Record $2 billion AR/VR investment in last 12 months

July 2016

Pikachu Gif

“Gotta catch ’em all”

Pokémon Go isn’t the only breakout AR/VR success this year. Early stage VCs and corporates invested a record $2 billion into AR/VR startups in the last 12 months, despite the market still being in its earliest stages.

As the fourth wave of platform change (after PC, online and mobile) kicked off this year, the smart money is making significant bets on companies with the potential to survive the early stage market and dominate in the long term. Fortune favors the brave in early stage investment markets, and nobody wants to be part of the “Oops I missed it again” crowd (as Qualcomm Ventures Jason Ball puts it). The FOMO is strong with this one.

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The reality of AR/VR survival

July 2016

Everest Base Camp signVR will be big, AR will be bigger (and take longer). But as in most early stage tech markets, growth will be curved, not straight. There will be a few billion dollars revenue this year, a progressive ramp in 2017, and a hoped for inflection point in 2018 (when AR could deliver that magic combination of hero device, long battery life, cellular capability, strong app ecosystem and telco cross-subsidization).

But AR/VR is still in the first of the four stages of tech market development (hype cycle, facing reality, liftoff, sustainable market). Its installed base, from low-end Cardboard through high-end HoloLens, is unlikely to top 100 million until 2018. So how can AR/VR startups survive when long term AR/VR business models won’t have the scale they need to thrive for 18-24 months? You just need to know where to look. So let’s look.

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Virtual, augmented and mixed reality are the 4th wave

July 2016

The Great Wave off Kanagawa

Consumer computing platform changes aren’t straight lines, they’re waves. PC, internet and mobile were the first 3 waves, and each was faster, larger and more disruptive than the last. Now the fourth wave of virtual, augmented and mixed reality is bearing down on us, so let’s dive in. The water’s fine.

Digi-Capital Platform Waves

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Record $18.6 billion games M&A to Q2 2016

July 2016

Games M+A to Q2 2016Games M&A hit a record $18.6 billion in the first half of the year, in a clear sign of late stage market consolidation. The biggest deal was the massive mobile consolidation of 84.3% of Supercell by Tencent for $8.6 billion at a $10.2 billion valuation in Q2, after King’s $5.9 billion acquisition by Activision-Blizzard closed in the first quarter. But those whoppers weren’t the only mobile games companies changing hands, with CMGE being acquired in a reverse merger in China after delisting from NASDAQ last year, Vivendi muscling its way back into games with Gameloft, as well as more take privates and share buybacks rounding out the major transactions. After last year’s games ice age saw deals drop by 81%, games M&A in the first half of 2016 is up nearly 1,000% compared to the rate of deal making in 2015.

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