The State of Reality
The premiere of Ready Player One, a tale about a dystopian world dominated by a fully immersive virtual universe called the OASIS, has inspired me to take stock of the current state of immersive technology. Despite the numerous technical challenges ahead, it’s important to look at how far we’ve come and ask a few critical questions about where we’re going. Is Ready Player One a glimpse into the near future, or is it just like any other well-funded sci-fi flick — pretty but with no real substance?
First, let’s address the elephant in the room: Despite the headlines and hype, virtual reality (VR) and augmented reality (AR) still represent a relatively nascent market, with $11 billion total spending on products and services in 2017, compared to more than $116 billion spent in 2017 on gaming altogether. Despite this, the technology development cycles, particularly for VR and AR hardware, have been impressive. The price tag for a pro-level VR headset is dropping by half every 18 months, and in the next 12 to 18 months, gamers can expect to see untethered headsets with positional and eye tracking. A recent interview with Darshan Shankar, CEO of Bigscreen, provides a very practical explanation on the state of VR. In the podcast interview, it’s noted that an Oculus Rift unit cost $2,000 about 18 months ago, and now it’s less than $400. The conversation goes on to note that new hardware, like the tetherless Oculus Go, will allow a user to instantaneously get into VR without having to set up the equipment with a computer. While positional tracking and six degrees of freedom will not be available on these headsets, chip development and hardware life cycles are moving at such a pace that in the next 12 to 18 months, a standalone product that will solve nearly all of these shortcomings should be developed.
The technical challenges associated with augmented reality are decreasing; advancements in mobile computing power promise to open the door for “real” mobile AR applications in the near future. Mobile AR provides a first glimpse into how leveraging computer vision and artificial intelligence with a mobile phone camera allows the computer (phone) to perceive the real world, understand its surroundings and augment the user’s reality with digital manifestations.
Capital Invested by Industry Vertical
The amount of capital invested in Mobile AR companies is on the rise (as shown in the above chart), although the number of deals is fairly consistent. Clearly this is an area where investors see potential. Funding of the infrastructure layer of mobile AR is happening at companies like Fyusion, 6D.ai, 8th Wall, Blue Vision Labs and Ubiquity6. The advancements in mobile AR transfer to related technologies like glasses, cars and robots. These infrastructure companies are also making it easier for developers to build AR content and map the real-world environment in real time to allow virtual objects to be overlaid. This new state of existence has been coined the “ARCloud” (described well by Matt Miesnieks) and is what many of the companies working on AR technologies are aiming to achieve.
Investment Activity in Augmented and Virtual Reality
Investors have sat up and taken notice of the burst of innovation in the mobile AR space, including the likes of Founders Fund, Shasta Ventures, Kleiner Perkins, Betaworks, General Catalyst and Candela Partners, which have all committed capital or built an investment thesis around augmented reality. Further, every large tech company has a strategy toward augmented reality — brands like Twitter, Facebook, Apple, Google, Snap and Amazon. This was emphasized by Niantic’s recent acquisition of Escher Reality, an AR mapping and computer vision company.
The iPhone moment for VR and AR may not be just around the corner, but the tech is certainly building momentum. That ~$11 billion figure is expected to be closer to $205 billion by 2022, which would represent a significant industry comparable to the GDP of the U.S. arts, entertainment and recreation industry — and potentially a major area of employment.
With all the innovation and investment going into AR and VR technologies, I am looking forward to having my Wade Watts moment of being fully immersed in the metaverse, racing my DeLorean while being chased by a T-rex, as soon as possible.
Author’s Note: Views are my own and do not necessarily represent those of my employer
