Mobile AR Strategies and Business Models Materialize (new report)

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Augmented Reality (AR) comes in various forms, such as smartphones and smart glasses. Those are further segmented into consumer and enterprise uses. But the point along that spectrum that’s gained the most traction is consumer-geared mobile AR, utilizing the smartphones we all carry.

Apple’s ARkit and Google’s ARCore have democratized mobile AR with app-building tools, while Pokémon Go and Snapchat put it on the map with mainstream-friendly AR features. Though these apps aren’t “true AR,” it doesn’t matter: they’ve done AR a favor by supplying its gateway drug.

These early AR apps have also done the industry a favor by beginning to validate product and revenue models. What AR features do consumers want to use? And what will they pay for? Pokémon Go and Snapchat have already begun to answer these and other strategic questions.

Pokémon Go for example drove almost $1 billion in revenue in the second half of 2016 alone. It did this through in-app purchases and brand-collaborations to drive local offline commerce. These are a just a few potential business models that will develop and drive mobile AR revenues.

 Full year-by-year detail and category segmentation available in full report.

Full year-by-year detail and category segmentation available in full report.

Meanwhile, giants like Amazon, IKEA and BMW are pursuing AR strategies and likewise teaching us important lessons. For example, should AR live within standalone apps or be incubated as a feature within already-established apps? And what should AR features be called to attract mainstream users?

In terms of market size, ARtillry Intelligence projects consumer AR revenues to grow from $975 million in 2016 to $14.02 billion in 2021. Until 2021, most of that revenue will come from mobile AR apps, as smart glasses aren’t yet viable for consumer markets due to cost and style.

But how will this revenue materialize and what product and revenue models will be best positioned? In addition to industry giants and early movers mentioned above, the ecosystem contains developers, startups, media companies and brands. How will they deliver content and build value with mobile AR?

The best way to answer these questions is to examine today’s best practices, historical lessons and market trajectory. This report sets out to do that by surveying the landscape, and uncovering product and revenue strategies for anyone interested in tapping the mobile AR opportunity.

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Mike Boland

Michael Boland is Chief Analyst and VP of Content for BIA/Kelsey, covering online and mobile media. Mike is a frequent speaker at top industry conferences such as BIA/Kelsey events, Search Engine Strategies, ad:tech, and WHERE 2.0. He has authored in-depth reports on the changing local media landscape including online video, social networking and mobile. He contributes regularly to highly read online news sources such as Business Insider and the Huffington Post. A trusted source for reporters covering the interactive media space, his comments have appeared in major news and trade media, including the Wall Street Journal, Fortune and Forbes. Previously he was a San Francisco-based freelance writer for business and technology magazines, such as Red Herring, Business 2.0, and Mobile Magazine. Mike began his career in business analysis and journalism as a staff reporter for Forbes magazine, where he covered tech & media.