Augmented and Virtual Reality will be worth billions

Augmented Reality and Virtual Reality are currently spoken of as the great promise bearers for how technology will compliment life in the future. And in line with that, they are all set to be worth close to a staggering $150 Billion by 2020. Let us try and understand this trend and learn more about this exciting segment today!


Virtual reality and augmented reality are very interesting completely engaging, not to mention futuristic – Google Glass , Oculus from Facebook, , not to mention Microsoft’s HoloLens. These are the early peeks we have into the exciting world of VR and AR. But then every one of them is far from becoming a consumer product. There are a lot of issues that need sorting out. And Teams are well on their way to that.

A detailed analysis of the VR/AR market today is difficult and challenging, because the sector is nascent and track records are still being written, and there are no real results to look at. We’ll look at methodology below, please note that our analysis is based on how VR/AR could grow new markets and disrupt or even bring down existing ones after the market really gets going next year.


VR and AR headsets both have stereo 3D high-definition video and audio, they both show you stuff that does not exist, but there’s a big difference. VR is fully closed and immersive, while AR is open and partly immersive – you can see through and around it. Where VR takes users inside virtual worlds that are totally disconnected from reality, immersing them, AR puts virtual things into users’ real worlds, augmenting them, effectively improving their real world with enhanced data to perceive.

It might feel like this distinction is splitting hairs and very narrow to call, but that small difference will give AR the edge over not just VR, but the entire smartphone and tablet market. There are major implications for Apple, Google, Microsoft, Facebook and others.



VR is a brilliant idea for games and 3D films – that’s what it was ideally designed and conceived for. However it is primarily a seated experience, as you might walk into things and hurt yourself if you walked down the street wearing a closed headset that obscures and masks your senses and perception. It’s still a brilliant technology with a monumental user base of tens of millions among console, PC and MMO gamers, those who prefer 3D to 2D films, as well as niche enterprise users (e.g. medical, military, education). This has attracted a growing apps/games ecosystem around early players like Unity, Valve, Razer and others.

AR is also great fun for games, but maybe not as much fun as VR as it gives true immersive experiences similar to the  mobile versus console games comparison. But AR has the potential to play the same role in our lives as mobile phones with hundreds of millions of users. People could wear it anywhere and do anything. Where VR is like wearing a console on your face (Oculus), AR is like wearing a transparent mobile phone on it (Magic Leap, HoloLens).


AR can take on a similar role to mobile across sectors, and support a host of uses nobody has thought of yet. The many things we can do with AR include a-commerce (we just invented a new cousin to e-commerce and m-commerce), voice calls, web browsing, film/TV streaming in plain old 2D as well as 3D, enterprise apps, advertising, consumer apps, games and theme park rides. So while games are prominently present in most AR demos, they are only one of a lot of potential uses for AR.

TechCrunch recently did a study on the potential and possible opportunities in AR and VR.  And here are some results from that.

They think VR’s addressable market is primarily core games and 3D films, plus niche enterprise users. VR could have tens of millions of users, with hardware price points similar to console. They anticipate consumer software/services economics similar to current games, films and theme parks, but don’t expect substantial additional data or voice revenues from VR. There could be meaningful enterprise VR revenues, but they think that AR could take more of that market.

They think AR’s addressable market is similar to the smartphone/tablet market. So AR could have hundreds of millions of users, with hardware price points similar to smartphones and tablets. This could drive large hardware revenues for device makers.

AR software and services could have similar economics to today’s mobile market, as they both cannibalize and grow it. A large AR user base would be a major revenue source for TV/film, enterprise, advertising, and consumer apps from Facebook to Uber to Clash of Clans. Amazon and Alibaba would have an entirely new platform for selling to a mass audience. Together with innovative applications nobody has thought of yet, AR’s scale could prove a bonanza for mobile networks’ voice and data businesses. Someone has to pay for all that mobile data.

But it not all roses and fun here, some VR applications give people motion sickness, and the privacy questions surrounding Google Glass raised a big ruckus all over the world! There are chinks to iron out and they need to iron them out fast, it’s already 2015! Vomit reality and Glassholes need to get fixed!


About Shakthi

I am a Tech Blogger, Disability Activist, Keynote Speaker, Startup Mentor and Digital Branding Consultant. Also a McKinsey Executive Panel Member. Also known as @v_shakthi on twitter. Been around Tech for two decades now.

View all posts by Shakthi →