Together, virtual reality and augmented reality are expected to generate about $150 billion in revenue by the year 2020.
Of that staggering sum, according to data published today by Manatt Digital Media, and originally sourced from Digi-Capital, $120 billion is likely to come from sales of augmented reality—with the lion’s share comprised of hardware, commerce, data, voice services, and film and TV projects—and $30 billion from virtual reality, mainly from games and hardware.
The report suggests that the major VR and AR areas that will be generating revenue fall into one of three categories: Content (gaming, film and TV, health care, education, and social); hardware and distribution (headsets, input devices like handheld controllers, graphics cards, video capture technologies, and online marketplaces); and software platforms and delivery services (content creation tools, capture, production, and delivery software, video game engines, analytics, file hosting and compression tools, and B2B and enterprise uses).
Already, there’s been one $2 billion exit, Facebook’s 2014 acquisition of Oculus VR, and there have been at least four companies that have received total investment of more than $100 million. Leading that pack is Magic Leap, which has gotten $592 million from investors like Google, as well as Lensar, with $131 million in funding, Nantmobile, with $110 million in funding, and Jaunt VR, with $100 million.
Investors include heavyweights like Disney—which recently led a $65 million round in Jaunt VR—as well as Legendary, 20th Century Fox, and venture capital firms like Andreessen Horowitz, Greylock Partners, Highland Capital Partners, and others.
That money is flowing into these industries is no surprise, despite the fact that there are few hardware platforms already on the market. That’s because there will soon be a range of new gear available, including the Oculus Rift, which is expected to hit the market next spring.
Other hardware that will be available in the next year—or is already in users’ hands—Microsoft’s HoloLens, Samsung’s Gear VR, HTC’s Vive, Sony’s PlayStation VR, and products and services from companies like GoPro, Canon, and Google.
At the same time, brands are flooding into the VR and AR markets. Household names like Ferrari, Ford, Marvel, NBC, Paramount, HBO, Red Bull, and many others are looking to find audiences with AR and VR “experiences.”
And, reports Manatt Digital Media, there’s more to come. Apple, for example, acquired the AR software developer Metaio, while Amazon is reportedly developing AR and/or VR projects in its R&D departments, Manatt points out.
All told, the data suggests that consumers will soon be flooded with augmented and virtual reality content and services, and that they will be spending quite a lot of their hard-earned cash on the media. Whether the numbers will add up to the totals Manatt predicts is hard to say. But one can say that a lot of very big technology companies are betting that the answer is going to be “Yes.”