It’s not the first time that technology buffs have over estimated the rate at which a new technology will be adopted by the mass public. Like Google Glass or the Segway before it, Virtual Reality was set to be the next big technological revolution. That hasn’t quite happened as quickly as many VR fans expected it would, and the adoption of VR technology has been sluggish.
We still have our minds busy using our cell phones, with consumers only purchasing a meager few million VR headsets, while the Apple iPhone sells more than 200 million units. As we await the results for 2017, the numbers are not expected to improve by much. For one reason or another, the visible adoption of virtual reality just hasn’t truly happened.
There is still hope however, as venture investment in the technology hasn’t slowed down at all. The available funding for virtual and augmented reality start up companies is basically at the same level as last year (2016), according to an analysis done by Crunchbase News. There may even be a funding increase in the works with investors recently jumping into Niantic (makers of the popular Pokémon: Go AR game) to the tune of $200 million (USD). A pack of investors led by Spark Capital, but also including Meritech, Founders Fund, NetEase Inc. and a couple others, have provided this massive funding injection as Niantic gets ready to launch a new Harry Potter based game. The game will take over where $1 billion in revenue giant, Pokemon: Go left off, using augmented reality to bring the world of Harry Potter to life in our streets and cities.
The trend extends to the whole VR and AR industry too, as more than 200 companies have secured more than $2 billion in funding in 2017. This funding is almost on par with that of 2016 but the number of deals itself is lower (almost 400 deals in 2016 and only about 260 in 2017). These numbers aren’t conclusive as there may be appreciable lag time due to the reporting of seed-stage financings. Out of the more than 200 companies in the game, only 11 or so have secured funding in excess of $100 million.
Magic Leap, a Florida based company that specializes in wearable cinematic VR technology brought in a whopping $1.88 billion in funding for 2017. Unity Technologies of San Francisco comes in second place with a boost of $689 million to fund VR and AR game development. Los Angeles “enterprise augmented reality” company DAQRI secured $275 million, Niantic (mobile AR game developer) $225 million and the company Lytro, who produces VR imaging technology sourced $216 million. These are the only companies to break the $200 million (USD) mark in 2017. Looking at the companies receiving these large amounts of funding, their business goals range widely. There are developers for cinematic VR, VR/AR gaming, VR/AR for enterprise, AR mobile gaming, VR/AR imaging technology, VR/AR assisted rehabilitation, VR/AR connected electronics and more. It goes to show that the industry and the technological uses are not fully sorted and applications are still being discovered.
With all this funding that’s being provided, investors have yet to see the forecasted returns. Most venture-backed VR and AR companies have yet to go public and one would be hard pressed to find many that are even at a stage where that would be an option. That being said, several “big boys” are getting in on the action, with Apple buying Vrvana (an AR headset developer) for $30 million and Google purchasing Oelchemy Labs, a VR game developer. Apple and Google aren’t alone in their speculation as most of the Global Top 20 technology companies have dedicated efforts around the VR and AR industry.
Most of this funding has yet to have any implications for consumers waiting for new devices and software, as it is allocated to mostly research and design applications. VR/AR video games and VR pornography are still two of the biggest drivers and the most common consumer applications. There’s lots of games out now or being released for consumers to look forward too and VR porn tube sites like Pornhub or VRSmash are becoming much more common, acting to drive consumer adoption of VR and AR technology.
The technology is still being refined and it seems that investors still think of it as the next big thing. Applications ranging from automotive design, to healthcare or rehabilitation, teaching support tools and much more, will keep the industry keen on developing the tech further.
Even if headset sales and adoption of the technology has been slow, it seems that we shouldn’t give up on virtual and augmented reality just yet. These technologies are inherently cool and may well still be destined to shape our technological future. There are just too many applications where VR and AR would be beneficial. As the technology continues to mature and more viable applications present themselves, the market could quickly gather momentum, finally becoming what it was always supposed to be.