by 2020 with an estimated $30 million generated.

The video gaming industry, valued at around $90 billion, is seen as a space which both AR and VR could have a major stake in going forward.

Tim Merel, managing director of Digi-Capital states;

‘But that possible weakness for gamers is exactly why augmented reality has the potential to play the same role in our lives as smartphones with hundreds of millions of users. You could wear it anywhere, doing anything. Where virtual reality is like wearing a console on your face, augmented reality is like wearing a transparent mobile phone on it. We think AR could fundamentally disrupt mobile, and the next Apple might come out of AR—depending on if and when Apple enters the AR market’

It’s also been suggested that the AR market could look fairly similar to that of the smartphone and tablet industry in terms of price points if it were to develop correctly. It could also represent a new avenue for revenue for major TV, Film and TV companies. Merel has also mentioned that AR could constitute a new platform for Amazon to sell its products - and be the catalyst for a new generation of apps that make use of new technologies.

The VR market will look slight different, with it thought that users will be looking for an enriched gaming experience, and this narrower scope for use is likely to be the main reason why its potential revenues should be considerably lower than AR. Despite this, with major players such as Oculus, Scope, HTC and Sony onboard, the VR market holds real promise.

It will be interesting to see how successful the Hololens will be and whether Apple will respond in kind. The Hololens could well be Microsoft’s opportunity to take Apple’s coveted title as the world’s most innovative company and at the same time, help the AR market flourish.

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