VR and AR in Consumer Goods: Macroeconomic Trends
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VR and AR in Consumer Goods: Macroeconomic Trends

By GlobalData Thematic Research 18 Dec 2020 (Last Updated December 17th, 2020 15:59)

Fast-moving consumer goods (FMCG) companies, retailers, and foodservice outlets have mostly been using augmented reality (AR) and virtual reality (VR) technology for marketing reasons.

VR and AR in Consumer Goods: Macroeconomic Trends
Customisation aided by technology is another avenue for offering highly customisable products and services, which are subsequently inclusive to all consumers.

Fast-moving consumer goods (FMCG) companies, retailers, and foodservice outlets have mostly been using augmented reality (AR) and virtual reality (VR) technology for marketing reasons. However, they also allow consumers to try out products virtually before purchasing them. Other uses of AR and VR in these industries include gamification, product demonstration, virtual tours, staff training, and enhanced packaging.

Macroeconomic trends

Listed below are the key macroeconomic trends impacting VR and AR, as identified by GlobalData.

Hype

AR is in its infancy but has already been touted as the next major computing platform by tech leaders like Apple CEO Tim Cook. This has inflated market expectations to levels which the technology has so far failed to match. Magic Leap raised $2.6bn in funding over five years by advertising unmatched AR experiences, including games and live shows, but its first hardware offering (the Magic Leap One) proved to be underwhelming.

Niantic has repeatedly promised to develop unique AR games but delivered familiar, Pokémon Go-type experiences each time. Well-funded, promising start-ups like Meta, Osterhout Design Group, Blippar, and Daqri have all exited the market, having failed to cope with growing competition and live up to self-created hype.

Untethered VR headsets and more compelling content are driving the adoption of VR across consumer markets. In March 2019, Sony announced that it had sold more than four million PlayStation VR (PSVR) systems worldwide since it was released in October 2016. One long-standing barrier for VR adoption – price – is also coming down.

Consumer adoption

Whilst the enterprise AR market is likely to be more lucrative, many players like North, Snap, Oakley, and Bose are targeting the consumer AR market. Epson and Vuzix target both the enterprise and consumer markets. Microsoft, the leader in enterprise AR, is rumoured to be planning a consumer device too.

Most consumer-focused apps are free for users and developers are paid by distributors like Apple and Google, whereas enterprise-focused software is either bundled alongside hardware or bought separately. As the technology matures, subscriptions, location-based entertainment, and in-app purchases will become more prominent, with some already emerging.

Content

The dearth of AR content is one of the biggest obstacles to mass adoption of AR platforms. Launched in 2016, mobile game Pokémon Go remains the most recognisable content app for AR, with several imitators failing to match its appeal. In social media and ecommerce, AR is restricted to basic photo filters, virtual try-on services, and indoor furniture placement applications, primarily due to the technology’s immaturity.

A longstanding factor holding back the development of effective AR content is high speed broadband infrastructure. As 5G telecom networks are rolled out across the world, more AR content will emerge.

While VR hardware is improving, the industry still lacks a significant amount of content. Unlike the over-saturated mobile apps space, VR is still a largely untapped market. With adoption increasing, VR content creators should utilise the opportunity to build a brand name before the industry hits the mainstream.

The video games industry offers abundant proof that consumers are willing to pay for effective and compelling content. Over the next three years, consumers will be looking for an accessible array of content choices. VR content creators should focus on areas such as films, video, ecommerce, healthcare, gaming, and social media.

Enterprise adoption

Several enterprises are using VR for specific tasks. For example, Air France offers passengers VR headsets, while Walmart, Airbus, and Verizon use VR as part of employee training programmes. That said, VR’s position in the enterprise market is under threat from AR. VR headsets are solo, occasional, and training-oriented devices, meaning they lose out in comparison to more efficient, collaborative, continuously serviceable AR solutions in the long run.

Enterprises are starting to recognise the benefits of AR in training, maintenance and repair, customer support, and product design. Healthcare, logistics, manufacturing, and the military are early adopters of AR, while Microsoft, Vuzix, Lenovo, Magic Leap, and Google are all targeting the enterprise market.

This is an edited extract from the Augmented Reality (AR) and Virtual Reality (VR) in Consumer Goods – Thematic Research report produced by GlobalData Thematic Research.

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