Answers to frequently asked questions about AR / VR and their business prospects

Is AR/VR/MR (AVM) a fad? Will they really be about more than games?

Yes, it is true that many tend to think that AR/VR/MR technologies are only applicable in gaming and entertainment industries, but it is not so. These technologies are developing rapidly, with more and more industries looking for a way to apply them. One of the most important examples is education, where these technologies could be of great use for visualization of studying material, grabbing students’ attention, and making studying more interactive and interesting. Also, these technologies could be implemented in corporate training and onboarding processes, which would help to reduce training expenses and speed up the process of adaptation for new employees. When those who study have real experience, instead of experience of just observing, it could drastically increase their understanding and information retainment capabilities. This is what makes AR so inviting for studying and training. This goes without saying that AR frees up its users from any physical limitations and obstacles.

AR also has a great potential to be applied in retail because it enables demonstrating products in a virtual showroom, creating new consumer experience and helping to save costs on retail space. Consumer creates his or her own experience of interacting with a product by directly interacting with it, which helps to better understand its value and differentiate it from similar products. This experience leads to a higher conversion rate, as a consumer would most likely make a decision to purchase a good product after trying it by oneself.

AR is also widely applicable in everyday life. For example, real time translation in Google Translate greatly increases the comfort of communication when we travel. Also, Google has implemented AR in Google Maps to make our daily commute more accessible and simple.

Being in a leadership position, what is your opinion on the impact of the current pandemic on the AR/VR products industry? And what developments can be expected in the near future?

The pandemic has negatively affected almost all sectors of the economy. However, the IT industry in general, and the AR / VR / MR technology in particular, felt more of the multi-directional impact of the global lockdown. On the one hand, our customers’ revenues decreased, and in this regard, some companies, having chosen a wait-out strategy, cut their marketing budget. On the other hand, manufacturers and marketers saw a vital need for an innovative approach in marketing, sales, and online promotion. While earlier many people saw the use of AR technology to promote a various group of products (clothes, shoes, accessories, home décor, furnishing, real estate, cars, etc.) as just a trend, and not as an essential business tool; in the new reality of closed stores and remote work, now the use of innovative sales methods has become a must not only for successful promotion but also for maintaining the market position. Naturally, this trend has further spurred the technological progress of our industry. Moreover, some manufacturers had to make changes to their products to make the AR implementation possible.

For example, recently we have finished a come-to-life puzzle project for an international company. Well, to make the AR app work smoothly the client had to slightly change the puzzle pieces so that the camera had something to catch. On the one hand, this is a small local case, but it illustrates a general trend that tends to grow in the future — manufacturers will have to more and more adapt their products to the functional requirements of AR technology.

Where is AR/VR/MR today? Where is it heading? How mainstream is this technology really going to be?

From the cycles of maturity perspective, today AR has successfully climbed over the peak illusions and huge expectations, went through the stage of certain market disappointments and has begun its way on the “Enlightenment hill” — the period when some ideas are reviewed and corrections are made. I think that in 2-3 years AR will achieve the “Plateau of performance,” when the advantages of AR become obvious for everyone. Technological mastodons, such as Apple, Google, Facebook and others, play an important role in this process. Nonetheless, even at the present stage, the technology of AR is pretty widely spread. We see many successful cases and the number of such cases is growing rapidly: Pokemon Go, implementation of AR in Snapchat and Facebook, apps by Wayfair and Ikea that help customers make buying decisions via the Internet, and this list is expanding.

What are the underlying user needs that you want to solve? What role would the real world play in this experience? What is your company doing to make VR/MR/AR a consumer product?

Our company Live Animations that specializes in developing loyalty programs for retailers and large brands based on AR solutions. Naturally, our end consumer is families with children. Parents are interested in the development of their children, and this is one of the needs that we solve by creating solutions and content that help children to explore the universe and develop their abilities. Modern generation of children require a special approach: today a smartphone is the most usable and convenient tool for them to explore the world and acquire new information. AR performs an educational function by presenting a child new facts and information in an fascinating way.

At the same time, brands are interested in creating and facilitating emotional connection with their clients, informing clients about brand’s values in an accessible way, gaining competitive advantages, and adding extra value to their products. We resolve all these tasks by developing effective marketing mechanics and creating useful and interesting AR content. Augmented reality is an opportunity for a brand to speak the same language with its audience, to boost audience’s loyalty, and, of course, to win customers’ hearts.

Real world plays the main part in this process, because it serves as the foundation for all decisions and content. The uniqueness of AR lies in the fact that it enables refocusing user’s attention from a mobile device and on the real physical world, making interactions with the real world more informative and interesting, enhancing exploration opportunities.

Who are the target users and what are their digital preferences? What devices are your target users most likely to have? What if they don’t have a headset for VR/AR?

The target users AR/VR/MR are Millennials, the most active consumers of products and services today. Millennials are ambitious, purposeful, and open-minded people born from 1980 to 2000 who are always online and could not imagine their life without gadgets. Millennials’ consumer model is different from everyone else’s, hence traditional marketing as we know it adjusts according to their needs. They use the latest devices, newest and most powerful smartphones and tablets, which could easily process top-quality AR content.

