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Virtual Reality and Business: Is Their Future as Bright as it Seems?

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Virtual Reality and Business: Is Their Future as Bright as it Seems?

IDG Research | Mar 9, 2017
Category: Research
Businesses are leaning in to look at virtual reality to redefine customer experiences, shrink their operational costs, and spur growth. The New York Times, GoPro, and Wayfair furniture are among 38 companies who revealed business plans in 2016 to include virtual reality, says Fortune. This represents a mammoth 375% jump from the 8 companies who said they intended to use VR in 2015.


VR Growth Projections: Are They Realistic?

Industry experts project augmented/virtual reality revenue will hit $108 billion by 2021, revised down from a forecast of $120 billion a year earlier. But, it might be too soon to tell if these are realistic or otherworldly growth projections.

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Industry consultants Digi-Capital are forthright about mixed results in 2016. "[A]t the start of the year we thought 2016 could deliver $4.4 billion" in combined virtual reality and augmented reality revenue, they explained. However, 2016 actually produced a $3.9 billion VR/AR market, which made their forecast 11% optimistic.

What surprised everybody was the out-of-the-blue success of an augmented reality app Pokémon GO. Digi-capital had forecast $0.6 billion in 2016 for augmented reality revenue. But 2016 saw an unexpected $1.2 billion in AR revenue after Pokémon GO launched on July 6, 2016.

The firm now predicts AR will bring in most ($83 billion) of a $108 billion AR/VR market in 2021.

The Difference between Virtual Reality (VR) and Augmented Reality (AR)

Both VR and AR add a new dimension to the interactions between people and the world through digital technology.

Augmented reality uses digital tools, such as apps and mobile devices, to add a layer of computer-generated stimulus to a real world experience. You've already seen AR in the form overlays in telecast sports, or if you've played or watched someone play Pokémon GO.

Augmented reality "enhances experiences by adding virtual components such as digital images, graphics, or sensations as a new layer of interaction with the real world," explains industry publisher Augment.

Virtual reality immerses the user in "an artificial, computer-generated simulation or recreation" which may offer lifelike environments, explains Augment. The experience involves using a headset and software to display the media. 

How VR Technology Works

 VR technology involves recording video footage in a 360-degree panorama. Then software combines the video, text and audio content into a scene. Playback requires a headset viewer designed to display the media.

VR headsets work in a similar way to the old stereoscopes of photography in the 1800s, or images seen through a View-Master, patented in 1939. VR devices present slightly different images to the eyes, and the brain supplies the perception of depth, volume, and presence of solid objects.

Potential Benefits for Business and Education

The gaming and entertainment industry offers the more popular uses for VR technology. Other business sectors are already using it to:

  • Present 360-degree views of a product
  • Improve medical training and therapies
  • Provide flight training
  • Offer virtual tours
  • Observe how virtuoso violinist Joshua Bell performs up close

The potential for cost savings may be substantial for some companies. VR software company WorldViz claims that by using virtual models, companies can save about 90 percent of the cost of making actual models. Lockheed Martin told CIO reporters they have saved several million dollars in production costs by "doing motion captures that simulate space vehicles and satellites."  

Educators have also expressed strong interest.

Samsung surveyed 1,000 K-12 teachers across the US about using VR in the classroom, and shared the results at ISTE 2016.   While only 2% of teachers have used virtual reality in a classroom setting, 60% were interested in making it part of the learning experience.

The survey of educators also revealed that:

  • 86% of K-12 teachers feel it is challenging to keep students engaged in the curriculum, even with current classroom technology

  • 93% of teachers believe their students would be excited to use VR

  • 83% believe virtual reality might help improve learning

Safety First

Is virtual reality safe, particularly for kids?  

VR technology is too new for hard facts about the health effects of long-term use for anticipated users, including children and teens.

Evidence does link nearsightedness to long periods spent looking at something up close, for instance, at the distance of a book or a cell phone. Since digital devices became common beginning in the 1980s, nearsightedness (or myopia, where far away objects look blurry) has been on the rise. It afflicted 25% of people aged 12-54 in 1971-72, and 41.6% of people in the same age group from 1999-2004, reports Digital Trends.

Because childhood is a time of rapid physical, emotional and psychological development, some industry observers are viewing VR with caution. Psychology and Human Factor Expert Dr. Cyriel Diels explained to Digital Trends how users of all ages may feel after their brain has acclimated to one experience, when they switch to the other: "Some people may experience after-effects that may affect motor control (hand eye coordination, postural stability). The classic example is that soldiers may not be allowed to engage in any activities that may be affected such as driving or using certain machinery."

While using VR headsets, people may walk and gesture as if interacting with a real physical world. They risk colliding with objects, or even slapping innocent bystanders in the space they're using. Headsets with sensors and warning signals attempt to warn users before crossing the boundary of a safe space. But it's hard to know now if that will be enough.

Top Challenges (or Opportunities) for Wider VR Adoption: Content, UX Quality and Cost

VR industry professionals believe a top challenge to wider VR adoption is a shortage of good content. That's one key finding in a 2016 survey of 653 VR entrepreneurs, tech executives, investors and consultants.

The 2016 Augmented and Virtual Reality Survey Report by Perkins Cole and Upload reveals:

  • 37% of industry professionals said "lack of compelling content" presents the biggest challenge to the AR/VR industry.
  • 38% cited user experience challenges such as bulky hardware and technical issues to be the main obstacles to mass adoption
  • 32% named cost of ownership as the biggest hurdle for wider adoption

How worried are industry professionals about legal problems? Not very. Only 4% of those surveyed consider regulatory or legal risks among the industry’s main challenges. 

VR's Marketing Potential

Brands are already exploring how VR can improve messaging and engagement with real people.

Creative uses for marketing with VR are limited only by our imagination. Here's one example. Shoe retailer Toms found a way to use VR without requiring users to adopt the technology first.  

In 2015, Tom's introduced VR devices in its flagship store in Venice Beach, California. Customers could help themselves to headsets and virtually travel to Peru and see some of the children who receive Toms' shoes. Toms plans to test additional tactics to expand the concept of the consumer experience during 2017.

Google Cardboard (@googlevr) enables viewers to have an immersive VR experience for as little as $15. This gets you a fold-it-yourself corrugated cardboard headset to hold a smartphone -- just add YouTube.  

Google's Virtual Reality channel, Youtube.com/360 offers a vast, growing collection of VR-ready videos, and an invitation to experience just about anything from swimming with dolphins to skydiving, from the comfort of your chair. Launched in 2015, the channel has over 2 million subscribers as of March 2017.

VR's Projected Road to Glory

Time will tell how business use of VR evolves. Here's one potentially prescient vision from a participant in the 2016 Augmented and Virtual Reality Survey Report: "Compelling content will drive demand. Demand will drive technology. Technology will drive the masses. Masses will expand the markets. Make the content commercially viable and the chain will follow."

 

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