Intelligence Briefings Archives - Page 7 of 9

December 9, 2019June 11, 2022

The consumer AR sector still lingers in early stages. Among other things, this means the playbook is being written mid-flight. There’s a great deal of experimentation underway as companies test and iterate rapidly to discover winning formulas and business models.

This goes for consumer AR product strategies. Though a common sentiment in 2016’s hype cycle was that AR applies to everything, it’s become clear that it’s not a silver bullet. It will have native and natural applicability to some aspects of our lives and work… but not all.

Beyond macro categories and use cases where AR should or shouldn’t be developed, there are more granular strategies around user experience (UX). What types of AR interactions resonate with consumers? And what best practices are being standardized for experience design and interface?

Equally important is the question of AR monetization and revenue models. Just as user experience is being refined, questions over what consumers will and won’t pay for are likewise being discovered. The same goes for brand spending behavior in cases of sponsored AR experiences or ads.

These lingering questions compel acute attention to quantifiable AR market successes and best practices. Not only does the sector’s early stages mean that these questions are prevalent… but also that their answers are scarce. That includes evidence of successful execution and transferrable lessons.

With that backdrop, ARtillery Intelligence ventures to find, aggregate and draw meaning from finite AR successes in today’s environment. And by “success,” we mean large-scale consumer traction and revenue. When examining consumer AR engagement and revenue leaders, what product attributes and tactics are driving their performance?

This includes Snapchat. Its social lenses have the greatest consumer AR active usage, and it holds the leading share of AR ad revenue. Among other things, this is propelled by product-market fit, ease of use, distribution and fulfilling key goals for brand advertisers.

Also on the list is Pokémon Go. Though the tech press has moved on to other shiny things, 2019 marks its best revenue performance to date. This is attributed to innovation cycles that breed ongoing novelty and replayability, as well as its sparing use of AR as a game element.

Other consumer AR exemplars include Houzz and Instagram. Emerging AR players also show early signs of traction that’s worth examining, such as Tilt Five. Altogether, how do we triangulate best practices and extract tactics and takeaways for AR players today?

We’ll do just that in the coming pages, starting with Snapchat. This draws from the rigor of market watching and analyst work – including daily editorial coverage of our sister publication, AR Insider. We’ll synthesize all of these things, pursuant to the core mission of empowering you with a knowledge position.

Spatial Computing: 2019 Lessons, 2020 Outlook

November 11, 2019June 11, 2022

They say that patience is a virtue. This applies to the current state of the spatial computing industry. After passing through the boom and bust cycle of 2016 and 2017, the last two years were more about measured optimism in the face of industry shakeout.

At the precipice of 2020, that leaves the question of where we are now? Optimism is still present but AR and VR players continue to be tested as high-flying prospects like ODG, Meta and Daqri dissolve. These events are resetting expectations on revenue outcomes.

But more than the ‘how much?” is a question of “when?” Market timing is quickly becoming a prominent factor to determine success of spatial computing players. This is a common factor in tech cycles historically. Spatial computing will be no different.

Speaking of history, spatial computing follows a pattern similar to the early 2000’s eCommerce bubble. Exuberance is followed by market correction, followed by slow progression that eventually meets and exceeds early projections… but not until years later.

The good news is that this slow uphill progression has already started, and we believe the worst is behind us. Though the broader tech and media worlds have shrugged off AR and VR as fads that died in 2017, Industry subsectors are signaling growth by quietly gaining traction and revenue.

This includes AR-based advertising. ARtillery Intelligence projects it to grow from $453 million last year to $8.8 billion by 2023. This outlook follows the momentum of advertiser adoption, as well as the continued investment of tech leaders like Facebook and Snap.

There’s also a robust support industry germinating, including “building blocks” which are endemic to this period of any tech sector. Represented by tools such as Unity, Adobe Aero, and 8th Wall, AR-as-a-Service (ARaas) will be a major AR revenue category.

AR’s health also hinges on the outcome of Apple’s rumored AR glasses. Apple has a track record of mainstreaming emerging tech, and the AR industry is hoping for that halo effect. But based on signals we track, this will come a few years past the rumored 2020 launch.

Meanwhile, adjacent sectors will accelerate AR adoption and development. The broader wearables segment is growing rapidly, and will benefit AR by acclimating consumers to wearing tech on their bodies. 5G, self-driving cars and other areas will likewise feed into AR.

There are also lots of positive signals for market growth in VR. Facebook/Oculus continues to invest in hardware subsidies and loss-leader pricing to jumpstart a network effect. The result of this investment is high quality and consumer-friendly price points for Oculus Go and Quest.

What do all of these signals collectively tell us? And where do they point for 2020 outcomes? We’ll unpack the full list of market factors and 2019 lessons in this report, pursuant to illuminating likely paths for spatial computing in 2020. A robust ecosystem is (slowly) building.

