As the Coronavirus pandemic continues to impact nations, businesses and the lives of billions, and the aftermath of the recession remains to be seen, some trends are already emerging, such as the embracing of digitization.
From video conferencing tools to project management platforms, companies, institutions and individuals are becoming adjusted to remote environments. This brings back into the spotlight the technologies of Augmented Reality and Virtual Reality. Both have thus far failed to live up to expectations and their potential to become an integrated part of the general public’s daily routine. But could COVID-19 change that?
During the peak of the outbreak we’ve already seen more industries shift into the realms of alternative realities. According to Forbes magazine, the real estate industry, for example, is using VR to save the housing market from the looming crisis:
“Chinese startup Beike (Ke.com) has developed VR to let potential buyers and renters take virtual 3D tours of homes and apartments on the market. With almost 4 million houses currently available on its VR platform and 660 million people using it, VR is now an industry disruptor. The company’s digitization efforts have also led to other efficiencies, including a real estate database that precisely defines housing properties with 433 fields. Its platform enables homebuyers to sign contracts and complete transactions online without breaking quarantine.”
The Tradeshows and events industries have also begun to incorporate AR and VR to enable participants to join large conferences virtually. Given it eliminates distance, travel time and costs, “this technology will likely stick around long after COVID-19 fears pass,” according to the Forbes article. Microsoft’s Mixed Reality Dev Days, for instance, ran its multi-day event in May — originally designed to take place in Washington state — on AltspaceVR, which functions like a city block, where people can gather and attend concerts and events. And for its major holiday May Day celebration, the city of Helsinki formed a partnership with VR company Zoan to launch a concert within a 3D version of the Finnish capital. By the time the rap group JVG finished its set, about 700,000 people — nearly 12% of the whole population of Finland — had tuned in.
When it comes to shopping, retail giants like IKEA are already using an AR app to preview how new furniture might look in a customer’s house, while others show consumers what clothes and accessories would look like without actually trying them on. The expansion continues to fields of health, education and travel (tourists sites like Machu Picchu and museums like the Guggenheim are now offering VR tours to housebound visitors) which can all benefit from AR/VR in the era of COVID-19.
And in its “natural” habitat, gaming, the VR ecosystem is booming, as Oculus revealed it had surpassed $100 million in Quest content after celebrating the one year anniversary of its Quest and Rift S headset release. According to Facebook figures, 20 titles have pulled in at least $1 million each with 10 of those eclipsing $2 million in sales, and with more gamers staying more time at home these days, Quest’s second year seems promising.
Indeed, some AR/VR startup founders are especially optimistic. “This is the time to build. In COVID times were seeing an insane influx in user registration, people are trying to build new experiences all the time,” says Alon Grinshpoon, CEO and founder of echoAR, a cloud platform for AR/VR apps which helps developers to create 3D application and content while emphasizing the importance of backend infrastructure in the frontend-heavy ecosystem of AR/VR/3D (the company backed by Remagine Ventures). Grinshpoon’s team has been sponsoring many developer hackathons and are seeing more people trying to build AR/VR apps, from focusing on battling the coronavirus to creating visualisations and video tutorials in AR, to get people more engaged. “This new medium has such a huge potential. If you think about virtual meetings, instead of being on Zoom — having a hologram of the person next to me to converse, a few years ago would be considered sci fi but now we have AR companies working on that,” he adds.
“There’s a big opportunity here, because everyone is shopping from home during COVID-19,” Evan Gappelberg, the founder and CEO of NexTech AR Solutions, told Haaretz newspaper. NexTech technology enables objects to be scanned in 3D and posted on websites, apps and in platforms like Google and Facebook. “We’re getting a lot of calls, as people from different sectors are looking for our technology. In 2019 we had $6 million in revenue. In 2020 we think we could triple that. With COVID-19, who knows? But we haven’t seen a slowdown in our business so far, it’s only getting better for us.”
“I’d say we’re still in the desert, or the valley, between the promise of these technologies and the results. But this might be the crisis they need to popularize the technologies,” says AliBaba chronicler Duncan Clark. “With people confined at home, AR and VR will move forward.” (AliBaba had acquired the Israeli startup Infinity Augmented Reality in 2019).
A report by analytics platform Digi-Capital explores the potential future of AR/VR in the aftermath of coronavirus, and predicts that the market will reach an estimated $65 billion revenue by 2024. The study’s next two-year forecast presents an impact by COVID-19 as it relates to five major factors:
- Long-term social distancing measures could scale up AR/VR adoption and use, ranging from socializing to gaming to business. “The crisis has the potential to become an accelerator to existing trends for enterprise AR/VR adoption,” according to the report, though location-based AR/VR entertainment is likely to be shuttered at least until 2021 (think headsets and hand controllers touched by masses).
- Brick-and-mortar retail closures/limitations may curb potential mass consumers, beyond early adopters, from access to AR/VR headsets. The report adds: “It is also too early to fully understand the long-term behavioral changes around trying on something in a retail store that is worn on the face.”
- Ecommerce acceleration could benefit the AR/VR industry, though limitations imposed on deliveries in some categories by giants like Amazon, could counter some of the benefits.
- Supply chain disruption looks to have had an impact on specific companies’ AR/VR hardware supply chains in the short-term, despite other companies appearing to ramp up production during the crisis. IDC, another data analytics company, is expecting standalone VR headset sales to jump 30% before the year is out, despite a decline in the first half of 2020.
- Recession/depression economic impacts haven’t had a negative effect on short-term demand for specific AR/VR hardware sold out in Q1 2020, but the impact on advertising budgets predicts a negative stance on AR/VR ad spend due to the crisis in the short to medium-term.
