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Is AR the future of the VR market?

VR's immersive qualities may limit its commercial potential, and AR could be the technology to pick up the slack

The market for consumer VR market is now in full swing, but despite bullish forecasts from companies with large investments in the space, the rapid emergence of augmented reality technology seems increasingly likely to steal its thunder.

At the DICE Europe conference in Barcelona last week, Unity Technologies CMO Clive Downie made a knowingly "bold" prediction: within the next 10 years, the number of people interacting with virtual reality on a daily basis will reach 1 billion.

Downie acknowledged that, right now, we're in the "gap of disappointment" with VR, where the installed base is small, and the existing content, while good, is, "nowhere near what we've been promised." Nevertheless, Unity - one of the biggest players in the VR space - is "100% certain" that the technology will have a huge impact on the world.

"I think there's going to be a billion people in VR in the next ten years, and that's going to come from mobile"

Clive Downie, Unity

"Mobile is going to get us closer than ever," Downie said. "No disrespect to the excellent Vive and the excellent Rift... But really, mobile is where the scale is going to be. Back to my point earlier, I think there's going to be a billion people in VR in the next ten years, and that's going to come from mobile."

Downie mentioned Google Daydream as a "major unlock" on the way to reaching that dizzying number. This will partly be down to the introduction of a mobile VR controller, but the real catalyst will be a combination of Google's scale and the Android ecosystem. If the average Android user upgrades their phone every five years, Downie argued, there will be 1 billion Daydream ready phones out there at the end of that period. "This is a big deal," he said. "Daydream is a big deal."

Downie wasn't the only VR enthusiast to take the stage at DICE Europe, but there was one notable voice for the opposition. Klaas Kersting, CEO of the mobile focused Flaregames, expressed major reservations about the VR market ever growing beyond a niche concern.

"VR is very immersive. On the other hand, it's not very social," Kersting said. "You wear something on your head, you filter everything out that's around you... That creates a hurdle to using these devices. Even if the technology gets smaller and more digestible, that will still be there.

"Nobody wants to wear several kilos on their head... It's something that will go away with time, but it will take a while. And it will take longer than people think."

"VR encloses and immerses the person into an experience that can be really cool but probably has a lower commercial interest over time"

Tim Cook, Apple

This is particularly relevant to Downie's trojan horse: mobile VR. Many of the qualities that make smartphones such an attractive (and vastly popular) platform for gaming are undermined when a VR headset is involved. Speaking at Casual Connect USA this year, Otherworld Interactive's Andrew Goldstein pointed out that, "mobile VR is much more about VR than it is about mobile. To me, it doesn't feel like a phone game; it feels like a VR game. It's more like Oculus Rift than it's like your cellphone." And if that's the case, it's fair to question just how many of those 1 billion Daydream-ready phones will actually used to sample the delights of virtual reality.

However, while Kersting was dismissive of VR specifically, he had a different take on another emerging technology. "There will be something that's more immersive," he said. "There will be something that blends realities - the real world with gaming - but I would guess that it would be more like AR - an AR lens, or AR glasses."

The idea that AR devices might eventually supercede VR headsets has been put forward before, not least by Epic's Tim Sweeney, who told the crowd at this year's China Joy that, "AR will be the biggest technological revolution in our lifetimes." The open question for Sweeney was how long VR had before AR hardware made it surplus to the majority of requirements. That may be the window in which platforms like Rift, Vive, Gear VR and Daydream have to overcome the kind of obstacles that Kersting described - some of which are more grounded in social and behavioural norms than the technology itself - and it's a window that may not be open for too much longer. The heavily funded AR startup Magic Leap, for example, has forecasted widespread penetration for its device within the next five years.

"AR is the direction that I think is far more interesting and promising - for technology and, really, for humanity"

John Hanke, Niantic

The eventual primacy of AR over VR is now an increasingly common point-of-view. This week, Apple CEO Tim Cook told Good Morning America America that AR will be "the larger of the two, probably by far," citing similar reasons to Flaregames' Kersting. "Virtual reality sort of encloses and immerses the person into an experience that can be really cool but probably has a lower commercial interest over time," he said. "Less people will be interested in that."

Niantic's John Hanke - who, admittedly, has a great deal to gain from AR winning out - expressed a similar opinion on the Recode podcast. "AR is the direction that I think is far more interesting and promising - for technology and, really, for humanity," he said. "In a VR situation, you're isolating yourself from everyone around you and entering this completely virtual space. AR is designed to add, enhance the things you do as a human being: Being outside, socializing with other people, shopping, playing, having fun.

"AR can make all those things better."

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Latest comments (12)

Renaud Charpentier Game Director, The Creative Assembly2 years ago
How about none of the 2 as far as gaming is concerned?
VR existing in a niche market where it brings real value (Cockpit games) and AR as a wide spread navigator overlay but limited to a few casual gamifications.

