Investment in virtual and augmented reality is heating up

Apple may be getting more serious about developing a VR headset

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Investments in augment reality (AR) and virtual reality (VR) companies reached $2 billion in the 12 months to June 2016, according to data from Digi-Capital.  

Making up the bulk of the investments in the past year was Magic Leap’s $793.5 million Series C round led by Alibaba, with participation from existing stakeholders Google, Qualcomm Ventures, and a host of new investors. Altogether, Magic Leap accounted for 40% of the total invested into AR/VR over the last 12 months. At the same time, $2 billion of investment in one year seems less significant considering Facebook has spent that much on a single transaction — the acquisition of Oculus in 2014.

That being said, AR/VR is widely perceived to be the next level in platform evolution, after PC and mobile. In this regard, there are many applications for this new technology as it relates to the digital media industry:

• Leveraging VR for more compelling storytelling. At a time when consumers have more and more choices to obtain the news, VR can provide a unique ways for companies to attract and engage audiences. The BBC, for instance, has rolled out a number of VR projects to create immersive and interactive content for their readers.  A journey into the plight of refugees, a virtual tour of the Roman Pantheon, and a historical documentary about Ireland’s 1916 Easter Rising are a few recent examples from the BBC.
  
• Leveraging AR for inventive advertising. Snapchat’s use of Sponsored Lens, and Pokémon Go’s recent success with AR content – including sponsored locations – points to the potential and possible applications of AR advertising. Currently, AR advertising is an untapped field with room for significant growth, and ad agencies are in the midst of figuring out this nascent space. The companies that establish themselves as first movers will reap enormous dividends.   

The tech industry has promoted the prospect of VR for the past few decades. But only now, with headsets backed by big names like Sony and Facebook, is VR finally becoming a concrete product with mass market potential. While VR technology is largely associated with the gaming industry, the platform offers a new set of content opportunities in entertainment, advertising, and more.

But where is it all going?

Margaret Boland, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on virtual reality content that examines how various VR headset categories will shape VR content development and looks at the trajectory for mobile gaming revenues to get a sense of how spending on VR content might develop. The report also lays out what types of content users and developers can expect on VR platforms, including gaming, video entertainment, and advertising.

Here are some key takeaways from the report:

• VR headset manufacturers are driving both the development and distribution of VR content by investing significant technical and monetary resources in developers, in an effort to build up an exclusive content library.
• High demand for VR headsets by mobile and console gamers will fuel demand for VR content. The VR content market will take an increasing portion of the mobile gaming software industry.
• Beyond gaming, VR video entertainment will remain short form until demand for VR headsets increases.
• Ads featured on VR headsets will likely have higher view-through rates than standard video ad spots.
• Other industries are also beginning to experiment with VR content. Travel companies, publishers, e-commerce merchants, and social platforms are beginning to see potential in this new category.
• VR content faces major hurdles that could keep developers from investing: The VR experience must be good enough for people to take up the devices. In addition, developers need to know that a sufficient user base exists to be worthy of the resource investment in VR content.

In full, the report:

• Provides a breakdown of each type of VR headset, what platforms they run on, and how content will differ for each.
• Includes estimates for global VR headset shipments by category.
• Includes a mobile gaming forecast to give a sense of the most important market that will drive spending on VR content in the next five years.
• Lays out what other industries are developing VR programs.
• Discusses some of the potential barriers that could dissuade developers from investing in VR content.

To get your copy of this invaluable guide to the VR universe, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the world of VR.