The bottom line: Digi Capital forecasts growth for the total AR/VR market for both this year and next year, but at a slower rate than anticipated pre-crisis.
All about timing
Coincidently, the recent February VC Cafe blog post “THE STARS ALIGN FOR AR TO GO MAINSTREAM” opened with an insight about timing, stating that “with Augmented and Virtual Reality, it feels like the right timing is always two years away. Until now.” Practically days before Coronavirus took over the agenda, the discussion detailed the ways in which the time is right for AR/VR to go mainstream.
Quoting the visions of Tim Cook and Mark Zukerberg prior to the outbreak, AR/VR are said to be the next major platforms after the mobile phone, because they would “eliminate the distance between people and allow people to be present despite physical distance.” Now, remoteness has become very real very rapidly for many, and “delivering a sense of presence” has become more urgent a demand from technology. Zuckerberg had been aiming for that reality by 2030, yet COVID-19 might expedite the urgency, as well as people’s willingness to adapt to the new technology, to a much earlier date.
Facebook is moving fast, and is already looking at the post-coronavirus future of work, a new AR/VR-centric reality “in which traveling for work is optional and a person’s career is dictated by his or her choices — not geography”:
“Collaboration across distance demands real-time connections, shared vision and context, and a powerful sense of community. Here at Facebook, we’re looking at the next computing platform — powered by augmented reality and virtual reality — to deliver the tools and experiences we need for the future of work. We envision a dynamic virtual work environment anchored by genuine social presence.”
Apple has reportedly already been working on AR technology for a while when the pandemic hit. Avid followers and analysts now assume a 2022 launch of functional “Apple Glasses”, bringing the possible release date forward from the Bloomberg estimate of 2023. Rumor has it that the announcement about the glasses will arrive by mid 2021.
Not all roses
And yet, the era of COVID-19, with its social distancing and self-isolation, might also be the ultimate test for these types of technologies. In his essay “The VR Winter”, Benedict Evans writes: “it’s instructive that now that we’re all locked up at home, video calls have become a huge consumer phenomenon, but VR has been not. This should have been a VR moment, and it isn’t.”
His Google Trends analysis shows that by May 2020 there has been virtually no significant spike in interest in the past three months in VR or Oculus, and his conclusion is that VR can merely be a subset of the games console, “another branch off the side of tech, not the next platform after smartphones.” The technology, and the consumers, aren’t there yet, and not even a global pandemic can change that, he says.
As another blogger put it: “In theory, people stuck in quarantine should be flocking to VR. But even the most immersive experiences can’t match the popularity of Zoom calls.”
The AR/VR industry is also obviously not immune to the crisis in terms of cancellations and layoffs, seeing substantial impacts across the range. VR cornerstone conferences, such as huge video game convention E3 and Facebook’s F8 Developer Conference had been cancelled over coronavirus concerns, and budget cuts and layoffs had hit some AR/VR companies harder than others.
In April, AR startup Magic Leap joined the long list of companies laying off employees, after Chief Executive Officer Rony Abovitz posted a somber statement on the company’s website, confirming a Bloomberg report that indicated that half of its workforce (about 1,000 people) were being let go, as the company winds down its consumer business to concentrate strictly on the enterprise side of things following the pandemic. However, in a surprising turn of events, Magic Leap has now announced it had raised a $350 million investment round in May, a lifeline which consequently withdraws the WARN notice (a 60-day notification for large-scale layoffs) sent to staff and an apparent reversal of the massive cuts.
Startup nation joins the wave
A good crisis often inspires the best of minds, and Israeli innovators are no strangers to creating powerful tech under stressful circumstances.
As expected, the VR healthcare sector was first to adjust. Israeli companies and startups have been on the frontlines of developing medical technologies, and some have serious prospects in the COVID-19 era. Surgical Theater has already transformed its VR tech — routinely used to convert CT and MRI scans into VR images — to diagnose lungs of coronavirus patients. Its two Israeli Air Force veterans used to lead the R&D of the F-16 fighter jet simulator, and are now using VR tech to install life saving tools in hospitals in the US and Israel.
Tel Aviv-based XRHealth which develops medical applications using mixed reality technology, has provided Israel’s Sheba Medical Center with VR headsets that will both allow doctors to monitor COVID-19 patients remotely, and enable quarantined patients to “travel” beyond their rooms using VR, CEO Eran Orr told Time magazine. It’s also offering a VR telehealth support group for people in isolation due to the coronavirus, where patients with similar ailments can gain support from each other and from doctors.
Other Israeli companies with the potential to improve the future of healthcare using VR/AR include RealView Imaging which created a holographic system that provides realistic 3D medical images for clinicians, and can be used during minimally invasive procedures, allowing physicians to manipulate the 3D images in real time; and Xvision, by Augmedics, a lightweight, wireless AR head-mounted display for surgery, that gives surgeons “X-ray vision” during complex procedures, received its FDA approval and US launch in late 2019.
And not just healthcare. From entertainment to business solutions, AR/VR tech in Israel is booming: Clone enables a remote expert to virtually teleport to a user’s environment, allowing communications through speech and gestures as if they were standing next to each other — coming in especially handy under social distancing measures; SkillReal boosts employee performance from afar by using AR/VR solutions to help build employee skills, deliver critical knowledge and support organizational learning and training (they signed an OEM agreement with Siemens in 2019); and Mixed place, which is an AR cloud infrastructure that enables streaming experiences to be placed on accurate locations on earth.
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