[Note: this post was published before ARCore and iPhone X/8 launches, and an update is coming shortly in Digi-Capital’s Augmented/Virtual Reality Report]

We’ve been saying for the last couple of years that Augmented/Virtual Reality is the fourth wave of consumer technology, and that AR could become much bigger than VR. But AR itself is not one giant wave, it’s a set of four big ones: mobile AR software, mobile AR hardware, tethered smartglasses and standalone smartglasses. These four waves could drive AR from tens of millions of users and $1.2 billion last year, to over a billion users and $83 billion by 2021. Surf’s up.

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Games software/hardware combined are set to drive more than $150 billion revenue for the first time ever in 2017, with software taking around three-quarters and hardware around one-quarter of the total (Note: this is games software/hardware combined – non-hardware revenues could deliver over $110 billion globally this year). With a compound annual growth rate (CAGR) of 7.9% for the next 5 years, games software/hardware combined could top $200 billion by 2021 (as detailed in Digi-Capital’s new 200 page Games Report and Database Q3 2017).

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AR/VR Dealmakers invested over $800 million dollars in Q2 2017, after a quieter first quarter. This rounded out over $2 billion invested across 27 AR/VR sectors in the last 12 months, as analyzed in Digi-Capital’s new 167 page Augmented/Virtual Reality Report Q3 2017 and 700 transaction 2011 to 2017 Deals Database (with major mobile AR update post-Apple/Facebook – also see Digi-Capital mobile AR YouTube channel). While investment hasn’t hit the record peak of Q1 2016 (when $1.2 billion was invested in the quarter and $2.4 billion in the previous 12 months), the second quarter of this year was an investment record for a quarter when Magic Leap wasn’t sucking in giant amounts of cash.

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(See new Digi-Capital AR/VR Report Q3 2017 and Digi-Capital mobile AR YouTube channel)

The mobile AR platform war was kicked off at F8 by Mark Zuckerberg’s “We’re making the camera the first augmented reality platform.” That simple sentence transformed what had been a one-hit wonder in Pokémon Go into an epic battle between Facebook, Apple, Google, Tencent, Snap, Alibaba, Baidu, Samsung, Huawei and more. Now Apple’s launch of its ARkit for iOS as “the largest AR platform in the world” has taken the mobile AR war to the next level. They’re fighting over a market that could hit over a billion users and $60 billion revenue globally by 2021 (as detailed in Digi-Capital’s Augmented/Virtual Reality Report).

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(See new Digi-Capital AR/VR Report Q3 2017 and Digi-Capital mobile AR YouTube channel)

Mark Zuckerberg’s “We’re making the camera the first augmented reality platform” was the first major step towards mass market AR. Apple’s launch of ARkit for iOS as “the largest AR platform in the world” was the second. Where Pokémon Go gave consumers their first taste of mobile AR, and Google Tango ushered in the race towards high end mobile AR phones, Facebook’s AR Platform and iOS ARkit now democratize mobile AR software regardless of hardware. Together with Apple launching an AR enabled iPhone this year or next year, Facebook and Apple have now turned mobile AR into the next great platform war. Consumers will win as usual, but there will be blood (as detailed in Digi-Capital’s Augmented/Virtual Reality Report). Read More…