Beyond Entertainment: The Disruptive Force of Augmented Reality

Walter Delph entrepreneur and BCG Digital Ventures’ Partner and Managing Director, explores the future of augmented reality.

With the official release of Oculus Rift in late March and HTC Vive shipping earlier this month, the media is a buzz with the promise of immersive virtual reality experiences for the masses, but the real power to disrupt industries beyond gameplay exists in augmented reality.

Investors and tech innovators are taking notice of VR’s market potential, but they’re also looking past the gaming and entertainment sectors to the consumer and technological capabilities of its twin technology, AR.

BCC Research, for instance, expects the global VR and AR market to increase at a 67% compound annual growth rate between 2015 and 2020, and Goldman Sachs Research boldly affirmed that VR and AR could form a combined $80 billion market by 2025.

These numbers reflect a hot trend, one that will only grow in popularity as the technologies mature.

The Winning Twin

Though they’re often lumped together, there are relevant differences between AR and VR technologies. VR plucks users from their everyday lives and drops them into a made-up reality of simulated 3D experiences, and it has some cumbersome limitations. Specifically, creating an immersive environment requires a huge amount of horsepower that wireless devices cannot deliver. This means tethering VR technology to hardware for the medium term, which limits its relevancy to controlled environments and lengthens its consumer adoption timeline.

HTC Vive, for example, is hardly a form factor that appeals to average consumers. The full system includes a headset of goggles that resembles something between night vision binoculars and a horsefly. Add to this wireless controllers and motion tracking towers, and users end up with a gaming system that commands a lot of space.

For now, VR’s applications are narrowly defined for gaming and entertainment uses. Affordable hardware, such as Gear VR, will allow for mass adoption, but this will take time, and there are significant design and ethical considerations at play. The price point for advanced VR systems is still high, too, which limits consumer appeal.

AR has more user cases and greater adaptability than VR does today. It brings virtual information and experiences to life in the real world, and its applications extend to healthcare, manufacturing, education, employment and more.

Recently, AR has been used to bridge the gap between the physical and digital worlds. LEGO Fusion and Mattel’s View-Master, which both use Vuforia SDK, are excellent examples of this. Many enterprises are also incorporating AR into training solutions.

According to Digi-Capital, the potential AR market parallels that of tablets and smartphones. As the analyst firm suggests, “AR could play a similar role to mobile across sectors, as well as a host of uses nobody has thought of yet.”

Picture a future where medical students rehearse life-saving procedures using visual projections on patient simulators or watch muscles and the skeletal system work together in action. Even at the primary level, AR has the potential to bring instruction to life with audio and visual clarity inside ordinary classrooms. From complicated surgeries, machine repair and head-up display (HUD) on windshields and retail windows to augmented field trips and biomonitoring, AR will become an essential part of life for consumers. Given its clear industry and consumer applications, it’s also on a shorter adoption timeline than VR.

AR’s Next Wave

AR technology is evolving rapidly, but there’s still a lot of work ahead to make these devices appealing and comfortable enough for the consumer market (not to mention resolving processing power issues).

Early entrants haven’t exactly fared well, either. Google Glass famously tanked in the open market, though some argue against this as a true representation of AR, and many of the startups working on AR systems are so secretive that it’s difficult to grasp how the technology will develop in the next year.

Fortunately, there are some interesting new products that suggest a brighter future is on the horizon. Microsoft HoloLens, the MOVERIO Pro BT-2000 and Magic Leap are certainly intriguing, and anyone who attended CES 2016 knows there’s a mounting AR presence in the tech space.

Corporate Influence

Startups and established tech companies have taken up the challenge of AR. As a result, we’ll soon see more polished products emerge, with advancements that build on one another and solve for real consumer and client needs.

There are also ways to speed up the development process and accelerate demand, including startup and corporate collaboration. Corporations are eager to invest in this technology. They’re also ready to unlock assets, including distribution and manufacturing capabilities, to drive product adoption.

Greater collaboration between corporate partners and the startup community could give AR the jump-start it needs. By bringing together separate, yet connected, startups for collaborative projects, technologists can solve issues faster, test more efficiently and leverage new breakthroughs. Conversely, corporations will gain new revenue streams and unlock their comparative advantages in dynamic ways.

As VR has already proven, consumer adoption will take a hit without such advancements. According to The Wall Street Journal, early glitches in major product releases have resulted in lower sales expectations, including those from SuperData Research, which just reduced its VR hardware and software global sales forecast for the year by 22%.

However long it takes to fully mature, one thing is clear: AR is destined to be a game changer for the tech industry.

To learn more about corporate investment and incubation and how DV brings together corporate partners with the passion, pace and capabilities of the startup community, please visit https://www.bcgdv.com/.

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