For a proper gameplay loop to happen for long you need rich input and clear output. VR will always struggle with rich input and AR will always struggle with clear output because of their very nature. That combined to the inevitable physical fatigue to use them and you have platforms that are and will remain incapable of delivering a continuous 2-5 hours tight gaming experience. It wouldn't be the first time, Kinect did work, technically, it just never proved a necessary input method. Interestingly, after a huge success with the WII, where are the next generation Wimote controllers and games? Nowhere, because it was impressive for 10 minutes, fun for 30... then players went back to their mice and pads.

My bet: in 10 years the current input and output methods will still vastly dominate the gaming market, it is probably the type of games that will evolve: the contend, not the medium.

Edited 1 times. Last edit by Renaud Charpentier on 22nd September 2016 11:26am

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Adam Campbell Game Manager, Azoomee2 years ago
VR enables experiences simply not possible in AR i.e. a completely digital world and viceversa. I don't think one is set to replace the other.
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Nick Parker Consultant 2 years ago
I wouldn't like to second guess but we ain't seen nothing yet. Too early to judge winners or losers but both will make a significant impact on gaming in their own ways and at different times.
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Show all comments (12)
Jeff Kleist Writer, Marketing, Licensing 2 years ago
I've been saying this for quite awhile. Anything that creates isolation, or forces a singular focus outside of a specific environment strictly intended for it is not going to achieve mass market, and that AR is going to take what we learn from VR and make it big.

It's all about putting grandma in the room on Christmas morning.
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Klaus Preisinger Freelance Writing 2 years ago
For decades, the gold standard was getting the game to the customer. Cheaper hardware, new devices and platforms to play on, new emerging markets to capture.

I do not think AR fits into that picture quite yet. It turns the old idea of getting the game to more people on its head. No AR game is coming to the player, instead, the player has to get out to meet the game. Not to mention adding a layer to the world through AR lenses that works in both rural and metropolitan areas.
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My bet: in 10 years the current input and output methods will still vastly dominate the gaming market, it is probably the type of games that will evolve: the contend, not the medium.
I couldn't disagree more, in 10 years I think 2d screens will still be commonplace, but will be considered older obsolete tech. VR and AR are the future, the applications are just to enormous to think otherwise. VR and AR tech will slowly and surely reach into every part of daily lives.
Anything that creates isolation.....
sure, but I dont get this idea that VR causes isolation. All the millions of people who play MMOS's are they considered isolated in their little apartments? Are we right now isolated typing on the internet, I'm alone sitting in my office, but yet Im not alone am I? VR is just going to open up incredibly new captivating meeting places for people. Facebook gets that, they understand its the future, Im not sure why others still think VR will be isolating. Are you really isolated if you and friends are sitting around a virtual beach talking, laughing and enjoying each others company in real time?

Edited 3 times. Last edit by Todd Weidner on 22nd September 2016 2:06pm

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Renaud Charpentier Game Director, The Creative Assembly2 years ago
3D TVs anyone? Billions were put behind these, they work, but they never happened... the next evolution for TVs is HDR + 4K still on the "old" 2d screen format.

Because a new technology appears and "kind of" work doesn't mean it will prevail as there is a social penetration factor to consider. You look dumb using a VR headset, not cool... and you are alone, isolated, that won't help. Also, for AR, remember the social reaction to Google Glasses? It was literally a punch in the face...

We have Skype and humans still take planes to discuss contracts or have final job interviews.
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Andrew Goodchild Studying development, Train2Game2 years ago
If someone is able to create an affordable set up that does both well for reasonable cash, then you have a potential winner.
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Ethan Einhorn Director of Marketing, Sidekick VR2 years ago
@Todd Weidner: I completely agree with Todd on this! Anybody who thinks that VR is inherently isolating has to try Alt Space VR or VTime. Social activity in VR is captivating, because you have a concrete sense of presence that is shared with everybody around you. It makes meeting new people comfortable and fun, and it's a great way to spend time with friends and family who live too far away to see in person. I think both have a big future, and they are so different that they aren't really competing with one another to begin with.
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Craig Page El Presidente, Awesome Enterprises2 years ago
Why is isolation a bad thing? It helps a lot with immersion.

I'll go with AR in places where I could get run over by a car, or walk off a cliff. And VR everywhere else.
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Ruben Monteiro Engineer 2 years ago
the next evolution for TVs is HDR + 4K still on the "old" 2d screen format.
Really? What's the use case for 4k? The only way to notice the pixels vs 1080p is to stand so close to the TV, you'll ruin your neck trying to watch it.
4k is needed in VR screens, not TVs.
and you are alone, isolated, that won't help
I always find this argument amusing. Where does this idea come from that VR turns people into anti-social hermits?
Have you ever considered that perhaps you don't need to be constantly surrounded by people and interacting 24/7?
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Jeff Kleist Writer, Marketing, Licensing 2 years ago
HDR is the selling point of 4K, not the resolution outside of enthusiasts.

As someone who has been involved in 3D for the better part of a decade, anything that creates isolation is a turnoff to the mainstream consumer. That's why they're pushing the secondary monitor/tv output so hard on PSVR.
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