AR and VR on the rise…finally

INVESTMENT IN AR/VR HITS AN ALL TIME HIGH: Investment in virtual and augmented reality has already surpassed $1.1 billion after only the first two months of 2016, according to Digi-Capital. This is the first time virtual and augmented reality have topped $1 billion in a single year. The incredibly rapid growth of investment is a clear signal that companies and industry pundits see the technology as not only viable, but an inevitable part of the future of mobile technology. For context, AR and VR investment reached just $692 million in all of 2015.

There is a lot of hype around virtual and augmented reality as major tech companies look to gain a foothold in the market. Vendors such as Oculus (owned by Facebook), Sony, and HTC have helped propel the development of the category in recent years. But they have also been joined by the likes of Microsoft, Google, and smartphone makers like Samsung. This makes sense considering that the AR/VR market is expected to reach $80 billion by 2025, according to recent Goldman Sachs estimates.

And while much of the consumer hype has been around VR devices, AR appears to be pulling ahead in terms of investor interest. In particular, Magic Leap, a US startup developing AR tech, accounted for the lion’s share of investment over the past year and two months. It has received $1.39 billion in funding, which includes $800 million in February’s Round C investment alone.  The company’s early investors include many global tech giants such as Google and Alibaba.

This is likely because AR provides more future use cases than VR. Unlike VR, which fully immerses users in a virtual environment, AR projects images and information onto the existing environment. For example, an engineer could use AR to look at the specs of a building while walking around a construction site.

Although adoption rates will be slow at first, due in part to the high cost of the hardware, it’s expected that once VR and AR adoption reach critical mass, they have the potential to upend everything from healthcare, to real estate, to gaming over the next 10 years.

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