Intelligence Briefings Archives - Page 9 of 9

March 5, 2018June 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 2000 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 last month’s ARtillery Intelligence Briefing, which examined mobile AR app strategies and business models. Now, a deeper view into real consumer usage and attitudes validates those findings, while providing new dimension on mobile AR strategy development and opportunity spotting.

As for the findings, one third of consumers surveyed have used a mobile AR app. And those consumers appear active and engaged, with more than half reporting that they use mobile AR apps at least weekly. The top app category by far is gaming, which we attribute to Pokémon Go’s popularity.

Mobile AR users are also engaged, with 73 percent reporting satisfaction or high satisfaction. 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 underscores a key challenge for immersive technologies: 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 August (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 cost reductions 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 are compelling to consumers’ current standards. In the coming pages, we’ll examine those strategies and unpack the rest of the survey findings. This is meant to empower readers with a greater knowledge position.

Mobile AR: App Strategies and Business Models

February 5, 2018June 25, 2022

Augmented Reality (AR) comes in various forms, such as smartphones and smart glasses. Those are further segmented into consumer and enterprise uses. But the point along that spectrum that’s gained the most traction is consumer-geared mobile AR, utilizing the smartphones we all carry.

Apple’s ARkit and Google’s ARCore have democratized mobile AR with app-building tools, while Pokémon Go and Snapchat put it on the map with mainstream-friendly AR features. Though these apps aren’t “true AR,” it doesn’t matter: they’ve done AR a favor by supplying its gateway drug.

These early AR apps have also done the industry a favor by beginning to validate product and revenue models. What AR features do consumers want to use? And what will they pay for? Pokémon Go and Snapchat have already begun to answer these and other strategic questions.

Pokémon Go for example drove almost $1 billion in revenue in the second half of 2016 alone. It did this through in-app purchases and brand-collaborations to drive local offline commerce. These are a just a few of many potential business models that will develop and drive mobile AR revenues.

Meanwhile, giants like Amazon, IKEA and BMW are pursuing AR strategies and likewise teaching us important lessons. For example, should AR live within standalone apps or be incubated as a feature within already-established apps? And what should AR features be called to attract mainstream users?

In terms of market size, ARtillery Intelligence projects consumer AR revenues to grow from $975 million in 2016 to $14.02 billion in 2021. Until 2021, most of that revenue will come from mobile AR apps, as smart glasses aren’t yet viable for consumer markets due to cost and style.

But how will this revenue materialize and what product and revenue models will be best positioned? In addition to industry giants and early movers mentioned above, the ecosystem contains developers, startups, media companies and brands. How will they deliver content and build value with mobile AR?

The best way to answer these questions is to examine today’s best practices, historical lessons and market trajectory. This report sets out to do that by surveying the landscape, and uncovering product and revenue strategies for anyone interested in tapping the mobile AR opportunity.

Enterprise XR: Impacting the Bottom Line

December 30, 2017June 11, 2022

The past year was volatile for XR. After an exuberant 2016, the sector’s temperature cooled when consumer hardware penetration – a key leading indicator of industry health – fell short of expectations. So attention shifted to areas of nearer-term scale: mobile and enterprise.

For enterprise (mobile is covered in a separate report) , its nearer-term opportunity is due to a greater addressable market. There are more receptive buyers in enterprise environments, due to measurable time and efficiency gains in AR-assisted job roles. This creates a clear ROI narrative.

To quantify, companies like Intel and Coca-Cola demonstrate 15-45 percent efficiency gains today. This includes time saved in assembly, sorting and maintenance functions. Given that enterprise process management generally strives for single-digit efficiency gains, this XR impact is notable.

And unlike consumer markets, where mobile devices are the near-term play, head-worn XR devices are already penetrating the enterprise. This is due to one big variable: style. AR glasses don’t yet pass consumer markets’ stylistic requirements, but that’s not an issue in the enterprise.

For all of these reasons, ARtillery Intelligence projects enterprise XR to grow from $554 million in 2016 to $39 billion by 2021, with an inflection point in 2019. Near-term revenue will be hardware- dominant as an installed base paves the way for recurring software revenue in later years.

Most of that revenue will be from AR versus VR. Though VR’s place in the enterprise will be valuable and transformative, AR’s market opportunity is larger. This is due to its breadth of applicability across enterprise functions, and pass-through vision that enables more versatility.

But despite all of these positive dynamics and fertile ground for enterprise XR, there will be challenges. As with any organizational technology adoption, there is red tape, inertia, sales cycles and the complications of system integration. As the saying goes, anything worthwhile isn’t easy.

So how will this all play out? What are enterprise XR’s benefits and proof points? What are enterprises saying and doing to indicate areas of opportunity? Who’s exhibiting best practices? And what are the biggest lessons so far? This report sets out to answer these burning questions.

XR: 2017 Lessons, 2018 Predictions

December 1, 2017June 19, 2022

2017 was quite a year for XR. As is often the case with emerging technology, XR’s early days have included a fair amount of exuberance. 2017 kicked off as such, continuing from 2016. But excitement levels began to recede mid-year as several market signals emerged.

Among those signals, we saw the beginnings of a funding crunch as several companies failed to secure follow-on investing rounds. We saw TechCrunch pronounce (falsely we believe) that VR is dead. Many of these activities stemmed from disappointing consumer VR adoption.

This realization caused the XR world in 2017 to shift attention from high-end VR to mobile AR, given its large installed base. Apple’s June ARkit unveiling amplified excitement levels, which then weakened as the platform’s September release was met with tepid consumer response.

So the question is: Where are we now with XR, and what can we expect in 2018? Drawing from ARtillry’s XR coverage and market sizing over the past two years, we have ventured to answer this question. In short, excitement levels haven’t been misplaced… but some have been mis-timed.

As a historical comparison, e-commerce was prematurely heralded in the early 2000’s dot-com bubble (which Artillry analysts lived through). The market sizing and exuberance at the time wasn’t overblown: In fact it underestimated eventual revenues. It was just early, by about five years.

ARtillery Intelligence believes that has parallels – though a different timeline – to where we now sit with XR. Massive opportunity exists but expectations should be adjusted about its timing. This realization can inform go-to-market strategies and operational execution for XR players.

But how and when will it all come together? What are the top factors and trends to examine? What are key drivers for interlocking pieces in the XR universe (AR, VR and enterprise and consumer segments of each)? And what does it all mean for where you sit?

We took a look back at 2017 to extract measurable lessons, and predict XR’s direction in 2018. It’s all about zeroing in on the pockets of greatest opportunity, and — as always — timing. Spoiler alert: there will be real revenue and value creation in 2018, but they’ll require strategic precision.

AR & VR Global Revenue Forecast 2016-2021