How is metaverse shifting the focus from mobile to wearables and spurring the growth of AR and VR?
Augmented & Virtual Reality (AR & VR) have gone through several hype cycles but are yet to become mainstream. However, ever since Facebook announced the metaverse, there has been a fresh burst of activity in this technology, with several exciting use cases and case studies emerging over the last few months. The global AR and VR market is projected to grow from $37.0 billion in 2022 to $114.5 billion by 2027; it is expected to grow at a CAGR of 25.3% from 2022 to 2027.
Companies are in fierce competition to own the underlying infrastructure of AR development platforms that will power the future of immersive experiences — and potentially the internet. Just as the iPhone helped transition the internet from desktop to mobile, AR devices like headsets and smart glasses could one day shift the internet from mobile to wearable devices. This is driving players like Meta, Google, Qualcomm, Microsoft, and Apple to invest heavily in developing AR devices.
BigTech in a race to own AR development platforms
Beyond hardware, big tech players are looking to own the AR development platforms that will power the augmented reality experiences of the future. Importantly, AR development platforms can fuel app ecosystem flywheels: big tech builds dev tools to attract AR developers; developers build apps on big tech platforms; apps attract consumers; consumers convert into revenue; and so on.
These AR development platforms could also drive new revenue streams. For example, they could be free to use but include paid services for higher-quality features, or else they could charge small fees on any profit generated by applications built on the platform.
As a result, big tech players and startups are doubling down on AR tools like software development kits (SDKs) in an effort to become the go-to platform for developers. In 2021, Apple released the 5th iteration of its AR software development kit, ARKit 5, which includes pre-built features for motion-tracking, facial-tracking, the ability to anchor AR to specific locations, and more.
Meta’s AR devices delayed
In May 2022, Google updated its AR SDK, ARCore, to include an API that gives access to Google Maps, allowing developers to build location-specific apps around the world. In addition to big tech, startups and enterprises are also developing AR platforms to capitalize on the growing demand. Meta has sunk billions into its metaverse division, but the hardware needed to move it forward—namely Meta-made AR glasses—is still potentially years away. Right now, the company’s roadmap puts Meta’s AR glasses’ release in 2024,
U.S. Army using 360-degree battlefield simulation
The technology is finding interesting uses in simulating combat situations. Last year, the US Army launched a virtual reality training facility that immerses trainees in a 360-degree battlefield simulation. This helps save on the cost of munitions and allows for custom training times (live-fire sessions have time constraints). The US Air Force also launched a Virtual Test and Training Center in 2020 for pilots to practice advanced flight tactics, which improves pilot safety while saving on the costs of fuel and equipment wear and tear.
The US National Retail Federation estimates returns from 2021 alone could total $761B. An estimated two-thirds of consumers were less likely to return products if they engage with them in AR, according to June 2022 research commissioned by Snap. VNTANA, a startup helping retailers display products in 3D, claims customers using its AR platform witnessed a 40% decrease in returns and an 83% increase in conversion.
AR Social shopping is a major opportunity
Similarly, Meta is using AR to improve advertising conversion for its retail partners. In 2021, the tech giant partnered with try-on companies ModiFace (acquired by L’Oreal) and Perfect Corp to offer AR try-on for beauty products in its Instagram Shops. Snap’s AR strategy is tightly interwoven with its plans to enable social shopping on its mobile platform. In 2021, Snap acquired Vertebrae, a startup using AR to create 3D visualizations of products, to improve its on-platform AR capabilities. More recently, in April 2022, Snap released its Dress Up feature, which allows users to try outfits on over their full body.
In April 2022, Meta acquired PreSize, a startup using smartphone cameras to measure customers’ bodies and help them determine how the clothing will fit. While not an AR company per se, the startup’s technology could set the foundation for Meta to develop a full-body AR try-on to compete with Snap.
Improving customer experiences
Augmented reality is also being applied in stores as in-person shopping makes a comeback. In-store AR can increase sales and improve the customer experience of trying out clothes or beauty products in an efficient, hygienic way. In June 2022, Walmart acquired its virtual try-on partner Memomi, a startup that provides a suite of AR solutions, including in-store mirrors that customers can use to try on beauty products, eyewear, clothes, and more.
Similarly, Estée Lauder has adopted in-store AR for virtual try-on. The beauty company saw sales increase after piloting Perfect Corp’s try-on mirrors in a UK store. Estée Lauder now uses over 8,000 of Perfect Corp’s try-on devices across stores globally.
Simulating Ikea décor at home
Retailers outside of fashion are also adopting AR technology. In January 2022, Avataar raised a $45M Series B from Sequoia Capital India and Tiger Global Management to develop a platform retailer can use to let consumers view how products like furniture will look in their homes. Ikea launched an AR app where potential buyers can imagine how Ikea décor will look in their homes.
Successful adoption of virtual try-on could be a catalyst for the emerging virtual fashion space, which refers to outfits designed for avatars or outfits users can only “wear” via AR filters. For example, Brand New Vision and DressX recently raised seed rounds to support their NFT-based fashion items, while in December 2021, Nike acquired RTFKT, a startup developing NFT collectables of sneakers. All 3 of these companies offer AR filters where collectors can show off virtual outfits, ranging from relatively regular-looking jackets to sci-fi-inspired dresses that would be impossible to manufacture in the physical world.
The intense activity in the AR/VR space underscores big tech’s belief that AR will shape the future of digital experiences. However, it is too early to tell who will emerge as the clear winner among development platforms, especially when startups and tech companies alike have so far struggled with developing mainstream AR devices and experiences.
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(Abhijit Roy is a technology explainer and business journalist. He has worked with Strait Times of Singapore, Business Today, Economic Times and The Telegraph. Also worked with PwC, IBM, Wipro, Ericsson.)
(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)
