National Public Radio interview of Digi-Capital‘s Tim Merel about how Alibaba, Starbucks, IKEA, Houzz and others could drive AR eCommerce to become one of AR/VR’s largest revenue drivers by 2022.
[See full AR eCommerce sales forecasts from 2017 to 2022 across clothing, consumer electronics, automotive, furniture, health/personal care, toys/hobby, office equipment, food and drink, media and other eCommerce sectors in AR/VR adviser (reports/tools, company network, strategy consulting, investment banking) Digi-Capital’s 199 page Augmented/Virtual Reality Report and Database]
AR (mobile AR, smartglasses) could approach three and a half billion installed base and $85 billion to $90 billion revenue within 5 years. At the same time, VR (mobile, standalone, console, PC) might deliver 50 to 60 million installed base and $10 billion to $15 billion. That’s a pretty big difference, and it all has to do with AR’s ubiquity and VR’s focus. (Note: AR/VR adviser [reports/tools, company network, strategy consulting, investment banking] Digi-Capital’s new Augmented/Virtual Reality Report Q1 2018 base case is that even with 900 million installed base for ARKit/ARCore by the end of this year, AR/VR revenue will only start to scale in 2019)
To understand why the sister markets are shaping up so differently, we’re going to dig in to AR and VR’s installed bases, use cases, app store category revenues (IAP/premium), eCommerce category sales, adspend by industry, enterprise revenues by industry, and geographic splits. The devil’s in the detail, and this is the most detailed dive we’ve ever done.
Video games software/hardware combined could be in the $165 billion to $170 billion range this year (if mobile outperforms again), and reach between $230 billion and $235 billion by 2022 if strong performance continues. That might make games software/hardware bigger in 5 years than 150 countries’ individual GDPs today (somewhere between Vietnam and Finland). Games software alone could drive around three-quarters of total market revenue in 5 years, with hardware taking the rest. Games are great fun, but they’re also serious business.
AR/VR investment records were broken last year as startups raised over $3 billion across 28 AR/VR categories (over $1.5 billion in Q4 2017). Perhaps the most surprising thing was the bellwether of big AR/VR rounds, Magic Leap, becoming slightly less mythical by finally revealing its product and taking less than a fifth of all the money raised in 2017. Who knew that could happen?
Mobile AR from Apple (ARKit), Google (ARCore) and Facebook (Camera Effects) and computer vision/machine learning (CV/ML) are focusing the minds and wallets of VCs in Silicon Valley, China and beyond. The $2.5 billion invested in AR/VR so far this year ($1 billion in October and November alone) was balanced across AR and VR, but now mobile AR and CV/ML are the new hotness (as VR has cooled).
Digi-Capital advises a broad range of VCs and startup CEOs, so we spoke to a few friends about how the investment market has evolved. You can read what nearly 30 prominent VCs had to say below, but for the TL;DR crowd: