Mike Boland

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.

The Camera is the New Search Box: Advertising in AR (new report)

This post is adapted from ARtillry's latest Intelligence Briefing, The Camera is the New Search Box: Ads in AR. To receive the report and access the full XR intelligence library, subscribe here (VRARA members receive a discount).

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One of the many areas projected to be transformed by immersive computing is advertising. The visually-immersive nature of technologies like AR and VR can offer advertisers new ways to spotlight products, and engage prospective customers in deeper ways than 2D media.

For example, advertisers can create AR campaigns that let consumers visually infuse products in the world around them, as captured through their smartphone camera. Brands like Nike, Home Depot and Michael Kors are already experimenting with – and learning from – such campaigns.

Beyond graphical AR overlays, advertisers will soon be able to participate in a related area: visual search. A close cousin of AR, this is represented by tools like Google Lens, which let users point their smartphone cameras at objects around them to contextualize (or purchase) those items.

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Altogether, AR ad formats are beginning to map to existing 2D ad formats that advertisers have been using for years. For example, branded graphical AR overlays are analogous to display advertising, while visual search can carry similar dynamics and user intent as search advertising.

But the opportunity is to go much deeper than these legacy formats in both creative capacity and effectiveness. Indeed, brands that have experimented with AR-based promotion already see favorable engagement and conversion metrics, such as 11x increases in product purchases.

The opportunity is further fueled by vested interest of tech giants. Tech’s “four horsemen” – Google, Apple, Facebook and Amazon – are especially keen on AR. Those specifically built on ad revenue (Google and Facebook), will fight to ensure positioning in advertising’s next era.

Resulting competition will accelerate innovation, investment and market timing for AR advertising in general. Indeed, one point of confidence ARtillry Intelligence holds for AR’s overall revenue generation and opportunity is the level of motivation behind these tech giants to make it happen.

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But it won’t be without challenges and question marks. Though all of the above stands to reason and quantitative analysis, one wild card is advertiser adoption. They’re a famously laggard constituency of the tech ecosystem, and survey data indicate their AR uncertainty.

There are also practical hurdles. Though mobile AR’s addressable market is 762 million smartphones, the actual market is a subset of that. Active AR users total around 158 million, and session lengths are small, due to factors like arm strain, which diminish ad inventory.

All of these variables converge to drive $2.6 billion in AR ad revenues by 2022. And like the progression of ad formats mentioned above, it will start with display ads before more technically advanced visual search. That requires computer vision, the AR Cloud and other building blocks.

But how will this materialize? What campaign tactics work? And what does it mean for developers, media companies and anyone vetting AR? We dive deep on these questions in the latest report, and will continue to analyze the findings here in the coming weeks.

Subscribe to receive the report and access the full XR intelligence library. VRARA members receive a discount on subscription.

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Bay Area: Come Discuss ARkit & the AR Cloud (8/22)

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Please join us Wednesday, August 22nd for the next VRARA SF Chapter Meet-up. 

Taking place at WeWork Mid-Market in San Francisco, you'll get a chance to meet the new chapter leadership, followed by a fireside chat with Matt Miesnieks, CEO and Co-Founder of 6D.ai, investor, and influential technology writer.

The San Francisco VR/AR Association's membership has grown significantly over the last three years, and to keep up with that pace, we've recently added significantly to our chapter leadership team to include some of the brightest stars in the ecosystem. The first part of the evening will include a panel discussion with our growing team: Annisa Kau, Sony Green, Alia LeCam, and Jeff Meador about the goals for the VRARA SF Chapter's coming year, and we will also get a sneak-peak at community member's answers to the question, "What makes San Francisco the best city for XR?" from our soon-to-be-published VRARA SF Ecosystem Report. 

We will then be joined by Matt Miesnieks for a fireside chat to reflect on this past year since ARKit and ARCore released, and talk about the influence of ARCloud on the evolving augmented reality landscape. We will also get a chance to talk with Matt about 6D.ai's approach to solving for the foundational technology to usher in the next age of spatial computing. The 6D.ai SDK (now in BETA), uses standard built-in smartphone cameras to build a real-time 3D semantic, crowd sourced map of the world, all in the background without a depth camera. This means that spatial computing apps that were only possible to build on expensive HMD's are now possible on ARCore and ARKit smartphones. We will get a chance to hear from Matt personally about how their AI neural-networks will help developer's applications understand the world in 3D.

See more information or register here. 

 

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How Do Consumers Feel About VR? (New Survey Data)

This post is adapted from ARtillry’s latest Intelligence Briefing, VR Usage & Consumer Attitudes. It includes some of its data and takeaways, including original market sizing and forecasting. Subscribe to ARtillry Insights for the full report. 

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How do consumers feel about VR? Who’s using it? What devices and apps do they prefer? And what do they want to see next? Perhaps more important, what are non-users’ reasons for disinterest? And how can VR software developers and hardware players optimize product strategies accordingly?

These are key questions at VR’s early stages that we set out to answer. Working closely with Thrive Analytics, ARtillry Intelligence wrote questions to be presented to more than 1,900 U.S. adults in Thrive’s consumer survey engine. And we’ve analyzed the results in a narrative report.

This follows last year's first installment of the report. Wave II of the research now emboldens our understanding and brings new insights and trend data to light. There are also notable parallels in these results to our sister report on AR adoption published in April.

So what did we find out? At a high level, eleven percent of consumers surveyed have bought or used a VR headset, up from eight percent in 2017. More importantly, VR users indicate high levels of satisfaction: 65 percent of respondents report moderate or extreme satisfaction.

However, it’s not all good news: Non-VR users report relatively low likelihood of VR adoption – 31 percent, down from 41 percent in 2017 – and explicit lack of interest. This downward trend is concerning for VR but isn’t surprising given the dip in excitement we’ve anecdotally observed.

Moreover, the disparity between current-user satisfaction and non-user disinterest underscores a key challenge for VR: you have to “see it to believe it.” In order to reach high satisfaction levels, VR has to first be tried. This presents marketing and logistical challenges to push that first taste.

Put another way, VR’s highly visual and immersive format is a double-edged sword. It can create strong affinities and high engagement levels. But the visceral nature of its experience can’t be communicated to prospective users with traditional marketing such as ad copy or even video.

The same challenge was evident in our corresponding AR report, but mobile AR’s barriers to adoption are lower. This is nonetheless a common challenge for immersive technologies. It will take time, acclimation and price reductions before they reach more meaningful penetration.

Meanwhile, there are strategies to accelerate that process, and to market VR more effectively. We examine those strategies in the latest ARtillry Intelligence Briefing, through the lens of consumers’ explicit sentiments, actions and desires. There's a lot to unpack, as we'll do in the coming weeks.

Preview more of the report here and subscribe to ARtillry Insights to access the whole thing.

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XR's Road To $61 Billion

This post is adapted from ARtillry’s latest Intelligence Briefing, XR Global Revenue Forecast 2017-2022. It includes some of its data and takeaways, including original market sizing and forecasting. Subscribe to ARtillry Insights for the full report. 

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Many AR and VR (a.k.a. XR) stakeholders claim that their market sizes will be massive. But how big are they, and how big will they realistically get? ARtillry Intelligence has quantified these sectors and their moving parts in precise terms. The result is our latest XR revenue forecast.

At a high level, we project global XR revenue to grow from $4.2 billion last year to $61 billion by 2022. That consists of AR, VR and the enterprise and consumer segments of each. That includes lots of moving parts, which all come together in an extensive financial model.

One common thread among these sub-sectors is that there will be a tipping point for both adoption and monetization in the 2019-2020 time frame. After that point, growth will accelerate and get over the consumer and enterprise adoption humps that persist today.

Breaking down the sub-sectors and their drivers, enterprise AR will hold the largest share of revenue in the outer years of our forecast. Scale will result from wide applicability across enterprise verticals; and a form factor that supports all-day use and clear ROI.

Adoption is currently dampened by organizational inertia, enterprise risk aversion and sales cycles. These factors will continue to stunt enterprise AR growth but will be outweighed eventually (2020) by the momentum, support and ROI realizations that are currently building.

Consumer AR will be the second largest revenue driver. Near term revenues will be mobile and software-centric (mobile device sales aren’t counted as XR revenue). That includes premium apps and in-app purchases — mostly the latter as validated by Pokemon Go and others.

Consumer VR takes the third spot for revenue in outer years, and be hardware-dominant in the near term as an installed base is established. Over time, software (apps & games) revenue will gain share, built on that installed base and benefiting from faster refresh cycles than hardware.

And the headline within consumer VR is standalone headsets like Oculus Go. At a $199, it hits a sweet spot for quality and affordability, and we project it to reach unit sales of 1.3 million this year. Given a gift-able price point, the 2018 holiday quarter will be a “moment of truth” for Go.

Lastly, enterprise VR takes the final spot among XR sub-sectors. VR will be stronger as a consumer play due to relative shortcomings in the enterprise like isolation, which inhibits industrial job functions. However, it will find value in areas like training and data visualization.

There are lots of other moving parts and inclusions within the above categories, such as XR advertising (included in enterprise AR & VR) and Location Based VR. It’s all broken down in the full report which you can preview here, including details on what’s included and not included.

And we’ll be revisiting excerpts and nuggets from the full report in the coming weeks as we unpack and analyze forecast components. There are lots of individual areas within the XR universe that are ripe for strategic takeaways and value creation. There will be a lot to discuss.

Preview more of the report here and subscribe to ARtillry Insights to access the whole thing.

New Report: AR’s Future Hinges on an ‘Internet of Places’

This post is adapted from ARtillry’s latest Intelligence Briefing, AR Cloud and the ‘Internet of Places.’ It includes some of its data and takeaways, including original survey research. Subscribe to ARtillry Insights for the full report. 

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It’s often forgotten that about $3.7 trillion is spent in consumer retail purchases in the U.S.. Of that, $300 billion (8 percent) is spent in e-commerce. This means that offline brick & mortar spending – though often overshadowed by its sexier online counterpart – is where the true scale occurs.

But digital media like mobile search is still impactful. Though spending happens predominantly offline, it’s increasingly influenced online. Specifically $1.7 trillion (46 percent of that $3.7 billion) is driven through online and mobile media. This is known as online-to-offline (O2O) commerce.

O2O is one area where AR will find a home. Just think: is there any better technology to unlock O2O commerce than one that literally melds physical and digital worlds? AR can shorten gaps in time and space that currently separate those interactions (e.g. search) from offline outcomes.

We’re talking contextual information on items you point your phone at. AR overlays could help you decide where to eat, which television to buy, and where to buy the shoes you see worn on the street. This is what ARtillry Intelligence calls “Local AR,” and it will take many forms.

