Virtual reality (VR) and augmented reality (AR) technologies have gotten a lot of attention over the past few years.
Sony’s PlayStation VR headset is shining a spotlight on the viability of VR gaming, while Google Cardboard and new Daydream View headsets are pushing mobile VR into the mainstream.
The unexpected success of Pokemon Go last year showed that smartphone users are ready and willing to adopt augmented reality.
And Microsoft’s development of its Holo-Lens goggles aims to prove that the virtual and augmented worlds will soon become a part of our reality.
What is Virtual Reality?
Virtual Reality is the computer-generated simulation or replacement of one’s environment. It immerses users into a new world with 360-degree views and with no sensory input from the room your body is actually in. For example, you put on your VR set, it blocks out your worldview and substitutes with a digital world as desired for your senses. From the point of view of your brain, you are somewhere else. Its a form of mental teleportation.
Here, virtual originally means: ‘being something in effect, though not really.
What is Augmented Reality?
AR, also known as Mixed Reality is a different phase from the VR. This is because its main purpose is not to cut out the real world and transport it to another one, rather it is to be an enhancement of your real world with a set of magical virtual objects in it.
Augmented Reality is a combination of actual reality – your real-world surroundings and virtual additions to the world. It’s adding information to the world around you and when executed out at its best, you are able to interact with all of it in a very human way.
Google glasses are an example of AR.
The Goal of VR is to make the users feel they are in another place. In contrast to this, Augmented Reality adds a digital edition to the user’s world. For example, objects can appear on tables, information can be displayed on floating windows.
Augmented and Virtual Reality: Where are we Now?
More than a decade ago, the first real smartphone hit the market and made screens an essential ingredient in our lives. As a result, it has changed how we communicate, work, travel, purchase and more.
Today, a third of American households have three or more smartphones, according to Pew Research Center, while 23 percent have three or more desktops and 17 percent have three or more tablets. We are constantly surrounded by screens. It is almost impossible to escape them.
Smartphones, coupled with headsets, have been the most common use of delivering VR experiences for a few years now. This has been the most accessible entry-point for consumer VR use.
Virtual reality is a lot more mature than the existing augmented reality market.
The required software tools and hardware platforms to create immersive VR experiences are already available.
With the availability of more advanced systems such as the Oculus Rift, coupled with 360 cameras, virtual reality experiences are quickly finding new avenues into our lives.
Although augmented reality is less mature than virtual reality due to technology limitations, lack of standardization and a higher price tag, it is already being utilized in industries including manufacturing, healthcare and logistics.
Augmented reality experiences are typically delivered through headsets, such as Meta, ODG, Vuzix and HoloLens, and are showing early signs that the technology is set to transform commercial and industrial markets. However, there is still work to be done before these technologies can reach mainstream adoption.
Market potential for both AR and VR
The virtual reality market was worth about $1.9 billion in 2016, but that’s expected to climb to $22.4 billion by 2020. Those numbers include both software and hardware sales. And when you factor in AR sales, the market skyrockets even higher. The combined AR and VR market will be worth $121 billion by 2021, according to Digi-Capital.
In that same year, IDC estimates more than 99 million AR and VR headsets will be shipped, up from just 10 million last year, which represents a 58% compound annual growth rate between 2016 and 2021.
What is the future of Virtual Reality?
Just as the theory of disruptive innovation would predict, prices have begun to come down. Facebook temporarily dropped the price of the Oculus Rift to $400 this summer, while HTC permanently dropped the price of the Vive to $600.
Both companies have also come out with cheaper models, with the Oculus Go now available for $200 and HTC recently announcing a new wireless headset.
And let’s not forget Samsung’s Gear VR headset, which attaches directly onto its Galaxy Smartphones, sells for around $100. There were 6 million VR headsets that shipped last year, and the Gear accounted for three-quarters of them.
The good news for investors is that companies are just getting started with AR and VR, which means the opportunities to benefit haven’t passed.
There are still plenty of unknowns, but as more companies rally around these new technologies and make the necessary investments to get them off of the ground, we’re likely to see the future of AR and VR develop substantially over the next few years.I believe that the current industry forecasts are too optimistic, but that VR will eventually succeed in reaching the mainstream.
Once high-quality, wireless headsets reach the $200-ish mass-market price point, affordable for Christmas presents, we’ll begin to see price elasticity kick in.
The decrease in costs will be offset by a significant increase in demand, which will spur interest in the advertising, software, and content needed to build out the VR ecosystem.