VR Global Revenue Forecast, 2018-2023

October 11, 2019June 11, 2022

The virtual reality sector continues to show early-stage characteristics, including erratic levels of interest and investment. But how big is it, and how big will it get? ARtillery Intelligence has quantified the sector’s revenue position and outlook, resulting in our latest forecast. This is the fourth wave of ARtillery Intelligence’s VR revenue forecast.

Built from daily market coverage, insider interviews and market-sizing experience from 15 years of analyst work (see methodology section), ARtillery Intelligence has constructed disciplined and independent market-sizing models. The analysis is segmented into revenue categories such as consumer, enterprise and sub-divisions of each.

So what did we find out? At a high level, ARtillery Intelligence’s position on VR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but likely slower than many industry proponents believe, due partly to the pace of adoption and other signals that ARtillery Intelligence tracks.

In fact, you may notice that VR revenue projections in outer years are lower than other firms’ figures. They’re also notably lower than our past estimates, as we adjust to market signals. This is common in market forecasting, as proficient market watchers perpetually course-correct based on dynamic market conditions and variables.

The following pages quantify and project figures within several revenue categories, as well as hardware unit growth. Bulleted insights are included throughout to qualify the revenue drivers and rationale behind the numbers. And further narrative insights can be found in ARtillery Intelligence’s monthly reports, which can be accessed in the PRO library.

The goal, as always, is to empower you with a knowledge position.

Mobile AR Strategies & Business Models

September 2, 2019June 11, 2022

AR’s early stages are defined by lots of experimentation to see what works natively in this new medium. That goes for product design as well as business models. What do consumers want and how much are they willing to pay for it? These questions continue to be a moving target.

Questions are also being answered by AR pioneers like Snap and Niantic, who are operating at scale. And by “scale” we mean occasionally Superbowl-sized audiences, and revenue to go with it. But the key word is occasional, as these AR exemplars are the exception rather than the rule.

But there are still valuable lessons to gain from these leading indicators. Though the AR sector will twist around and take shape over the next few years (as historically seen in tech), there are early lessons to learn in what product and business models are working so far.

Some of these signals are already evident in ARtillery Intelligence’s consumer survey with Thrive Analytics. There, we see lots of explicit sentiments from consumers about how they’re using AR, how that’s changing (over three waves of existing research) and what they want to see next.

Takeaways from that survey include the continued popularity of AR gaming (Pokémon Go) and social experiences (AR lenses). But there’s also growing interest in emerging forms of AR such as visual search (Google Lens), navigation (Google Live View) and in-store retail commerce.

But what are the business models that are developing around this evolving consumer behavior? Though varied, we’ve begun to segment these models into three main categories (and several sub-categories). They include AR advertising, in-app purchases and AR-as-a-service.

The first two are fairly well known, though they’re developing in nuanced ways examined in this report. But the third category is a less-discussed revenue category where brands, retailers and app developers pay for tools to build AR experiences for their customers.

This carves out a new category we’re calling B2B2C, which includes software such as Unity, Amazon Sumerian, Adobe Aero and other tools to create AR experiences. Though enterprises are buying and deploying the technology, the AR experiences end up in consumers’ hands.

Adding up all three categories mentioned above and examined in this report, it’s a $1.44 billion market, growing to $20.3 billion by 2023. The common thread is AR technologies where the end users are consumers on mobile devices as opposed to industrial enterprises and/or headworn AR experiences.

The following pages examine each of these revenue categories and how they’re evolving. What are their business models, best practices and strategic takeaways? The goal, as always with ARtillery Intelligence Briefings, is to empower you with a knowledge position.

Hearables: Broadening the Definition of AR

August 12, 2019June 11, 2022

Augmented reality’s (AR) definition continues to evolve. Though considered by most to be a graphical format that overlays imagery on the physical world, there’s an emerging sentiment that AR’s definition is too narrow. As the technology grows into its own skin, it’s expanding into alternate forms of “augmentation.”

Chief among them is the emerging area that ARtillery Intelligence calls “audio AR.” It involves AR’s signature overlays… but audible rather than graphical. It can inform users and augment their experiences through audio cues, which are advantaged by subtlety and reduced hardware friction.

In fact, the foundation for this opportunity happens through already-pervasive “hearables” such as Apple AirPods. The popular device sold 25 million units in 2018, which ARtillery Intelligence projects to grow to just over 100 million by 2023. This is the first step to an audio AR future.

The second step is content and apps that developers build on that hardware base. Apple is motivated to make this happen, as audio AR is one component – along with Watch and glasses – of a prospective wearables suite that ARtillery Intelligence believes will be central to the succession plan of a maturing iPhone.

