The State of Immersive Technology: Virtual Reality and Augmented Reality Markets
Current markets and product trends for immersive technologies. Industry use cases and emerging VR/AR applications in manufacturing, healthcare, retail, supply chain management, and other industries.
- VR/AR Market Is Maturing
- AR Is Leading the Way
- VR/AR Needs to Happen in Companies Now
- VR/AR for Augmented Training
- VR/AR for Improved Production Efficiency
- VR/AR to Wow Customers and Prospects
- Emerging VR/AR Use Cases by Industry
- VR/AR in Manufacturing
- VR/AR in Retail
- VR/AR in Healthcare
- VR/AR in Automotive
In this report, we’ll take a look at the emerging applications of virtual and augmented reality tech in various industries, from retail to healthcare, covering some of the most promising use cases. This report will be useful for executives and team leaders looking to innovate, improve operational efficiencies, cut costs, and drive better business outcomes with thought-out VR/AR application.
VR/AR Market Is Maturing
Augmented reality (AR) and virtual reality (VR) technologies are still far from becoming mainstream, unlike some of the other emerging technologies (for example, smart home solutions from the likes of Amazon and Google). Many of the startups had to scale down their headcounts as the anticipated growth momentum is not here1.
However, it doesn’t mean that the combined VR/AR industry is stagnating. For example, the monthly active usage of VR headsets on Steam, one of the most popular gaming platforms, has been steadily growing, albeit slowly2. At the same time, according to analysts at IDC, global shipments of VR/AR headsets are going to continuously grow at an impressive compound annual growth rate of 66% for the next couple of years3.
Strong growth is expected to continue as global shipments climb to 68.6 million in 2023 with a compound annual growth rate (CAGR) of 66.7% over the 2019-2023 forecast period.
IDC also expects the major brands like Oculus, HTC, and Microsoft to keep carrying the torch and fueling the potential growth. But traditional hardware companies, like Qualcomm, and their chip innovations should also provide the much-needed boost for the market4. This potential supply could be met by creative industries and their growing interest in VR/AR technologies5.
But these trends don’t mean that other industries will not reap the benefits of virtual reality and augmented reality development. It’s projected that the commercial sector will collectively account for 80% of VR/AR spending by 20206.
Ten industries are forecast to deliver CAGRs of more than 100% over the five-year forecast period, including state/local government (123.7% CAGR), resource industries (120.9% CAGR), and wholesale (120.9% CAGR). Consumer spending on AR/VR will continue to be greater than any single industry ($7.2 billion in 2019) but will grow at a much slower pace (36.6% CAGR).IDC
Opportunities for enterprise VR/AR are abundant. For example, according to ABI Research, virtual reality training solutions could be a 6-billion-dollar market by 20227, as 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. Even Gartner already considers these industries to be relatively mature8.
AR Is Leading the Way
It’s important to note that organizations using immersive technology prefer investing in AR, not VR—Capgemini Research shows more organizations are implementing AR (45%) than VR (36%)9. There might be numerous explanations to this, but the simplest one is that AR allows real-world applications while VR is purely virtual and mostly carries intangible benefits, like improved skills. Not to mention that AR is cheaper and people can start using it with just their smartphone and no additional gear.
AR is becoming a serious production optimization tool. According to some estimates, at least a quarter of all of the AR projects are being implemented at industrial/manufacturing companies10. This further reinforces the notion that immersive tech is here to stay, as it’s ‘conquering’ larger enterprises.
VR/AR Needs to Happen in Companies Now
According to Deloitte, over 50 of Fortune 500 companies in various industries are already rushing to develop and implement impactful VR/AR applications11. Some are already there to get a head start before their competitors catch up.
75% share of organizations with large-scale AR/VR implementations realize over 10% operational benefits.
57% of early achievers have experienced over 10% efficiency increase with AR/VR compared to only 23% of the rest of the companies.
In other words, these operational benefits might not even happen later on. If they do happen later, the ROI can be much lower. Companies need to start probing and implementing operational use cases now to stay ahead of the curve.
VR/AR for Augmented Training
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 theory12.
This is also reinforced by how humans naturally absorb information and learn. Over 65% of people are visual learners13, 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, research by the University of Maryland concluded that VR is roughly 8% more efficient at stimulating recall memory than standard computer-based training14.
That’s why these technologies are already proving to be effective at training. For example, United Rentals had dramatically reduced the time it takes to train workers by 40%15. A restaurant chain improved onboarding and culture training through the use of VR, boosting successful certifications by over 20%16. A different restaurant chain managed to double the speed of kitchen skills training for its staff17. Heavy industries are not an exception too. Boeing was able to cut production training by up to 75%18. 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 simulations19.
- 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 NASA20.
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.
VR/AR for Improved Production Efficiency
Just like with training, augmentation with technology can significantly improve a wide variety of operational processes by becoming an additional knowledge layer for personnel.
AR can serve as a visual guide for employees performing complex and highly sensitive tasks, to make sure that they’re fulfilling every requirement and following every step.
For example, Boeing uses AR technology to assist wire technicians. The AR setup displays the schematics in real time and projects them onto the fuselage, allowing for much more precise and error-free maintenance. This move added a quarter to the productivity of technicians and practically eliminated any errors in the process21. Their competitor, Airbus, is using VR to improve maintenance through simulated service protocols. This allowed them to achieve a similar 25% reduction in the duration of maintenance processes22.
Streamlined R&D and Prototyping
Developing a product in a virtual environment by creating digital copies of potential parts could be a game-changer for industries heavily reliant on prototyping. Such technology also allows showcasing the final product as a simulation.
This is exactly what BMW is using VR for—to provide more context for its concepts and improve design efficiency23. Ford is achieving similar goals with their virtual environment, although they also put a lot of emphasis on the remote collaboration that it enables24.
VR/AR to Wow Customers and Prospects
The global AR market is set to grow at an unprecedented CAGR of almost 152% between 2019 and 202425. 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 experience26.
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 promising27. 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.
All of this ‘enthusiasm’ is not just true for consumers. Over two thirds of agencies would like to see more VR/AR in digital marketing28. It’s obvious why, given that nearly half of those aged between 18 and 34 in the US intend to purchase a VR/AR device29, which corresponds to the most active spenders or people soon to become them30.
If You Do It, Do It Right
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 elements31.
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% CTR32.
Emerging VR/AR Use Cases by Industry
It’s critical to note that when it comes to VR/AR projects, execution is the key. Even the most appropriate use case and the best idea for it may fall flat if you’re not properly executing it. That might mean anything from finding the right talent outside of your company to postponing the project until you have the budget to pull it off.
Below is a list of use cases for VR/AR across multiple industries. We accumulated them working with clients and prospects, as well as through our never-ending research of the industry. These use cases mostly are not mentioned before in this report.
VR/AR in Manufacturing
Reduced Assembly Errors
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.
Improved Supply Chain Management (SCM)
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.
VR/AR in Retail
Over a hundred million people will be using immersive technologies to shop online and in-store by 202033. This is an excellent opportunity for retailers looking to capture even more market share.
Virtual Shopping and Dressing Rooms
It’s one of the main reasons why brick-and-mortar is still a thing. People want to try on items, see how they fit their wardrobe, their environment, and personal parameters. This logic can be applied to a myriad of retail goods. Selling backpacks? Your customers might want to see how they look on them. Selling makeup? A virtual makeup studio can showcase your products without consumers actually applying them.
Virtual Store Layouts
Building the layout of your future store in VR before actually committing to it can be a saving. With standard inventory across regions and countries, such VR application can be infinitely scalable and useful for your potential stores across the globe.
VR/AR in Healthcare
With the unrivaled focus on innovation, healthcare organizations are already exploring high-impact VR/AR applications. It’s not surprising that this market is projected to grow at a CAGR of over 23% through 2019-202534.
Visual Disorder Treatment
Using VR, 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.
Virtual Reality for Mental Disorders
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.
VR/AR in Automotive
Virtual Car Configurator
Sure, you can look at the car at the dealership. But will they have a model with all of the options that you might want to purchase? Would a computer rendering of the options do them justice? With virtual showrooms that could showcase every option available, dealers could close that gap and even make it an exciting part of the car shopping experience.
Augmented Car Repair
Similar to AR applications in manufacturing, car repair shops can use AR to visually inspect vehicles, verify repairs, view diagnostics in real time, and even request parts directly from the manufacturer.
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.
If you’re looking for an experienced virtual and augmented reality partner, reach out to us. We’re happy to discuss your potential project and brainstorm solutions.
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