The rise of open software and open digital ecosystems tells us that all new technologies reach their peak when they are characterised by co-creation, open sharing and collaboration between members of the development community. This holds true for virtual reality (VR) and augmented reality (AR) hardware solutions, which have been witnessing growing adoption in recent times.
The rise in the adoption of these solutions has been driven by the increasing availability of new-age, technologically advanced solutions at affordable prices; the increase in their application areas among end-use industries; the booming gaming industry with rising investments in AR and VR technologies; and a surge in the penetration of smartphones in emerging economies.
Going forward, the use of immersive technologies such as VR/AR is likely to increase significantly in the 5G era, especially because 5G can remove data processing requirements from the equipment itself, spurring the production of cheaper and more lightweight headsets that can be used wherever there is 5G connectivity.
A look at the key trends in the AR/VR hardware market…
In India, the market for AR/VR reached a valuation of $1.83 billion in the financial year 2020 and is expected to witness a compound annual growth rate of 38.29 per cent up to the financial year 2027, mainly due to the accelerating digital transformation of the country. The growth has been led by the availability of various AR/VR devices alongside the growing adoption of head-mounted displays (HMDs) in different industries.
In terms of offerings, the hardware segment dominated the Indian AR/VR market with the largest market share of 71.28 per cent in financial year 2020. This growth is due to a significant dip in the prices of AR/VR devices owing to the large demand from the gaming industry and easy availability of headsets across the country. HMDs held the largest share in the market at 35.84 per cent due to their adoption in various applications.
In terms of region, South India dominated the Indian AR/VR market with a market share of 34.38 per cent in 2020, owing to rapid urbanisation and digital transformation in the area.
Over the next few years, AR/VR will make an impression in the enterprise market as well, with the world inexorably moving towards three-dimensionality. As per the International Data Corporation (IDC) estimates, the global value of these emerging technology categories – AR/VR headsets, smart home devices and wearables – will reach $369.6 billion by the end of 2021 and $524.9 billion by the end of 2025.
The key factors driving the uptake of AR/VR devices are easier availability, increasing adoption of HMDs in different industries, technological advancements and the growing digitisation and penetration of HMDs in the gaming and entertainment sectors post-Covid-19. Further, the surge in smartphone penetration in emerging economies is expected to drive the demand for AR and VR solutions in the upcoming years. In the future, India’s AR/VR market will grow on the back of the roll-out of 5G, Wi-Fi 6 and emerging technologies such as big data analytics, artificial intelligence and machine learning. Finally, the presence of a young population immersed in engaging content in India, along with applications in various sectors such as healthcare, tourism, defence, gaming and automotive, is also contributing to the growth of AR/VR devices in India.
Types of AR/VR devices
VR devices with HMDs are one of the most common gadgets that one can find in the market today. Essentially, they are a gateway to the virtual world for people wearing them. The device creates a computer-generated 3D environment. By connecting their smartphone to a VR headset, users can experience virtual reality. VR devices are manufactured by different companies, and different types have different features, specifications and prices. For instance, the VR device market is crowded with tethered VR headsets, stand-alone VR headsets and smartphone HMDs. AR devices, meanwhile, can be broadly categorised into four types, namely, heads-up displays, helmet-mounted displays, smart glasses and handheld AR.
Recently, the Ministry of Tourism, Government of India, has partnered with OutsiteVR, a travel technology start-up, to enable people to virtually travel to India and to further enhance Incredible India campaigns. OutsiteVR is an experiential platform that allows users to virtually travel across popular heritage sites, historical monuments and tourist attractions using a smartphone, a desktop or a VR headset.
Tech giants eyeing a share of the market
In the future, AR and VR hardware is projected to have a much greater impact on the digital ecosystem. Because of this, all big tech companies are working on these two technologies, including Google, Apple, Facebook and Microsoft. Google’s “Glass” wearable remains the first prototype for AR. While their cardboard VR kits were the first to become popular, the company has now shifted its focus to AR.
Mark Zuckerberg, too, was an early adopter of VR, having purchased Oculus seven years ago for $2 billion. Further, Facebook is investing substantially in the technology and software expertise required to create a flawless virtual experience through AR and VR. It has established a branch called Reality Labs, whose researchers are focusing on developing the metaverse’s distinguishing features, particularly “presence”, the sensation of being in a space with people. This team, accounting for 20 per cent of the company’s staff, is largely staffed by persons with gaming backgrounds. Facebook is also investing in software to allow activities such as virtually teleporting to another place – say, an office – to make it look as if you are truly there, as well as in physical hardware such as AR glasses and more powerful VR headsets.
Zuckerberg predicts that this technological shift will be completed over the next five years, and headsets and AR glasses will be ready for substantial everyday use by the end of the decade. Further, Facebook aims to profit more from the sale of virtual products and experiences in the emerging new environment, which people will most likely engage with even more than they do now.
While the demand for AR/VR devices is increasing at an unprecedented rate, there are several factors, including lack of awareness in underdeveloped economies and high equipment costs, coupled with their harmful effect on the eyes, that are hampering the growth of the market.
However, despite these challenges, a report by TechSci Research states India’s AR/VR market is expected to grow substantially in the next five years owing to the adoption of technology by diverse portfolio sectors including content creation, engineering and technology development, and the development of virtual applications for electronic devices to create customisable content.
Further, a report by IDC predicts that AR/VR hardware is expected to grow the fastest in value over the coming years, albeit from a lower base, as new devices are expected to be launched by established companies as well as start-ups. The consumer segment is expected to dominate the market due to the increasing application of technology in consumer electronics and the development of interactive gaming platforms. Furthermore, continuous growth in the country’s gaming and console industry is expected to boost demand for HMDs in the coming years. Moreover, lightweight, portable and affordable HMD devices, offering opportunities in a variety of fields such as healthcare and rehabilitation, are expected to boost the AR/VR market in India.