Meanwhile, the BoseAR platform already provides developers a place to build audio AR apps and experiences. This should accelerate audio AR as developers are incentivized by distribution scale from Bose’ hardware base. It’s on pace for one million audio-AR enabled devices by year-end.

Developers are already jumping on this opportunity with audio AR apps that feature guided audio tours, espionage games or fitness management. Going beyond just audio cues, these apps tap into the IMU sensor bundle in BoseAR hardware to sense precise head movement as inputs.

AR’s expansion into new modalities and definitions doesn’t end with audible content. Other key signals and inputs are developing, such as location. In fact, one of the most popular forms of AR to date utilizes device location as a key input to inform and influence user experience: Pokemon Go.

Niantic AR lead Ross Finman likes to say “the real world is the content.” Rather than taking a secondary role to graphical overlays, the real world should be a primary component in AR experience creation, similar to how location is a key input that dynamically alters Pokémon Go play.

In what other ways is AR expanding into new modalities and definitions? We unpack this concept in the following pages, including examples, case studies, exclusive interviews, and original data. The goal, as always, is to inform and empower you with a greater knowledge position.

Industrial AR: Benefits & Barriers

July 6, 2019June 11, 2022

One of augmented reality’s (AR) proposed beneficiaries is the enterprise. That can take many forms including data visualization in corporate settings, or software to create customer-facing AR experiences for brands. Impact will also occur through AR visualization in industrial settings.

The latter includes things like assembly and maintenance in manufacturing facilities. The idea is that AR’s line-of-sight visualization can guide front-line workers. Compared to the “mental mapping” they otherwise do with 2D instructions, line-of-sight support makes them more productive.

This plays out in a few ways including speed, effectiveness, error reduction and safety. These micro efficiencies can add up to worthwhile bottom-line impact in large-scale operations. Macro benefits meanwhile include lower strain and turnover, leading to higher morale and institutional knowledge.

These benefits were examined in ARtillery Intelligence’s February 2018 report, Enterprise XR: Impacting the Bottom Line. But since that analysis, we’ve tracked several growing challenges to AR’s viability and implementation in industrial operations. The picture may not be as rosy as we all thought.

For example, though all of the advantages outlined above are valid, it’s challenging to get to the point of realizing them. Practical and logistical barriers stand in the way such as organizational inertia, politics, change management and fear of new technology among key stakeholders.

The biggest symptom of these stumbling blocks is the dreaded “pilot purgatory.” As its name suggests, and as you may have heard in AR industry narratives, this is when AR is adopted at the pilot stage, but never progresses to full deployment. It’s the biggest pain point in industrial AR today.

In a recent analysis with Re’Flekt, ARtillery Intelligence identified the sources and solution areas for these challenges: the “Three P’s.” Comprising People, Product & Process, they’re the top areas where effective AR implementation strategies should focus in order to avoid pilot purgatory.

For product, it’s all about addressing real operational pain points, uncovered through ground-level research. For people, it’s about customizing AR’s ROI story to individuals at all levels of the organization. For process, it’s about multi-disciplinary prototyping rather than top-down innovation.

We’ll go deeper on all of these in the coming pages, including demonstrable case studies. We’ll examine industrial AR’s benefits and barriers. This entails everything from product planning to internal communications refinement. The name of the game is to set up industrial AR to succeed.

AR Global Revenue Forecast, 2018-2023

June 10, 2019May 13, 2024

The augmented reality sector continues to show early-stage characteristics, including volatile levels of interest and investment. But how big is it now, and how big will it get? ARtillery Intelligence has quantified its revenue position and outlook, resulting in our latest forecast. This is the fourth wave of ARtillery’s AR revenue forecast.

Built from daily market coverage, insider interviews and market-sizing experience from 15 years of analyst work (see methodology section), ARtillery Intelligence has devised a disciplined and independent market-sizing process. The analysis is segmented into revenue categories such as consumer, enterprise and sub-divisions of each.

So what did we find out? At a high level, ARtillery Intelligence’s position on AR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but likely slower than many industry proponents believe, due partly to the pace of adoption and other signals that ARtillery Intelligence – and its sister publication AR Insider — tracks.

In fact, you may notice that AR revenue projections in outer years are lower than other firms’ figures. They’re also notably lower than our past estimates, as we adjust to market signals. This is common in market forecasting, as proficient market watchers perpetually course-correct based on dynamic market conditions and variables.

The goal, as always, is to empower you with a knowledge position.

VR Usage and Consumer Attitudes, Wave 3

April 8, 2019May 13, 2024

How do consumers feel about VR? Who’s using it? What devices and apps do they prefer? And what do they want to see next? Perhaps more important, what are non-users’ reasons for disinterest? And how can VR software developers and hardware players optimize product strategies accordingly?