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Visual Search

One of the first formats where Local AR will manifest is visual search. If you think about it, AR in some ways is a form of search. But instead of typing or tapping search queries in the traditional way, the search input is your phone’s camera and the search “terms” are physical objects.

This analogy applies to many forms of search, but is particularly fitting to local. Traditional (typed) local search performs best when consumers are out of home, using their smartphones. This is when “buying intent” is highest, and when click-through-rates and other metrics are highest.

Furthermore, proximity-based visual searches through an AR interface could gain traction if our recent consumer survey research is any indication. Among the categories and types of AR apps that consumers want, city guides, in-store retail and commerce apps showed strong demand.

These proximity-based searches are conducive to AR because the phone is near the subject (think: a restaurant you walk by), and can therefore derive information and context after mapping it visually. This really just makes it an evolution of a search query… but done with the camera.

“A lot of the future of search is going to be about pictures instead of keywords,” Pinterest CEO Ben Silberman said recently. His claim triangulates several trends: millennials’ heavy camera use, mobile hardware evolution, and AR software (such as ARkit) that further empowers that hardware.

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The Internet of Places

These are some reasons why Google is keen on AR. As is common to its XR initiatives, Google’s AR efforts are driven to advance its core business. In other words, to continue dominating and deriving revenue from search, it must establish a place in this next visual iteration of the medium.

“Think of the things that are core to Google, like search and maps,” said Google XR Partnership Lead Aaron Luber. “These are core things we are monetizing today and see added ways we can use [AR]. All the ways we monetize today will be ways that we think about monetizing with AR.”

For example, a key search metric is query volume (along with cost-per-click, click-through-rate and fill rates). Visual search lets Google capture more “queries” when consumers want info. And these out-of-home moments, again, are “high intent” when monetization potential is greatest.

These aspirations will manifest initially in Google Lens. Using Google’s vast image database and knowledge graph, Lens will identify and provide information about objects you point your phone at. For example, point your phone at a store or restaurant to get business details overlaid graphically.

This can all be thought of as an extension to Google’s mission statement to “organize the world’s information.” But instead of a search index and typed queries, local AR delivers information “in situ” (where an item is). And instead of a web index, this works towards an “Internet of places.”

But before we get too carried away in blue-sky visions – as is often done in XR industry rhetoric, trade shows and YouTube clips – it’s important to acknowledge realistic challenges. There are several interlocking pieces including hardware, software and most importantly… the AR Cloud.

Subscribe to ARtillry Insights to access the full report.

How Do Consumers Feel About Mobile AR? (new report)

This post is adapted from the latest report from ARtillry Insights, Mobile AR Usage & Consumer Attitudes. Preview more of the report or subscribe through VRARA

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How do consumers feel about mobile AR? Who’s using it? How often? And what do they want to see next? Perhaps more importantly, what are non-users’ reasons for disinterest? And how can app developers and anyone building mobile AR optimize product strategies accordingly?

These are the questions we set out to answer. Working closely with Thrive Analytics, ARtillry Intelligence wrote questions to be presented to more than 2000 U.S. adults in Thrive’s established consumer survey engine. And we’ve analyzed the findings in a narrative report.

This follows last month’s ARtillry Intelligence Briefing, which examined mobile AR app strategies and business models. Now, a deeper view into real consumer usage and attitudes  provides new dimension on mobile AR strategy development and opportunity spotting.

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Specifically, one third of consumers surveyed have used a mobile AR app. And those consumers appear active, with more than half reporting that they use mobile AR apps at least weekly. The top app category by far is gaming, which we attribute mostly to Pokémon Go.

Mobile AR users are also engaged, with 73 percent reporting satisfaction or high satisfaction. But beyond these and a few other positive signals, there are areas for improvement. For example, non-mobile AR users report low likelihood of adopting soon, and explicit disinterest.

The disparity between current-user satisfaction and non-user disinterest underscores a key challenge for XR: you have to “see it to believe it.” To reach high satisfaction levels, apps have to first be tried. This presents marketing and logistical challenges to push that first taste.

Put another way, AR’s highly visual and immersive format is a double-edged sword. It can create strong affinities and engagement levels. But the visceral nature of its experience can’t be communicated to prospective users with traditional marketing like ad copy or even video.

The same challenge was uncovered in our corresponding VR report last August (we’ll publish the second wave in Q3). This makes it a common challenge with immersive tech. It will take time and cost reductions before they reach a more meaningful share of the consumer public.

Meanwhile, there are strategies to accelerate that process, and to build AR apps that are compelling to consumers’ current standards. For example, social features can boost AR stickiness and network effect, which will be accelerated with multi-player support in ARkit.

There is of course a lot more to it, which we break down in the report. Meanwhile, this will continue to be a moving target and require lots of strategic precision and an informed position. Stay tuned for lots tidbits and survey results we’ll unpack in the coming weeks.

Preview more of the report or subscribe here

Mobile AR Strategies and Business Models Materialize (new report)

To read the full report, subscribe to ARtillry Insights

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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.

To read the full report and a library of XR research, subscribe to ARtillry Insights

Join VRARA SF at XD Immersive (May 3-4)

VRARA members, contact us for a discount code to attend

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VRARA SF has partnered with the XD Immersive conference, taking place in San Francisco May 3-4. That means lots of things but most of all it means that VRARA members get a deep discount (35%) on early bird tickets (contact us for discount code).

XD Immersive is part of a new event series from UX Strat. Focused on UX design, and management, it will zero in on a range of business cases in the XR world. And to do that, it has assembled A-list speakers from Google, Samsung, Microsoft, IBM, frog design, Meta, Intel, Beast, Immersion, and many more.

Join us on May 3-4 in the ultra-modern bespoke venue on Market Street. More about the event can be seen here, and we hope to see you there. 

VRARA members, contact us for a discount code to attend.

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Bay Area: An Evening Out with VRARA and Tom Emrich

Register here, VRARA members are invited to a dinner that immediately follows drinks & networking.

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VRARA SF is assembling on March 7th for a social evening out with SF's VR/AR community. Join us at the hip and game-filled Coin-Op for happy-hour drinks, food and networking with SF's biggest XR influencers. We'll even have Ready Player One-themed prizes and trivia.

Our celebrity guest is Super Ventures' Tom Emrich (bio below). We're lucky enough to have him along to mingle with us and share ideas and stories. We're taking over a section of the venue including a (no host) bar and we'll provide light fare and giveaways. Coin-Op also has happy hour drink prices from 4-7. More information and registration can be found here.

Following the networking and cocktail hour is a (no host) dinner with Tom for VR/AR Association members at 7:30. If you'd like to join us for dinner, please RSVP with that designation by 3/05. If you'd like to become a member, contact us

OUR GUEST OF HONOR: TOM EMRICH

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Sometimes called the “man from the future” Tom Emrich is a leading voice in augmented reality, virtual reality and wearable tech. He is committed to driving adoption and innovation in technology which is augmenting the human experience.

Tom is an active investor and founding partner at Super Ventures, the first fund dedicated to augmented reality. He is also a community builder having grown a community of over 250,000 professionals dedicated to augmented reality, virtual reality & wearable technology through We Are Wearables, the largest wearable tech community in the world and AWE (Augmented World Expo) the world's #1 AR+VR conference and expo with annual dates in the USA, China and Europe.

Tom has been recognized as a top global influencer for AR, VR and wearables and has presented talks at major conferences such as TEDx, SXSW, TechCrunch Disrupt SF, CVR, WT Conference, Wearable Technology Show, TOM*FW, and FITC. He regularly appears in the media as a futurist and expert including The New York Times, Huffington Post, Space Channel, CNN, BBC, CBC, Readers Digest, Globe and Mail and FASHION magazine.

Tom's passion for this space is driven by his belief that wearable tech plays a critical role in our human evolution. See more on Tom's website.

Register here, VRARA members are invited to a dinner that immediately follows drinks & networking.

Enterprise XR: The Road to $39 Billion (New Report)

This post is adapted from ARtillry's latest Intelligence Briefing: Enterprise XR: Impacting the Bottom Line. It includes some of its data and key takeaways. Subscribe to ARtillry Insights to access the full report.

 XR Revenue Outlook (year-by-year detail provided in full report)

XR Revenue Outlook (year-by-year detail provided in full report)

The past year was volatile for XR. After an exuberant 2016, the sector’s temperature cooled when consumer hardware penetration – a key leading indicator of industry health – fell short of expectations. So attention shifted to areas of nearer-term scale: mobile and enterprise.

For enterprise (mobile is covered in a separate report) , its nearer-term opportunity is due to a greater addressable market. There are more receptive buyers in enterprise environments, due to measurable time and efficiency gains in AR-assisted job roles. This creates a clear ROI narrative.

To quantify, companies like Intel and Coca-Cola demonstrate 15-45 percent efficiency gains today. This includes time saved in assembly, sorting and maintenance functions. Given that enterprise process management generally strives for single-digit efficiency gains, this XR impact is notable.

And unlike consumer markets, where mobile devices are the near-term play, head-worn XR devices are already penetrating the enterprise. This is due to one big variable: style. AR glasses don’t yet pass consumer markets’ stylistic requirements, but that’s not an issue in the enterprise.

For all of these reasons, ARtillry Intelligence projects enterprise XR to grow from $554 million in 2016 to $39 billion by 2021, with an inflection point in 2019. Near-term revenue will be hardware- dominant as an installed base paves the way for recurring software revenue in later years.

Most of that revenue will be from AR versus VR. Though VR’s place in the enterprise will be valuable and transformative, AR’s market opportunity is larger. This is due to its breadth of applicability across enterprise functions, and pass-through vision that enables more versatility.

But despite all of these positive dynamics and fertile ground for enterprise XR, there will be challenges. As with any organizational technology adoption, there is red tape, inertia, sales cycles and the complications of system integration. As the saying goes, anything worthwhile isn’t easy.

So how will this all play out? What are enterprise XR’s benefits and proof points? What are enterprises saying and doing to indicate areas of opportunity? Who’s exhibiting best practices? And what are the biggest lessons so far? This report sets out to answer these burning questions.

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Key Takeaways

XR has been heralded as the next major technological transformation. This will materialize, but later than expected.
-- Similar to the early-2000’s e-commerce bubble, XR excitement and market sizing isn’t overblown… it’s just early.

Soft consumer hardware sales have shifted attention to near-term scale and opportunity, including mobile and enterprise.

ARtillry Intelligence projects enterprise XR to grow from $554 million in 2016 to $39 billion by 2021.
-- Enterprise AR will grow from $314 million in 2016 to $35.2 billion in 2021, including a 2019 inflection point.
-- Enterprise VR will grow from $240 million in 2016 to $3.8 billion in 2021.

AR’s share results from breadth of applicability for enterprise functions, and pass-through vision that enables versatility.
-- AR will also be widely applicable across verticals including CPG, automotive and aerospace.
-- Enterprises have less stylistic and budgetary restraints than consumers, given today’s bulky and costly smart glasses.

Enterprise XR includes live AR remote assistance (assembly, maintenance), pre-authored AR guidance (sorting, maintenance), and immersive VR collaboration (training, design), among other formats.

Adoption drivers include strong ROI and operational efficiencies (time and error reduction) in functions like manufacturing.
-- Intel, Coca-Cola and others detailed in this report demonstrate 15-45 percent efficiency gains today.
-- Additional cost savings result from remote support and collaboration, which lessen travel and machine downtime.

Beyond micro-economics, enterprise AR has potential to transform workforce management
-- AR’s guided instructions or live remote assistance makes more people qualified for more jobs.
-- This unlocks enterprise efficiencies and employees’ in-house mobility, task variety and morale.
-- AR can enable experienced and valued veterans to work remotely, rather than retire or burn out from field work.

Enterprise XR benefits are counterbalanced by several challenges, most of them due to organizational inertia.
-- Like many technologies, XR will face resistance at organizational and departmental levels.
-- The first and only point of entry is often “innovation centers,” where XR is often well received but then languishes.

Tactics for overcoming hurdles include building on already-adopted systems (e.g. Android), and grassroots support.
-- Greater chance of deployment can result from advocacy within the business units proposed to use XR. Bottom-to-top organizational buy-in can create powerful demand signals that lead to real XR deployments.
-- Value propositions should go beyond bottom-line impact and be spun to address individual (and sometimes selfish) pain points of decision makers and influencers throughout the organization.

Despite challenges, there’s good news.
-- After initial adoption, subsequent XR implementations are easier to achieve, as comfort levels are gained.
-- There is evidence that sales cycles are reducing in length.
Cultural familiarity with XR will inch forward and lessen enterprise resistance – a common process in tech revolutions.
-- We’ll see step functions as companies make investments that fuel advancement, which in turn drives more investment.

Challenges will persist into 2018 but momentum and acclimation are leading towards a 2019 tipping point.
-- Enterprise XR will follow a similar adoption pattern seen in smartphone enterprise integration over the last decade.

Subscribe to access the full report.

Bay Area: Join Us at Venture Summit West

Register Here for Early Bird (50% off). VRARA Members, Contact Us for Additional Discount.

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The VR/AR Association, San Francisco Chapter has partnered with the Venture Summit West, March 13-14 in Santa Clara, Ca.. That means discounts for VRARA members, among other things (contact us for code). 

More from the conference organizers:

The 6th annual Venture Summit West, presented by youngStartup Ventures, is the premier industry gathering connecting venture capitalists, corporate VCs, angel investors, technology transfer professionals, senior executives of early stage and emerging growth companies, university researchers, incubators and premier service providers.

Whether you are an investor seeking access to new early stage deals, or a CEO or Founder of a new venture looking for funding, visibility and growth, Venture Summit West is one event you won’t want to miss.

Register now 50% reduced early bird rates. VRARA members, contact us for additional discount.

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Bay Area: Come Learn ARkit (1/20 - 1/21)

Find out more details and register here. VRARA members, contact us for member pricing. 

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Augmented Reality is here and will change the world - come build the future! If you played Pokémon Go, you’ve seen Augmented Reality, but there is so much more. With mobile platforms now supporting Augmented Reality (e.g. Apples ARkit, Google’s ARCore) and AR content platforms rising, this is the time to learn about AR and how to use it.

If you want to use AR technology, but are not sure how, this is your opportunity – we want to enable you to dive in and develop in AR so that you can use AR for your company and yourself, regardless of skill level or background. Come spend the weekend with us learning how to build Augmented Reality apps.

This 2-Day Weekend Workshop includes:

  1. Developing a fully working Augmented Reality app (using ARKit & Unity) in a weekend Quality training in AR from leading developers with extensive teaching experience
  2. Help on how to take this new knowledge forward so you can develop on your own
  3. An understanding of the AR/VR/MR landscape and how it is developing
  4. A new network of people who share your passions

Find out more details and register here. VRARA members, contact us for member pricing. 

XR: What Did We Learn in 2017? What's In Store For 2018?

This post previews ARtillry's latest Intelligence Briefing, XR: 2017 Lessons, 2018 PredictionsPreview more of the report or subscribe to access it in full.

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2017 was quite a year for AR & VR (a.k.a. XR). As is often the case with emerging technology, XR’s early days have included lots of excitement. This year kicked off as such, continuing from 2016. But excitement levels began to recede in mid-2017 as several market signals emerged.

So the question is: Where are we now with AR & VR, and what can we expect in 2018? Drawing from ARtillry’s XR coverage and market sizing over the past two years, we have ventured to answer this question. 

As a historical comparison, e-commerce was  heralded in the early 2000’s dot-com bubble. But the market sizing and exuberance at the time wasn’t overblown: In fact it underestimated eventual revenues. It was just a bit early.

ARtillry Intelligence believes that has parallels – though a different timeline – to where we now sit with XR. Massive opportunity exists but expectations should be adjusted about its timing. This can help inform go-to-market strategies and operational execution for XR players.

But how and when will it all come together? What are the top factors and trends to examine? What are key drivers for interlocking pieces in the XR universe (AR, VR and enterprise and consumer segments of each)? And what does it all mean for where you sit? 

