This post is adapted from ARtillry Intelligence’s latest report. To access the report and full XR intelligence library, subscribe here (VRARA members receive a discount).
2018 was a reflective year for XR. After an exuberant 2016, followed by a corrective 2017, XR industries settled into a moderate pace. This includes reset expectations on the size and timing of AR & VR markets, as well as acceptance that aspirations will take longer to materialize.
But we saw deep-pocketed tech giants charge ahead with XR. With strong contention that XR represents the next computing shift, they’re investing in the future of their platforms by gaining early market share and technological edge. And they’re each attacking XR from different angles.
Apple is investing in AR to fertilize the ground for its future hardware: AR glasses. Google is cultivating visual search, a close cousin of AR, as a search modality. Amazon is embracing AR to boost e-commerce, and Facebook is spending billions to position a VR powerhouse.
Despite XR market softness, it was these moves from tech giants that provided confidence in 2018 for the eventual market arrival. Indeed, there’s no bigger vote of confidence in a technology and a market than billions of dollars in long-term bets. We believe this will continue into 2019.
One of those investments will be Facebook’s continued subsidization of VR headsets, through aggressive pricing. It’s executing a classic loss-leader approach to gain early market share and build up the installed base of Oculus headsets. This is already accelerating consumer adoption.
We also learned important lessons in 2018 about AR adoption and behavior. Mobile AR, despite its potential scale, is gated by consumer AR interest and app quality. And these factors need more time in the oven. The quality of many ARkit apps hasn’t sold the masses on AR just yet.
But though the scale is relatively low, mobile AR users are showing strong engagement in terms of frequency and other behavior. In formats where engagement is measured heavily, such as AR ads(branded AR lenses), performance indicators and advertiser ROI are already quite strong.
Meanwhile, there were wild cards played in 2018. Magic Leap One finally launched, coupled with even more ambitious promises. Apple’s acquisition spree and patent filings point to its AR glasses circa 2021. And the AR Cloud’s importance emerged into the collective consciousness.
So the question is, where are we now with these and other XR sub-sectors? And what can we expect in 2019? Drawing from ARtillry Intelligence’s deep XR coverage, we ventured to answer these questions. We’ll look back at 2018 to extract measurable lessons, and predict XR’s directions in 2019.