These are key questions at VR’s early stages that we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 3,100 U.S. adults in Thrive’s established consumer survey engine. And we’ve analyzed the results in a narrative report.

This follows similar reports we’ve completed over the last two years. Wave III of the research now emboldens our perspective and brings new insights and trend data to light. All three waves represent a collective base of 7,065 U.S. adults for a robust longitudinal analysis. This will continue to improve.

Meanwhile, what did we find out? At a high level, 16 percent of consumers surveyed have bought or used a VR headset, up from 11 percent in 2018. More importantly, VR users indicate high levels of satisfaction with the experience: 67 percent reported extreme or moderate satisfaction with VR.

As for price sensitivity, demand seems to inflect at $400 and $200. These are interestingly the price points for Oculus headsets including Quest, Rift S and GO. This indicates Oculus’ competitive edge aggressive price competition and accelerating market share, congruent with our separate projections.

Furthermore standalone VR – embodied by Oculus Quest, Go and other emerging headsets – represents a key inflection point for VR this year. Though still early (this survey was fielded before Quest’s market launch), standalone VR addresses many consumer objections evident in this survey.

However, it’s not all good news: Non-VR users report relatively low interest in VR ownership – 27 percent, down from 31 percent in 2018 – and explicit lack of interest. This downward trend in interest is concerning for VR but isn’t surprising given the dip in excitement we’ve anecdotally observed.

Moreover, the disparity between current-user satisfaction and non-user disinterest underscores a key challenge for VR: you have to “see it to believe it.” In order to reach high satisfaction levels, VR has to first be tried. This presents marketing and logistical challenges for the industry to push that first taste.

The same challenge was evident in our corresponding AR report, but mobile AR’s adoption barriers are lower. This is nonetheless a common challenge for immersive technologies. It will take time, acclimation and price reductions before they reach a more meaningful share of the consumer public.

These points join several other strategic implications that flow from latest consumer VR sentiments. We’ll examine those takeaways in the coming pages, including the latest wave of findings, and our narrative analysis for what it means. The goal is to empower you with a greater knowledge position.to date now represent a cumulative base of 7,065 U.S. adults, enabling robust longitudinal analysis.

These survey results are a telling snapshot of VR adoption, which we’ll detail in the coming pages. That will include charts and a narrative story arc that unpacks strategic takeaways, and our outlook for consumer VR. But before we take that deeper dive, here’s a highlight reel of survey findings.

Mobile AR Usage and Consumer Attitudes, Wave 2

February 11, 2019June 11, 2022

How do consumers feel about mobile AR? Who’s using it? How often? And what do they want to see next? Perhaps more importantly, what are non-users’ reasons for disinterest? And how can app developers and anyone else building mobile AR apps optimize product strategies accordingly?

These are the questions we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 3000 U.S. adults in Thrive’s established consumer survey engine. The results are in and we’ve analyzed the takeaways in a narrative report.

This follows the last few months’ ARtillery Intelligence Briefings, which examined social and commerce-based AR. Now, a deeper view into real consumer usage and attitudes validates those narratives while providing new dimension on mobile AR strategies and opportunity spotting.

As for the findings, mobile AR usage is up to 22 percent of the U.S. population. These users are mostly experiencing mobile AR through apps, such as those built on ARkit and ARCore. But we see trending towards lower-friction experiences such as “AR-as-a-feature” and web AR.

Mobile AR users also appear active and engaged across the board, with more than half reporting that they use mobile AR at least weekly. The top app category is gaming, which we attribute to Pokémon Go’s popularity. But other key categories, such as Social AR and visual search, are on the rise.

Mobile AR users also indicated high levels of satisfaction with the experience. But beyond these and a few other positive signals, there are some negative signs and areas for improvement. For example, non-mobile AR users report low likelihood of adopting soon, and an explicit lack of interest.

This disparity between current-user satisfaction and non-user disinterest continues to underscore a key challenge for AR: you have to “see it to believe it.” In order to reach high satisfaction levels, apps have to first be tried. This presents marketing and logistical challenges to push that “first taste.”

Put another way, AR’s highly visual and immersive format is a double-edged sword. It can create strong affinities and high engagement levels. But the visceral nature of its experience can’t be communicated to prospective users with traditional marketing such as ad copy or even video.

The same challenge was uncovered in our corresponding VR report last July (we’ll publish the second wave in Q3). This makes it a common challenge with immersive media like AR and VR. It will take time and acclimation before they reach a more meaningful share of the consumer public.

Meanwhile, there are strategies to accelerate that process, and to build AR apps that align with consumers’ current standards. In the coming pages, we’ll examine those strategies and unpack the full set of survey results. This is meant to empower readers with a greater knowledge position.

Social AR: Spatial Computing’s Network Effect, Parts I, II & III