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Augmented And Virtual Reality Investment Hits $1.1 Billion In 2016

It’s the first time AR/VR investment has topped $1 billion in any year.

[Photo: Flickr user Web Summit]

With smartphone penetration reaching an all-time high and sluggish tablet sales, the tech industry and pundits are on the lookout for the tech that will be the "next big thing" and spur innovation and customer adoption as much as the iPhone and other handsets did almost a decade ago. If interest from major tech companies and increasing investment into new technologies is anything to go by, the industry believes that next big thing may very well be augmented and virtual reality devices.

Annual investment in augmented and virtual reality companies hit an all-time high with a record breaking $1.1 billion being invested into AR and VR companies in 2016 so far this year, according to a new report issued by Digi-Capital.

"Augmented Reality and Virtual Reality investment reached $1.1 billion in the first 2 months of this year," Tim Merel, founder and CEO of Eyetouch Reality and Digi-Capital, said in a statement. "This is the first time that AR/VR investment has topped a billion dollars in any year (let alone 2 months), and shows incredible growth compared to the $700 million invested during all of 2015."

It should be noted that almost $800 million of the $1.1 billion investment in AR and VR this year went to one company: Magic Leap, but $300 million has already gone to smaller companies in the AR/VR services, hardware, advertising, distribution, and entertainment markets. "Even without Magic Leap, investment is up 20% in Q1 2016 compared to the $250 million invested in Q4 2015," Merel said. "Plus there's another 4 weeks left for investors to boost AR/VR this quarter."

The increased investment in AR and VR technology comes at a time when virtually every major tech player is working on getting into the market. The Facebook-owned Oculus Rift and HTC’s Vive will be released this spring. Microsoft is releasing its HoloLens development kit to developers at the end of the month. PlayStation VR will be coming out later this year. Even secretive Apple is rumored to have a team exploring VR technology.

Yet the interest from major tech players should be no surprise considering augmented and virtual reality revenue is forecast to hit $120 billion annually by 2020.