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How AR Acceleration has Overtaken VR: Gaming vs. Everyday Application

AR has become the new buzzword within technology circles, but those who have been following the new mediums expected this day to come.

Augmented reality (AR) has speedily risen in popularity over the course of 2017. While those affiliated with virtual reality (VR) have been discussing the impending arrival of the passthrough medium for years – citing technology from the likes of Magic Leap as a basis for something groundbreaking – it’s simple success stories from the likes of Pokemon Go and Snapchat that have resonated with the public en masse. And now, thanks to the arrival of Apple ARKit and Google ARCore, AR will soon be available to millions of people worldwide without necessarily requiring a new hardware investment.

Apple Visitor Centre ARAR and VR have become a two-track market, with mobile AR soon to have over twice the installed base at launch in 2017 than the entire AR/VR headset market is likely to benefit from by 2021. Apple ARKit, Google ARCore and the Facebook Camera Effects platforms could have 900 million installed base by the end of 2018, with their launch changing the trajectory of the whole market. However, mobile AR is just one leg of the medium – arguably the same entry level experience as a Google Cardboard has been for VR – and the market will dynamically shift into high-end AR in a similar fashion to that which has seen VR gear itself towards the Oculus Rift, HTC Vive and PlayStation VR.

While mobile AR will dominate the medium for the foreseeable future, it remains a technology best suited to smartglasses application. An argument exists that VR now has a diminishing market potential thanks to the sudden boom of AR, however the presiding opinion is that the two technologies will merge in time, largely due to the fact that both require a head-mounted display (HMD) for optimum use of their respective assets.

AR and VR may appear to be competing markets at present, but this is only in the short term. Eventually, premium VR will accelerate to the point at which it makes logical sense to include AR functionality on-board the same device as a new high-end standard. Of course, it would be hard to pinpoint exactly when such a transition will occur – the technologies behind both AR and VR have changed dramatically in just the last two years – but this will likely become a standardised product before high-end AR becomes a mass market product.

Digi-Capital AR/VR Revenuw Forcast Q4 2017

Digi-Capital’s AR/VR revenue forecasting has taken has changed significantly in the wake of widespread mobile AR, as can be seen in the chart above. However, the basis upon which this assessment was made appears somewhat short-sighted: is AR truly accelerating ahead of VR? Was it not the Samsung Gear VR and Google Cardboard that truly began installing the idea of VR in the collective social consciousness? Two formats which are arguably past their prime with two years of their respective launches. Where mobile AR is almost certain to dominate the install base, it doesn’t necessarily mean that it will push back against premium VR content for revenue share. In the same fashion as the Samsung Gear VR, mobile AR software’s economics are similar to the broader mobile market in that a vast amount of users are unlikely to invest financially in software until it has been proven beneficial in someway – be it entertainment or productivity – resulting in much higher adoption rates than premium content but potentially lower revenues.

eCommerce is likely to be the sector which benefits from mobile AR in the short term, albeit indirectly. Opposed to delivering monetised AR content the technology will likely be used for upselling: we’ve already seen dozens of applications allowing users to see how they would look wearing a new type of makeup, glasses or even adding new furniture to their living rooms.

Envisioned by The Mine allows users to view digital products from The Mine, a premier online destination for luxury home furnishings and Lowe’s Company, at scale, in their own space, leveraging new augmented reality capabilities Apple introduced with ARKit.


Digi-Capital’s completely revised Q4 2017 Augmented/Virtual Reality Report for mobile AR, smartglasses, premium VR and mobile VR market segmentation, makes a lot of assumptions about a market which is far from being proven, but then that is the company’s raison d’etre. The one sentiment that can be appreciated by all is that Apple will most likely act as the catalyst for AR, so any potential launch of mobile tethered smartglasses as an iPhone peripheral could be the driving force for the consumer smartglasses market in the near future. Should such a product exist, VR will most definitely find that long road ahead grow much longer very quickly.

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