Digi-Capital’s new Augmented/Virtual Reality Report 2016 and AR/VR deals database captured $686 million of investments in augmented and virtual reality in 2015. There have now been 6 straight quarters of AR/VR investment growth, with a quarter of a billion dollars invested in Q4 2015 alone at nearly 6x the rate of mid-2014. The 2015 numbers are even more impressive considering that Magic Leap’s monster round from 2014 and even larger reported (but as yet unconfirmed by the company) round from late 2015 are not included.
(The installed base and revenue forecasts in this post are out-of-date and have been completely replaced here – see new Digi-Capital AR/VR Report Q3 2017 and @DigiCapitalist mobile AR YouTube channel)
Virtual reality could be big soon. Augmented reality could be bigger, but might take longer to get there. How big and how soon? Let’s look at what we learned in the last year and how that changes the mix and timing of AR/VR forecasts.
Timing is everything
Samsung/Oculus’ Gear VR launch was the starting gun for AR/VR 1.0, so what can we expect next year? Strap on your magic goggles, it’s immersion time.
Consumer VR 1.0
You couldn’t miss the electrons (digital and TV) and trees sacrificed to VR this year. While 90s VR was a poor beta, this time around it really is different. The new wave includes Facebook/Oculus, Samsung, HTC/Valve, Sony and Google amongst others (maybe even Nintendo?). Apple bought Metaio. These guys are serious, and it isn’t their first rodeo.
Augmented and virtual reality are the new hotness, as VCs and corporates get in on the act. While Facebook’s multi-billion dollar acquisition of Oculus got everyone’s attention early last year, it’s only in the last 12 months that investments accelerated.
The current bubble debate has polar opposites with Bill Gurley saying we’re in the middle of a tech bubble, and Marc Andreessen saying there’s no such thing. Tech adviser Digi-Capital’s new Mobile Internet Report Q3 2015 shows that the mobile market sided with Bill in the last quarter. Mobile internet stocks were down 15.7% in the 12 months to Q3, and the average valuation dropped in Q3 from $9 billion to $8 billion for the 105 mobile internet unicorns.