What is the greatest challenge that the medium of virtual/augmented reality/mixed reality must overcome in next five years?

The greatest challenge for AR now is to become more user-friendly. This is the most important one, from where I am sitting. One of possible solutions is to create AR glasses affordable and accessible for every person. The technology should be convenient to use for a user, just like a smartphone is convenient today, with a multiplicity of its functions and tools. Although, hardware development is only a part of the task. Just as important is to equip it with software and content that is useful and interesting for the mass consumer. A sufficient number of competent developers should emerge that would be able to create content of this high level of quality.

How has the AR/VR niche evolved in the recent years and what further developments can be expected in the future?

In recent years, the systematic switching from specialized use (military, training, production, and logistics) to consumer mass adoption was the main trend of AR / VR development. This is especially true for augmented reality. After the world’s leading players saw how effective this technology could be regarding marketing and sales, AR became mainstream. Marketing lens and filters for social networks, virtual fitting rooms, innovative loyalty programs for retail and FMCG, augmented reality advertising campaigns, augmented reality books — we can go on for quite some time.

The AR market is expected to grow from USD 7.6 billion in the last year to USD 29.5 billion by 2025.

Such popularity of this technology made gadget manufacturers supply new devices with special technologies to improve AR performance. The most striking example is the launching of a device with an integrated LiDAR scanner and the emphasis on this particular feature in the market leaders’ advertising campaigns.

Another significant factor is continuously expanded 5G coverage, created specifically to support augmented reality. Despite the resistance of the marginalized groups of society and the crazy myths, it will no longer be possible to prevent the widespread of this standard.

Besides, the world market has been waiting for smart augmented reality glasses for quite some time now. This device will definitely revolutionize not only marketing strategies but also our whole lives. While the leading IT giants, under the cover of trade secrets, are competing with each other to develop the long-awaited device, its functionally similar predecessors are already beginning to win the hearts of consumers. For example, AR headset or unique devices for socializing people with special needs.

Therefore, the immediate future — literally a year or two — will transform our view of both — reality itself and the methods of doing business in it.

What could impede the growth of virtual and augmented reality?

Inconvenience of use and a lack of quality content, as well as mass prejudices about virtual and augmented reality are the major impending factors. Also, the complexity and cost of development are major barriers for companies today, as not all companies could afford the creation of quality content and effective solutions. In addition, one of the obstacles could be a lack of understanding about AR capabilities and the ways of the technology implementation, poor knowledge about how AR/VR could be applied to achieve their business goals. Today, many companies use these technologies only to create a WOW-effect and this does not bear enough value for end users.

Are there any lasting physical effects to using virtual and augmented reality? If yes, can human bodies and minds cope with AR/VR?

Speaking of AR, there are clearly positive effects on the information perception mechanisms. AR provides a level of visual attention that is almost two times greater than that of the same tasks without this technology. It affects perception and storage of information in human’s memory: information that is stored or coded in our memory in AR is 70% more effective. This process is also known as imprinting of information. If we are speaking of the negative influence of AR, it is not greater than that of a smartphone or a laptop, because the main AR activation instrument today is a smartphone.

The case with VR is a bit more complicated. Of course, this immersive technology enables total immersion, but it has its downsides that become evident after a lengthy exposure to virtual reality (more than 30 minutes). The most common of them are desorientation in the “real” world and nausea. However, the long-lasting negative effects are nonexistent and these symptoms are brief.

As an established business leader, what would be your advice to the budding entrepreneurs aspiring to venture into the AR/VR industry?

Choosing the right market segment for AR / VR development is the best beginning for your future success. It is so important because today practically every sphere of our life — medicine, education, marketing, the list is almost endless — is in high demand for AR and VR.

Choose a niche that inspires you. It is crucial to make sure that economic feasibility is not the only vector that defines your business growth strategy. Because in the medium- and long-term run, a team of like-minded people inspired by the same idea will always win from people who work only for the sake of money.

Our experience and our competitors’ experience have made it clear that it by no means benefits your business if you are ready to do any work on this market. Many budding entrepreneurs are willing to work on any project and, as result, they lose.

We have been through all that. Initially, we have defined our segment quite clearly — AR / VR development for children and families products. Nevertheless, it turned out to be too vague. Well, we had to come up with a more detailed concept of our place on the market and look for our niche.

Therefore, the most important thing to do is to concentrate on what you are most interested in, and what gives you the feeling that you are the best in it.

It is the foundation of your future team. After all, the people with whom you are going to conquer the business world side by side should not just be professionals — they should literally love what they do.

For example, to create a great product for children, we need creative specialists, people who love to create something for children. If we are talking about real estate, then a completely different team is needed: people who like architecture and design. As it is just impossible to create amazing products without understanding the problems and development trends of the area that you are bringing to life.

The art of business is to be able to recognize and satisfy a need before the customer himself even realizes he is having one. Here comes the-perfect-for-this-task AR technology. It’s a kind of brand’s personal world, which professional marketers can fill with anything that may be useful or interesting to consumers and associate it with the buying experience