How are AR and VR being commercialized?

Artificial reality and virtual reality are rapidly becoming part of our everyday lives. In this blogpost, we look at use cases powering this growth across four industries—retail, entertainment, manufacturing, and healthcare— and discuss the challenges of adopting AR and VR in the real world.

September 12, 2018
• by
Vivek Sharma

As the popularity of artificial reality (AR) and virtual reality (VR) grows, these new technologies are set to take over our screens. With the phenomenal success of Pokémon GO, we’ve caught a glimpse of the commercial possibilities of these technologies. Since the terms AR and VR are often confused or used interchangeably, let’s start with definitions.

In AR, digital content, like displays, text, sound, or video, is added to a device screen, making these additions part of the physical world being displayed. In this way, digital content augments reality—hence the name, augmented reality.

Most smartphones come with AR software in their mobile operating systems. ARKit for Apple devices and ARCore for Android devices enable developers to build AR mobile apps. At their core, as Ars Technica describes, both systems “do a lot of the heavy lifting for app developers in terms of working with the device’s camera, scanning images and objects in the environment, and positioning 3D models in real space and making them fit in. They combine device motion tracking, camera scene capture, advanced scene processing, and display conveniences to simplify the task of building an AR experience”.

In contrast, VR refers to a 100% computer-generated view of the world. That view could be a digital rendering of the physical world, fully creatively imagined or a combination of reality and imagination. To use VR, users cover their eyes with a VR headset (e.g., Oculus or Vive) or smartphone VR accessory (e.g., Google Cardboard or Samsung Gear) alongwith, in some cases, VR gloves and body suits. The sensors on VR accessory pick users’ movements to simulate an immersive and (almost) real time virtual environment.

In a previous blogpost, we talked about the rapid convergence of the physical and digital worlds. Both AR and VR technologies straddle the line between these worlds, offering vast commercial applicability. According to TechCrunch, AR could reach 3.5 billion installed base and $90 billion in revenue by 2022, while VR is expected to hit 50 million installed base and $10+ billion in revenue.

In this blogpost, we look at use cases powering this growth across four industries—retail, entertainment, manufacturing, and healthcare— and discuss the challenges of adopting AR and VR in the real world.

In the retail industry, typical AR/VR use cases center on helping shoppers answer three questions: How does it look on me? How does it look in my home? And, how can I find or buy a product? For example, L’Oréal recently announced AR-powered makeup try-on experiences using Facebook Camera for leading beauty brands. Meanwhile, Ikea Place is an AR app that helps shoppers get a feel for how furniture will look or fit into their homes, and Lowe’s AR applications assist shoppers with designing and visualizing projects. Finally, Zara’s AP applications show shoppers models wearing selected apparel when their mobile phones are within a shop window-scanner’s proximity.

In terms of entertainment, games like Pokémon GO are the torchbearers of AR adoption, and over 47% of the 13 million AR apps built on Apple’s ARKit are games. MarketWatch expects the AR gaming market to grow at a compound annual growth rate of 150%+ to reach $285 billion in revenue by 2023. Beyond games, AR and VR are being used by leading museums around the world to create more immersive and informed content consumption; for example, the French National Museum of History has a dedicated VR room that “highlights the origin of life on earth as well as how human being[s] influence [their] own environment”. Even in the hospitality industry, Airbnb uses AR through 360˚ photos and 3D scans to help guests step inside a host’s home or city to see what they can expect while away from home.

AR and VR in manufacturing have, so far, been implemented in operations and employee training, although new uses for the technology continuously appear. In most operational environments, information is found on screens, papers, binders, and boards, and operators must step away from the task at hand and use their hands to find what they need. To solve this problem, manufacturers are now using AR-enabled smart glasses (e.g., Google Glass and Microsoft HoloLens) to deliver real-time, hands-free (and potentially voice-controlled) access to information about relevant objects in the field-of-view of operators. For example, a warehouse worker can use AR to get pertinent, real-time information about shipments, including their contents, destination, and origin, simply by looking at it through a pair of smart glasses. Forrester expects over 14 million U.S. workers to use smart glasses by 2025.

In terms of employee training, Lockheed Martin started using AR to expedite technician training for manufacturing Orion vehicles for NASA—with impressive results; “before, for example, technicians used paper instructions or 3D models on a computer in certain manufacturing processes of Orion. Now, instead of having to look through binders of data or content on the computer across the room, they can wear an AR device, such as HoloLens, which overlays instructions for drilling or applying torque to specific parts of the spacecraft…  [as a result] The time it takes for a technician to ‘ramp up,’ or to understand the drilling processes, has been reduced from eight hours to about 45 minutes using augmented reality headsets.”

The use of AR and VR in healthcare is, perhaps, the most important to our well-being. Innovative use cases for these technologies in the healthcare industry include mapping patient bodies, creating distractions from pain while treating patients, and aiding physician training. Doctors at Cedars-Sinai Medical Center have used VR headsets with immersive content to distract more than 2,500 patients from pain during procedures. Notably, VR therapy is used by nurses and doctors to treat burn victims through the SnowWorld application, which helps patients deal with the physical and psychological pain of burn treatment. And, a Cleveland clinic uses a VR-based curriculum to teach clinical anatomy to students, while some hospitals digitally record rare surgeries to provide immersive virtual experiences to train surgeons.

Based on the strength and diversity of these use cases, why haven’t AR and VR gone mainstream? In a survey by eMarketer, 40% of respondents rated ‘bulky hardware and technical glitches’ as the #1 obstacle to mass adoption of these technologies. These challenges are certainly true right now, but they are certainly not insurmountable. The evolution of other technologies prove this—the first computers were the size of a room and the first mobile phone weighed 2.5 lbs. As AR and VR technologies continue to provide compelling use cases with commercial viability, miniaturization is inevitable.