We’ll take a look back at 2017 to extract measurable lessons, and predict XR’s direction in 2018. It’s all about zeroing in on the pockets of greatest opportunity, and -- as always -- timing. Spoiler alert: there will be real revenue and value creation in 2018, but they’ll require strategic precision.

Preview: 2018 Predictions

1. Enterprise AR Pulls Ahead: Enterprise AR will pull ahead of Consumer VR as the leading XR sub-sector (consumer VR held that leading position in 2017), reaching revenue of $10 billion. The biggest adopters in 2018 will be manufacturing and assembly, which have the clearest ROI potential for enterprise AR. The biggest challenge will be organizational red tape and sales cycles. So the name of the game will be quantifying ROI, demonstrating bottom line impact and having domain knowledge in enterprise verticals (in addition to immersive tech competency). Those who can hit those marks will be most successful in tapping into enterprise AR’s $48 billion opportunity by 2021.

2. Mobile AR Rebounds: After surging in 2016 due to Pokémon Go, then dipping in 2017, mobile AR revenues will rebound in 2018, exceeding $1 billion. This will mostly come from app revenue, including Niantic’s Harry Potter game that inherits Pokémon Go’s architecture and game mechanics. The predominant mobile AR business model in 2018 will follow Pokémon Go’s established model of in-app purchases. We’ll also begin to see experimentation with ad support or sponsorship that are tied to location-based discovery and commerce (i.e. retail store visits, navigation, product info).

3. Mobile AR Standards Develop: After disappointing mobile AR app libraries in 2017 (in both quantity and quality), 2018 will continue to see many misfires and unsuccessful apps. A small minority will break out and begin to define the category and seed user demand. They will apply native thinking, “AR-first or “AR-Only” approaches, but these success stories will be very limited in quantity – likely fewer than ten. At least one of these apps will break out in 2018 as mobile AR’s first truly native and category-defining “killer app,” and will be location-based gaming, social, or commerce oriented.

4. Consumer VR Gets a Jolt: Oculus Go will launch in Q2 2018 and fuel consumer adoption more so than any other single headset to date. Its sales will exceed one million units in 2018, and begin to climb to a leading headset market share in later years. With a $199 price tag, and more room for discounting, this will jumpstart VR’s sluggish sales and adoption rates. It will also create a greater installed base to motivate developers and content creators to build content, thus attracting more users to VR in a sort of virtuous cycle. This process will take more than one year to play out, but will accelerate in 2018 to the tune of about 20 million total headsets sold (including cardboard and low-cost units throughout China); and a cumulative installed base of about 43 million headsets globally.

5. Unifying Technologies Emerge: Beyond slower-than-expected consumer VR adoption, the sector has further suffered from fragmentation. The already small user base is divided into smaller subsets when you consider the different platforms and walled gardens (HTC, Oculus, Daydream, etc.). This makes it harder for developers to justify ROI in investing in content because an already-small addressable market gets smaller. Alleviating this challenge will be a major industry priority in 2018, including interoperability across platforms, more low-barrier and cross-platform development tools like Google Blocks and Poly; and unifying technologies such as WebVR and WebAR. Google will take the lead on – and benefit most from – web-based delivery of AR and VR experiences. The AR cloud will develop and gain importance as a repository of geo-tagged data and content to enable and populate AR apps and games. It will be a critical component, given AR’s understated need to access mapping and positional data to overlay graphics properly.

Preview more of the report or subscribe to access it in full.

Bay Area: Join us at AR AppShow (1/23)

VRARA members, contact us for a discount code 

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VRARA SF has partnered with next month's Augmented Reality AppShow. Join us 1/23 for an evening of networking and live demos of ARkit and ARCore apps that are in development. That will give us all a sneak peek at the AR innovation in the pipeline.

The conference organizers are also looking for apps to showcase, in case you're working on one. Apply here and contact us for discount code to attend. We hope to see you there.

More from the event organizers:

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On November 10th, 2009, 10 mobile apps including Dropbox were showcased at the first ever AppShow at the flagship Apple Store in downtown San Francisco.  Since then over 170 iPhone, iPad, and Android apps have presented or launched at 18 AppShows, in 4 cities.  Many of these apps have gone on to become household names like Uber and Waze which both launched at the SF AppShow.   

With Apple's launch of ARKit and Google's launch of ARCore, app developers around the world have started a whole new innovation cycle to show the public what can be done with this amazing new augmented reality technology on mobile phones.  Since ARKit's launch in September, apps using this platform have already been installed 3 Million times.  More than ever these apps need to be seen live, in order for their full utility to be understood.  Join us for 10 rapid fire augmented reality app demos in an hour, by the people who created them.  Learn more about AR technology and how it could be applied to your business.

If you're building a great app or know of one, apply to present at http://appshow.com/apply  We are also looking for sponsors and anyone interested in helping out with the event.

The AppShow is the premier App event -- We discover and break the hottest apps.

Past presenters have been featured in the New York Times, BBC, CNN, and the iTunes App Store home page after appearing in the SF AppShow!

- Cocktails, appetizers, and networking. 6:00pm - 7 pm.

- Join the live studio audience for the SF AppShow broadcast.  Our host will check out hot apps, interview their developers and take your questions from the stage. Show starts at 7pm.

See newsworthy new apps, get insight from app developers, find unrecognized app gems. Space is limited, seats available on a first come basis.

