The tipping point is that magic moment when an idea, trend, or social behaviour crosses a threshold, tips, and spreads like wildfire.
Malcolm Gladwell, The Tipping Point
Some tech revolutions happen quickly, like a tsunami. For example, smart phone penetration. Others take time, and multiple waves, until they become mainstream. I believe we’re now at the tipping point for 3D content adoption and why it represents a huge opportunity for startups.
3D content has been around for a while. What’s driving 3D content adoption now?
1) Improved infrastructure
The advancements in infrastructure, including the launch of 5G networks, new Nvidia chips with nearly 100% increase in GPU power, Lidar sensors embedded in consumer smartphones, to cloud gaming becoming widely available with offerings from Google, Amazon, Microsoft, etc. These advancements are creating huge opportunities in the world of 3D content by increasing download speeds and streaming capabilities to make AR and 3D content creation/ consumption widely accessible.
Improved infrastructure is a catalyst to developer adoption. Anecdotally, we at Remagine Ventures are investors in EchoAR, a CDN and CMS for 3D content which has seen the number of developers on its platform grow from 300 in March 2020 to over 10,000 in April 2021, with almost zero marketing effort. The According to Alon Grinshpoon, co-founder and CEO of EchoAR:
“3D content is now everywhere. Users are flocking to multiplayer 3D universes such as Fortnite and Roblox that allow people to interact with 3D content and use it to represent their identity – these are the new 3D social networks. All camera-first applications and games that incorporate 3D content like Pokémon GO, Snapchat, and TikTok are seeing unprecedented adoption and revenue which points to the fact that new solutions are required to manage and deliver 3D content for all future applications.”
Alon Grinshpoon, EchoAR
The future of infrastructure looks bright: from the rumoured Apple smart glasses, expected to launch in 2022, to Snap’s new Spectacle 3, 3D content will continue to grow in demand and finally ‘explode’ when it has its ‘iPhone moment’.
2) The Metaverse and Gaming
The July 2021 Mobile gaming report by Israeli gaming startup CrazyLabs, shows that 3D games consist of 90.8% of the mobile gaming market. In consoles and PC it’s probably 100%.
Last week Epic Games announced the acquisition of 3D content marketplace Sketchfab to support the “open and interconnected Metaverse”. What exactly do they mean? that there will be much more 3D content needed to ‘populate’ a virtual world/game/virtual experiences in whatever form the Metaverse will take and it’s important to put the tools to create and port this content in multiple environments. Here are some of the quotes from the official announcement:
“Joining Epic will enable us to accelerate the development of Sketchfab and our powerful online toolset, all while providing an even greater experience for creators. We are proud to work alongside Epic to build the Metaverse and enable creators to take their work even further.”
Alban Denoyel, Sketchfab’s co-founder and CEO
“As the adoption of real-time 3D technology continues to grow, demand for web-based solutions will only increase”
Marc Petit, the general manager of Unreal Engine
Tim Sweeney, CEO of Epic Games openly talks about the Metaverse as the company’s mission. With over 400 million Fortnite players that gather on Fortnite not just to play, but also to hang out, socialise and listen to live music concerts, Epic is perhaps the leader in driving the Metaverse vision forward, but it is certainly not alone.
In an interview with The Verge on July 22, Mark Zuckerberg shared his vision for transforming Facebook into a Metaverse company over the next 5 years:
“It just touches a lot of the biggest themes that we’re working on. Think about things like community and creators as one, or digital commerce as a second, or building out the next set of computing platforms, like virtual and augmented reality, to give people that sense of presence. I think all of these different initiatives that we have at Facebook today will basically ladder up together to contribute to helping to build this Metaverse vision.
And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a Metaverse company.”
Mark Zuckerberg
For the younger demographic, Roblox offers a ‘third place’ for children to play and socialise in the virtual world. The company successfully IPOd this year, reaching a market cap of over $46 billion, and it continues to grow by offering its own users to become creators on the platform. In 2021, the company is on track to exceed $500 million in payments to creators, double the amount of 2020.
