The State of Immersive Technology: Virtual Reality and Augmented Reality Markets

Augmented reality (AR) and virtual reality (VR) technologies have been continuously growing for the past years. According to the latest report from PRNewswire, the global AR/VR market is expected to increase by 162.71 billion from 2020 to 2025, a CARG of 46%. Also, as per Crunchbase report, in 2021, VR/AR startups received nearly $3.9 billion of venture capital, which makes it the second-best year for VR/AR investment.

There are a number of factors contributing to the exponential growth of the AR/VR market.
From metaverse to the drastic improvements in technology to the increasing number of use cases outside of entertainment, AR/VR market is destined to grow further.

Pandemic has also played a pivotal role in accelerating the VR/AR market growth. For example, HTC decided to hold its 2021 developer conference online in VR. Consumers also experienced a massive paradigm shift, resulting in many of them buying VR for entertainment and satisfying their social needs from home. Researchers from the University of Illinois have found out that those, who bought a VR headset during the pandemic were more likely to use it further for work and education.

Opportunities for enterprise VR/AR are abundant. For example, in 2021 Osso VR, an SF-based virtual reality startup focused on medical training closed $72 million in Series B funding. In a nutshell, more companies find it to be more cost-effective and scalable than traditional training practices. The tipping point for enterprise VR/AR adoption might be close, and businesses should seriously consider exploring these technologies.

It’s evident that nothing compares to real-world experience. The other end of this spectrum is theoretical learning, which anyone has to go through before the actual practice, be that driving a vehicle or learning how to repair a production line. VR/AR-enabled training capabilities are meant to bridge the gap between investing precious resources into practical skills and spending too much time on theory.

This is also reinforced by how humans naturally absorb information and learn. Over 65% of people are visual learners, i.e. those who are more susceptible to learning in a visual format. The rest of the major learning methods (kinesthetic and auditory) can also be entirely covered by VR/AR, as they engage all of these senses. 

Scientific evidence is there to back up these claims. For example, in a recent study by PwC, researchers reveal that VR learners are 275% more confident to apply skills after training and can learn 4 times faster than in classroom, concluding that VR learning can be more cost-effective at scale.

That’s why these technologies are already proving to be effective at training. As the technology continues to evolve and become more accessible, enterprises are becoming increasingly more interested in leveraging AR/VR for training and operations. According to the 2021 Perkins Coie report, 95% of organizations are planning to increase spending on immersive technology for better remote collaborations and training. For example, just last year, Accenture, one of the biggest consulting firms in the world, acquired 60000 VR headsets for employee training. Volkswagen has managed to reduce training time for the assembly of T6 multivan by 50% by introducing VR in the training experience.

Needless to say, this creates a significant ROI for the whole training and onboarding process. 

The opportunities presented by the virtual and augmented reality market across industries are bountiful:

• Using VR/AR to train medical professionals in equipment operations, diagnosis, and teamwork
• Training military and police personnel by simulating combat and emergencies. For example, NYPD is training its force to deal with active shooters in VR simulations.
• Making sure that employees are continuously educated on workplace safety and hazards.
• Training on customer relationship management for the travel and leisure industry.
• Training for extreme conditions and emergencies, like astronaut training at NASA.

It’s also important to note that VR/AR-based learning has the potential to significantly lower the cost of training:

• Employees don’t have to travel for practical exercises.
• VR/AR is incredibly scalable as the equipment is affordable, and software can be reused for an unlimited number of times.
• Safety and equipment integrity don’t have to be compromised, as everything happens in the digital world.
• The cost of training goes down with time, as the initial cost of producing a training program in VR gets shared among the numerous employees that reuse it. 

According to Grand View Research, the global AR market is set to grow at an unprecedented CAGR of 40.9% from 2022 to 2030. This development opens up new opportunities in marketing and advertising through immersive experiences, since around 50% of people globally are using different types of ad blockers to improve their experience. 

And this is where immersion could break the spell. Over a third of AR users consider marketing and advertising applications of the technology to be the most promising. It’s obvious why. Consumers want to be convinced and wowed. VR and AR provide the perfect opportunity to do that, especially when most people already carry a device that can enable this (like smartphones and tablets). 

Audiences treat product placement in VR a lot better than in traditional forms of advertising. One obvious explanation would be that VR is simulating the real world, where product placement is everywhere, from the bottle of Pepsi on your table to the strategically placed candy bar under your car’s windshield. 

While it may be harder to get a VR/AR marketing campaign off the ground due to higher costs, it’s also important to remember that the revenue potential, as well as brand recognition growth, can also be significant. This is where you have to figure out if it makes sense to launch this type of a campaign, and whether to do it on your own or engage an experienced VR/AR production partner. Otherwise, you might end up worse off. For example, a study by Purdue concluded that AR ads are significantly less effective than display ads, as 53% fewer people can recall AR ad elements.

It can be argued that it’s all about the execution and not just the fact that you’re running a VR/AR campaign. There are plenty of examples of successful immersive campaigns. Augmented reality can deliver over a minute of dwell time on your ad, with 30%+ conversion rates. Land Rover was able to keep users engaged past the 2-minute mark with their Land Rover Velar ad, achieving an impressive 38% CTR. 

Polar Studio has found out that dwell times on AR ads are four times longer than mobile video.

An AR-enabled device can be used to inspect parts and identify faults or misalignments. In this scenario, the device overlays an image of the part in its perfect condition (i.e. how it’s supposed to be built), and the technician then compares it to the results of their assembly.

Anything from remote collaboration with suppliers and colleagues in other warehouses to safety warnings and inventory counts. This could be achieved with immersive tech, reducing SCM frictions and improving the processes down the supply chain.

With the unrivaled focus on innovation, healthcare organizations are already exploring high-impact VR/AR applications.

Opting for healthcare mobile app development with VR components, healthcare professionals can cure a variety of visual disorders by building VR/AR exercises for eyes. In this case, instead of performing an imagined sequence of actions, patients go through an immersive experience designed to directly help their condition.

In this scenario, immersive technology can be used to superimpose diagnostic images over the surgery area. Such applications can also create a ‘transparency’ effect when the surgeon can see a virtual image of internal organs while performing a surgery. This could greatly improve patients’ safety.

VR applications for mental disorders could be set up to run exercises that treat anxiety. They can also place the patient in a more calming setting, improving the overall therapy immersion and experience.

There’s nothing virtual about the direct impact of VR and AR on businesses across the globe. Industry leaders have to make an effort and explore how immersive technologies can be applied in their niche.

It’s essential to learn from competitors or innovate if the competition is falling behind. However, companies have to be careful with use cases and execution, since a bad VR/AR experience may damage your brand or, if it’s used for internal purposes, even decrease productivity.