Register and get more information here

VR and AR Revenues to Reach $79 Billion by 2021 (new report)

Subscribe to ARtillry Insights to access the full report.

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How big are AR & VR and how big will they realistically get? ARtillry Intelligence ventured to quantify these sectors' revenue opportunity and the result is its latest industry revenue forecast.

And the Verdict? Global AR & VR revenues will grow from $4.1 billion in 2016 to $79 billion by 2021. This includes AR, VR and the enterprise and consumer segments of each. It mostly consists of hardware and software sales (see inclusions and exclusions below).

As for a breakdown of the major sub-sectors of the XR spectrum, consumer VR leads all categories today but will be quickly eclipsed by enterprise AR. Enterprise's leading stake has a lot to do with clear ROI for enterprise buyers, and a form factor that supports all-day use.

See the rest of the breakdowns below, and read about report's methodology here. You can also see our video companion below for additional narrative about revenue drivers and dynamics. To access the full report, subscribe to ARtillry Insights.

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Key Takeaways

Global AR & VR revenues will grow from $4.1 billion in 2016 to $79 billion by 2021.

Enterprise AR will grow from $829 million in 2016 to $47.7 billion in 2021. It’s the fastest growing segment of AR & VR revenues and the largest revenue segment in 2021. Scale will result from wide applicability across enterprise verticals; and a form factor that supports all-day use and clear ROI (e.g. manufacturing efficiencies). Near-term revenues will be hardware-dominant as it’s usually the first step in enterprise tech adoption. Hardware growth creates an installed base for software, which will dominate enterprise AR in outer years. Enterprise hardware adoption will also mature as it’s established in the enterprise, with replacement cycles outpaced by software refresh rates.

Consumer AR will grow from $975 million in 2016 to $15.8 billion in 2021. Until the 2020 introduction of Apple’s smart glasses, it will be dominated by the mobile form factor. Revenues will be software-dominant during that time (mobile devices aren’t counted in this forecast), and include app revenues such as in-app purchases. Much of this will evolve from the business model validated by Pokémon Go which drove most of 2016's consumer AR revenues. Niantic will also find success in its follow-up game to Pokémon Go, with architecture and game mechanics re-skinned to a Harry Potter theme. Consumer AR will hit an inflection point – and shift share towards hardware revenue – starting in 2020 as consumer-gear smart glasses finally arrive. Meanwhile, the development work put into mobile AR apps will be a training ground for an eventual glasses-dominant era.

Enterprise VR will grow from $665 million in 2016 to $4.4 billion in 2021. Though strong in its own right (46% CAGR), it will hold the smallest share of AR & VR revenues among the sub-sectors measured in this forecast. VR will be stronger as a consumer play (see below), while AR is stronger in the enterprise (see above). The latter dynamic stems from VR’s inherent isolation, which inhibits some job functions and share of time per working day. Like AR, VR’s near term enterprise revenue will be hardware-dominant as it’s the first step to tech adoption. That installed base will pave the way for enterprise VR software revenues to grow and overtake enterprise VR hardware revenues by 2019.

Consumer VR will grow from $1.6 billion in 2016 to $11.5 billion in 2021. Like enterprise VR, it will be hardware-dominant in early years as its installed base is established. Over time, software (in this case, games and apps) will eclipse hardware revenues with a faster refresh cycle. A greater installed base of hardware will also incentivize VR content creators to invest in long-form content, resulting in more robust VR content libraries and greater software spending per user (ARPU). Price competition among VR headset manufacturers (e.g. Oculus, Sony, Samsung) will also be a big consumer adoption driver. Oculus Go, at a $199 price point, will hit a sweet spot for quality and affordability, and will drive mainstream VR adoption and education starting in 2018. Oculus – with the advantage of Facebook-backing – has the flexibility to apply loss-leader pricing in order to trade margins for market share. That will give it a strong competitive position versus players that are dependent on hardware revenue (i.e. HTC, Samsung).

Subscribe to ARtillry Insights to access the full report.

Bay Area: Join Us For VR/AR Year-End Roundtable (12/08)

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What a year it's been for VR & AR. As we enter 2018, VR/AR Association SF is assembling the best minds for a mega panel on the industry's biggest challenges and opportunities.

join us in San Francisco on Wednesday December 6 for an evening of networking, food & drinks and elite speakers from VRARA's SF member base (additional details here).

There will be much to discuss and define as we enter the new year: What did we learn in 2017? What does 2018 have in store? And what does it mean for you? 

Act fast because this will be a smaller and more intimate gathering than our normal event series. VRARA members interested in speaking, please contact us.

Register here. VRARA members choose the "member" option at checkout.

AR & The Future: Enterprises & Backrooms (Online Class)

VR/AR Association members, contact us for a discount code to attend

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Immersive technologies hold lots of potential to streamline business operations -- both corporate and "heavier," fare like manufacturing. But the opportunity hinges on professional development and education, as shown in the VR/AR Association's many webinars and symposiums.

In that same spirit, Shel Israel's Transformation Group has launched a series of live online classes. Known as AR & the Future, they will help professionals understand how immersive technology will change all business sectors. VRARA has partnered with TG, meaning discount codes for you.

The next class is coming up on November 28th. Entitled AR & The Future, Enterprises & Backrooms, it will zero in on how AR will unlock functionality and value in backroom operations.

More details are below and VRARA members can contact us to receive a discount code. We hope you'll join us on the 28th.  


