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Published on April 27th, 2020 | by Emergent Enterprise


How Could COVID-19 Change AR/VR’s Future?

Emergent Insight:
Like every other industry, the global pandemic is having a profound effect on the immersive technology industry. What are the specific emerging impacts on augmented and virtual reality solution providers? Tim Merel shares some of these at VentureBeat including both positive and negative outcomes. The companies that will succeed will be those that adapt to the “new normal” the best. By evaluating areas like audience needs, context for using the product or service and their technological setup will lead AR/VR providers to new methods that could even result in more customer engagement and revenue.

Original Article:
Photo by Lux Interaction on Unsplash

COVID-19 is impacting the lives of billions. Early-stage technology markets like virtual and augmented reality are trivial by comparison. However, AR/VR companies are dealing with knock-on effects both positive and negative. This analysis explores the potential future for AR/VR in the context of the silent cyclone we’re all going through.

Digi-Capital’s long-term virtual and augmented reality forecast is for the AR/VR market to reach around $65 billion revenue by 2024. However, the next two years are forecast to be impacted by COVID-19-related factors including (but not limited to) physical lockdowns, brick-and-mortar retail closures, essential ecommerce delivery limitations, supply chain disruption (supplier, manufacturer, distribution, wholesale, retail) and recession/depression economic impacts. Although these and many other factors have far greater implications, let’s define what we mean in relation to AR/VR:

Physical lockdowns: Much of the planet is in different stages of physical lockdown, making getting together impossible or illegal in many parts of the world. This is exacting a terrible toll, but it could turn out to be a net positive for AR/VR adoption and use. Families and friends catching up and socializing remotely, enterprise users collaborating within their own organizations and with others, and service providers carrying on business remotely where possible, are a few examples of activities where AR/VR could help. AR/VR use cases are in some ways only limited by the nature of the interactions (such as where they can be done virtually rather than physically) and the imagination of developers and users. So physical lockdowns could become a critical demand driver for AR/VR in the short to medium term.

Brick-and-mortar retail closures: The crisis has been devastating for physical retail, bringing the sector to a standstill and accelerating some long-term trends by years (if not decades). For brick-and-mortar stores that survive, their future appears to be fundamentally changed short-, medium-, and long-term. At first blush this could benefit AR/VR, but there are specific aspects which might not be as positive.

Essential ecommerce delivery limitations: Ecommerce trends appear to have been accelerated at an unprecedented rate by the crisis, which on the face of it could be positive for AR/VR. However, there are limitations being imposed on eCommerce deliveries in some categories by giants like Amazon, which could counter some of the benefits.

Supply chain disruption (supplier, manufacturer, distribution, wholesale, retail): Global supply chains across sectors have been optimized to keep customers happy and costs down. While the U.S.-China trade war had already begun to have an impact on global supply chains, the crisis has been far more significant. This is as true for AR/VR as any other industry.

Recession/depression economic impacts: Depending on which economists turn out to have been right, the world appears to be going into a recession or depression the likes of which is in living memory only for the elders in our communities. Of all the factors we’re looking at, this could prove most critical for AR/VR’s future.

AR/VR sector impacts

In the context of these five factors, we’ll examine the impact on major AR/VR business models across hardware sales, ad spend, ecommerce sales, enterprise (ex-hardware), app stores, location-based entertainment, and video.

AR/VR hardware sales

Physical lockdowns could be a plus for AR/VR hardware demand, as individuals and businesses look to stay connected during the crisis. However, brick-and-mortar retail closures might be a net negative for AR/VR hardware, as mass consumers beyond early adopters might not be able (or in some cases willing) to try before they buy. Arguably, this is a bigger deal for AR/VR headsets than familiar technologies like smartphones, tablets, PCs, and consoles. It is also too early to fully understand the long-term behavioral changes around trying on something in a retail store that is worn on the face.

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The Emergent Enterprise (EE) website brings together current and important news in enterprise mobility and the latest in innovative technologies in the business world. The articles are hand selected by Emergent Enterprise and not the result of automated electronic aggregating. The site is designed to be a one-stop shop for anyone who has an ongoing interest in how technology is changing how the world does business and how it affects the workforce from the shop floor to the top floor. EE encourages visitor contributions and participation through comments, social media activity and ratings.

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