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TECHnalysis Research Blog

April 17, 2018
The Unseen Opportunities of AR and VR

By Bob O'Donnell

Some of the most exciting and revolutionary innovations to appear on the scene over the last few years are augmented reality (AR) and virtual reality (VR). At their core, these eye-opening technologies—and the many variations that lie between them—are fundamentally new types of displays that let us see content in entirely different ways. From completely immersing us within the digital worlds of virtual reality, to enhancing our views of the “real world” with augmented reality, the products leveraging these capabilities offer experiences that delight the minds and open the imaginations of most people who try them.

And yet, sales of AR and VR products, and adoption of AR and VR apps to date have been relatively modest, and certainly lower than many had predicted. So, what’s the problem?

To better understand the opportunities and challenges facing the AR/VR market, TECHnalysis Research recently completed an online survey of 1,000 US consumers ages 18-74 who own at least one AR or VR headset. Questions covered a wide range of topics, all intended to learn more about why people bought certain AR/VR devices, how they use them, what they like and don’t like about them, and much more.

The responses revealed a range of different insights—some expected and some surprising—and made it clear that consumers who know about, and have had the opportunity to try, AR and VR products are generally very enthusiastic about them. In fact, the overall tone of the comments made by owners of these devices was surprisingly positive.

A few key facts from the survey results provide a good overview of the AR/VR market. First, most people who have tried AR or VR headsets have used one that leverages a smartphone, with more than twice as many people making that choice over a PC or game console-based option. Standalone headset usage was even lower, at about one-quarter of the number who had tried smartphone-driven solutions. Overall, 76% of respondents had only tried one type of system, while the remaining 24% had used two or more.

The most popular choices among survey respondents were the Samsung Gear VR, Sony PlayStation VR, and “other” smartphone-based headsets, such as the many generic options that were available last holiday season. Interestingly, the Sony PlayStation VR and Samsung Gear VR also had the highest satisfaction levels among owners (see Fig. 1), suggesting both that the products providing the best experience for the money were the most widely purchased, and that the aggressive marketing pursued by these companies has been effective. Around 81% of respondents own one device, but the remaining 19% own an average of 3, highlighting a group of dedicated, and curious, AR and VR enthusiasts (and pushing the overall average number of devices per person to 1.4).

Fig. 1

One of the surprising findings from the study is that the frequency of using headsets was modest, with just 18% saying they used their headsets daily, while 38% reported weekly usage, and the largest group, at 41%, saying they only used them once or twice a month. The average session length across devices was a respectable 38 minutes, but the limited overall usage suggests concerns about limited available content, and an overall sense that, while they like the devices, they don’t like them enough to warrant more frequent usage. This, in turn, raises questions about pricing, because if the products aren’t used that frequently, it’s harder to justify (and harder for consumers to accept) higher prices. In fact, the products that did have the highest percentage of daily users were the HTC Vive, Windows 10 Mixed Reality headsets (from a variety of vendors), and Oculus Rift, all of which are priced higher than most other options on the market.

When respondents were asked to quantify the frequency with which they felt ill or queasy using an AR or VR headset, the numbers point out that this problem still exists. Thankfully, 56% of respondents said they never or only rarely have an issue, but one-third said it happens sometimes (defined as between 10 and 49% of the time they used a device), and 11% of owners said that queasy feelings occur frequently (50-100% of the time). Technology improvements around display refresh rates, reduced latencies and other advancements should reduce these numbers, but it’s clearly still a factor in preventing wider adoption.

Most of the study focused on AR and VR headsets, but the survey also included questions about smartphone-based AR app usage without attached headsets. Given all the hype around the launch of Apple’s ARKit for iOS and Google’s ARCore for Android, there have been high expectations for these new apps, but the survey results confirmed what others have reported: real-world usage is just so-so. About half of respondents use these kinds of apps at least once a month, but the other half either never used these apps or have tried several of them but have essentially given up. Given that the respondent base to this survey is generally enthusiastic about AR and VR and know/care enough about the technology to have purchased an AR/VR headset, the smartphone AR app numbers are definitely disappointing.

One reason for the modest numbers could be related to the most surprising finding of the study. Overall, respondents said they preferred VR over AR by a 3:1 ratio. Given all the industry discussion about how AR is expected to win the long-term technology battle, this certainly flies in the face of conventional thinking. Admittedly, more consumers have likely had exposure to VR than AR, but it was clear from many different types of questions throughout the study that the completely immersive experience offered by VR was one of the most appealing aspects of the technology. It was also surprising to see that the preference was consistent across the different age groups that took the survey (see Fig. 2)

Fig. 2

More than just about any other technology now available, using current AR and VR products highlights the potential future possibilities of what they will be able to do even more than what they currently can do. The ability to see both the real world and entirely new worlds in completely different ways is unquestionably a compelling experience. As the technology and market evolve, the enthusiasm in today’s consumers will only grow. The opportunities may be a bit slow in coming, and the technology is unquestionably in its early days, but there’s little doubt that both will likely surpass our current expectations.

(A free copy of highlights from the TECHnalysis Research AR/VR study are available here.)

Here's a link to the column:https://techpinions.com/the-unseen-opportunities-of-ar-and-vr/52695

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.

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