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Changing realities: how the XR market is growing

Both the augmented reality and virtual reality markets are big business for tech companies. With potential application for both consumer and business use, the world of augmented, virtual and mixed reality, also known as XR, is constantly growing.

Delving deeper into the VR sector, Research and Markets recently revealed that it is expected to grow to $44.7 billion by 2024.

The penetration of HMDs (head mounted displays) in the gaming and entertainment sector, huge investments in the VR market, advancement of technology and growing digitisation, and the availability of affordable VR devices are all noted as major factors fuelling the growth of the overall market.

Looking at the use of virtual reality in the gaming and entertainment sectors in particular, and Research and Markets says this has been a notable growth driver, but points out that the lack of awareness regarding the advantages using VR devices is a major challenge for the industry.

“The market is clearly growing in a number of areas,” Ross Holt, global head of gaming at distributor Exertis, tells PCR. “Steam recorded a record number of VR users connected to their platform in March and whilst it doesn’t represent the overall VR market, reports estimate that there were 1.7 million users with expectations that it could reach 3 million monthly-connected headsets on Steam around January 2021.

“Furthermore, the market continues to attract big players, evidenced by the recent announcement that HP, Microsoft and Valve are working in collaboration to develop the next generation of VR headsets for PCs.”

Holt highlights Oculus as a “clear market leader” with its entire range (Quest, Rift S and Go) selling at unprecedented levels. “There has been increased demand for VR products in all of our countries, exacerbated by the current ‘stay at home’ situation. This has coincided with Valve (owner of the Steam gaming platform), releasing the newest instalment of the hugely influential Half Life series, Half Life: Alyx, in VR.

“From a software point of view this is a very important release for VR, particularly as Valve redefine a genre with most of their titles, and Alyx has been met with rave reviews.”

Elliott Myers, founder of gaming chair brand Roto VR, agrees that Oculus and the new Half Life title are big news in the VR world right now.

“Oculus Quest and Valve Index are the go-to hardware devices presently,” he says, pointing out that Half Life: Alyx has just broken “every record in terms of downloads, quality ratings for a VR game (or any game, actually) and also simultaneous play (in VR)”.

But what opportunities does that offer up to tech retailers, especially in the current climate?

“Recent events have postponed many of this year’s XR announcements, but I think what COVID-19 is doing is forcing people to look at the future of humanity earlier than they would otherwise,” Myers tells PCR.

“What do I mean by that? Well, remote conferencing has pretty much overnight swept away many traditional business practices, and from an XR-tech standpoint, virtual reality will soon be able to enrich these remote meet-ups to the point where people actually feel like their sharing a physical space – thus feeling less remote. This will underpin a future of less (and unnecessary) carbon-based travel of which plenty of investors in this sector would be happy to support.

“According to Roadtovr, VR hardware and software has been growing exponentially since 2019, but this hasn’t really translated to traditional retail sales so much,” points out Myers.

“Before COVID-19 there was a growing trend towards ‘retail-tainment’, where customers were encouraged to spend time in- or-around the store to pass time and try out products. But XR products in particular didn’t translate too well, as the swapping, cleaning, making physical space, etc, was just too clunky and unproductive. XR products are best sold online, which is a pity, because these types of products greatly benefit from customers trying them out first-hand.”

Augmented market

Looking closer at the augmented side of the XR market, and Reporter Link recently revealed a report showing that the global augmented reality market size is estimated to grow from $10.7 billion in 2019 to $72.7 billion by 2024.

“AR technology is anticipated to continue its growth in the software segment through the emergence of various nestling projects that will evolve into large-scale productions,” says the report.

“Recently, numerous companies have experimented with augmented reality prototypes. For instance, companies such as IKEA and Walmart have already launched AR prototypes to enhance the shopping experiences of their customers. Thus, the software segment is set to grow because of the high growth of the number of apps and platforms in the AR space.”

Exertis’s Holt notes that AR glasses – where you can see the real world overlaid with digital objects – haven’t been developed sufficiently as a consumer product yet and are “some way off becoming mainstream”, highlighting that in the current climate, developments in these areas and new releases are likely to be delayed. “However, expect to see some lifestyle brands entering the market for AR glasses in the future,” he says.

Both Holt and Roto VR’s Myers believe that there are some interesting developments to come with regards to XR being sold at retail, as well as being used by retailers themselves.

“There will be opportunities for retailers and tech resellers to sell more XR products whether that’s for mobile, smart glasses or headsets. Gaming will be the biggest category in the consumer sector but applications in business are many and varied. Perhaps the biggest obstacle will be product supply and development in the current climate,” suggest Holt.

Myers says he is “hugely excited” about VR in retail, indicating that stores will be key in communicating the concepts that will help them shift the boxed products.

“We’d love to discuss the possibilities with potential retail partners,” he says. “Meanwhile, in a B2B sense, chains stand to benefit hugely from XR, as Walmart has shown by adopting thousands of Oculus Go headsets to help train their staff.”

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