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AR & the Future: Enterprises and Backrooms

Nov. 28, 2017 10:00 AM to 12 pm Pacific Time

Summary: Even though media attention focuses mostly on immersive technology in consumer-facing business, a great deal of the adoption and ROI is happening within enterprises and in the backrooms of retail organizations. The gains are being realized in logistics, safety, training and efficiency. Rather than zapping aliens, these applications improve profitability, morale and communication effectiveness.

Shel Israel, Transformation Group CEO & co-author of The Fourth Transformation: How Augmented Reality and Artificial Intelligence Will Change Everything will present an overview of how AR is changing the enterprise, where the costs and limitations of devices seem far less relevant to miners and oil rig workers than they do to shoppers and gamers.

He will explore use cases most relevant to the enterprise and backrooms of retail operations.

This session will include a guest presentation by Wolfgang Stelzle, founder and CEO of RE’FLEKT, a Munich-based startup working with Daimler, Porche, Bosch, Seepex and Microsoft. He will explain how the basic application of converting user manuals into AR-based instructions will save billions of dollars while making customers happier and more successful.

The class is designed for managers and professionals who want to use AR to bolster their companies and careers. Attendees will develop knowledge they can use to start their own AR efforts while educating and motivating others.

Investing in VR/AR: What are VCs Saying and Doing? (new report)

Subscribe to Monthly Research Reports here.

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Investors are excited about AR and VR, just like most of the tech world is. But they see things through a different lens. Given risk profiles and often-higher stakes than other entities in the AR and VR landscape, they have additional layers of insight and consideration.

So ARtillry Intelligence ventured (excuse the pun) to capture that perspective in a new report. It spent much of the last year talking to investors, and attending industry events where top investors speak. The result is a collection of insights, synthesized into a categorized narrative.

Where do AR and VR investors see the biggest opportunities? What are their investment theses? What factors signal strong financial upside? What do they look for in a pitch? Finally, what can the rest of us take away from those insights in order to choose the right paths in AR and VR sectors?

These questions are tackled throughout the report, and the key takeaways can be seen below. Topics include enterprise versus consumer approaches; high-end AR and VR versus more rudimentary (but scalable) mobile formats; and strategies around content.

Investors we’ve spoken to have lots to say on these topics that will steer the course of AR and VR. Their credibility is stronger than many other industry voices, given not only unique vantage points mentioned above but another key factor: They’re putting money where their mouths are.

Check out the report’s key takeaways below, and subscribe here to get the entire thing. Meanwhile, stay tuned for more excerpts and insights on this topic.


Smart Money: Insights From AR & VR Investors

Key Takeaways

AR & VR have elicited considerable investor excitement and projections of smartphone-sized transformation.
— We’ve witnessed a rise in AR and VR-focused investment firms (Presence Capital, The Venture Reality Fund, Super Ventures), and corporate VC firms (Comcast Ventures, Qualcomm Ventures, Intel Capital, Lenovo Capital).

More than $4 billion in venture funding has been invested in AR & VR companies since 2012.
— Magic Leap alone has received $2 billion, which should signal caution, but we believe funding dispersion will even out.
— AR companies have received the most funding, followed by consumer VR, enterprise VR, and VR games.

Underlying tech has received the most funding recently, followed by video content, games and peripherals.
— In this relatively early phase, building blocks hold a large opportunity, including haptics, processing and inputs.
— All parts of AR & VR’s collective spec sheet are underdeveloped, creating opportunities across the board.

Addressable market is a big investment criteria, and is currently diminished by consumer VR’s small base.
— Consumer hardware ubiquity is marked by 100 million units. VR headset penetration is currently 17 million units.
— Until consumer VR reaches ubiquity, enterprise and mobile AR hold nearer-term opportunities for scale.

Mobile AR’s benefits include volume penetration, portability, all-day access and frequency of use.
— ARkit and ARCore create 505 million AR-compatible smartphones today, increasing to 4.3 billion by 2020.
— ARCore is advantaged by a lower-friction web AR approach. ARkit is advantaged by more structured revenue models.

Enterprise AR & VR have more receptive buyers than consumer markets, due to a strong ROI case.
— Enterprise AR & VR can benefit from the unit economics of SaaS pricing/packaging.
— Successful enterprise execution is often found in entrepreneurs with vertical or industrial knowledge.
— Knowledge of enterprise software dynamics and business processes (in addition to VR/AR) is a winning formula.
— Warning signs of enterprise approaches include lack of customer diversification or recurring revenue potential.

AR & VR content companies can be risk prone, and don’t often see venture-sized returns or exits.
— There can be longer-term value and recurring revenue outside of content itself, such as merchandising.
— Broadcast-focused AR & VR companies can tap into the sector’s scale and receptiveness to innovation.

Social is thought by many to be AR & VR’s eventual killer app, especially VR.
— Social functions can make games and apps more multidimensional, with greater appeal for repeat usage.
— Social can also amplify growth potential through viral marketing dynamics and network effect.

After product, market and other aspects of business models are optimized, pitch tactics must equally be refined.
— The art of pitching investors includes proper selection, “networking in,” and streamlined talking points.
— Key tactics are specificity, quantitative-focus (unit economics, market size, etc.) brevity, and humility.

The consumer VR sector is experiencing a shakeout, meaning deceleration of new investments and a funding crunch.
— This will impact existing players who will compete for a finite supply of follow-up investment rounds.
— New entrants should model out spending levels, cash and the macro environment.
— All players should build conservative to aggressive forecasting ranges and operate lean.