The Metaverse is getting a lot more attention, and will continue to be a big driver for 3D content adoption. From avatar technology, to game engines. For more in depth analysis on the Metaverse, I highly recommend Matthew Ball’s 9 piece “Metaverse Primer“ series.
3) VR adoption
According to the Global Entertainment & Media Outlook 2021–2025 report by PWC, Worldwide VR content revenue surged 31.7% in 2020 over 2019. While VR consumer adoption is still slower than expected, the Oculus Quest 2 launched in October 2020 by Facebook is widely considered the first ‘mainstream’ VR headset.
Now sold out on the official website, the Oculus Quest 2 is priced at $300 for 64 GB of storage, cheaper than any of the main gaming consoles. Industry estimates put the sales of the new VR device at 2 million units in Q1 2021 alone. While tiny compared to smart phones for example, VR headset owners are willing to pay for premium content.
In February 2021, Facebook’s Oculus team released some numbers: over 60 titles on the Quest VR platform made over $1M in revenue.
Leading the pack is Beatsaber, a popular VR fitness game that generated over $180 million in revenue until February, with the rate of adoption steeply accelerating.
AR gaming is also a big business. Pokemon Go, the mixed reality mobile game by Niantic, has generated over $5 billion (!) in revenue in five years from player spending.
VCs are starting to take VR content and apps more seriously. VRChat raised $80M series D in June 2021. RecRoom, another VR social app, raised $100M back in March at a $1.25 billion valuation.
4) Augmented Reality in eCommerce/ Social
Snap just reported Q2 2021 was the company’s best quarter in four years with 293 million daily active users, a 55 million users growth YoY. Much of this growth is driven by augmented reality – from transforming images to cartoons with AR filters to virtual try on of fashion items, in partnership with Farfetch and Prada.
According to Snap’s consumer AR report 2021, people are 94% more likely to buy something after they tried it with AR.
Snap recently acquired Vertebrae, a company that lets brands create and manage 3D versions of their goods.
According to Evan Spigel, Snap’s CEO: “More than 200 million Snapchatters engage with AR every day on average, and over 200,000 creators use Lens Studio to build AR Lenses for our community”.
This consumer use of AR today is somewhere between ‘Toy’ and ‘Tool’. Users engage with AR not even realising what AR is, and sometimes just for fun. However, the move to leverage AR for shopping becomes more of a utility (i.e. will this shoes/ glasses/ make up look good on me?) and the apps putting an emphasis on AR are reaping the benefits.
5) Interactive content
The use of 3D content and AR filters goes beyond social and gaming. New content experiences leveraging AR are getting traction with users. The applications range from advertising, Edtech, gaming and experience and even books.
Another example from our portfolio is Zoog, an interactive entertainment content hub connecting families, starting with books. As Yoav Oren, co-founder and CEO of Zoog describes:
“We’ve seen that AR can act not only as an enhancement to content and its experience, such as seen on Snap and other platforms, but also act as a communication bridge between generations.
The first thing we did, is make AR accessible to every user, regardless of age or demographic. We allow any person to become an AR content creator and use AR masks and filters to communicate with others. The result is experiences that grandparents love to create and grandchildren love to receive and even think is cool. We compliment the AR event with sound effects and motion animation, making the experience even more engaging.”
Yoav Oren, Zoog
The enterprise use cases for AR/ 3D content are growing as well. From training tools for doctors leveraging MagicLeap or Hololens headsets, to industrial AR for manufacturing, using the new incarnations of Google Glass Enterprise Edition.
The ‘Emerging Technology Sentiment Analysis Q2 2021‘ survey by Globaldata reveals that 70% of respondents stated that AR would disrupt their industry most out of a selection of seven emerging technologies including AI, cybersecurity, cloud computing, IoT, blockchain, and 5G. 3D content adoption is not going to happen over night, but as it has already started and will only grow more from here.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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