AR and Mixed Reality Have More Potential, But VR Has All the Hype

According to the second annual VRDC VR/AR Innovation Report, developers see more long-term potential in mixed reality (MR) and augmented reality (AR) than VR. Yet the hype over VR still reigns.

Developers are seeing more long-term potential for mixed reality (MR) and augmented reality (AR) over virtual reality (VR), as well as a need for more enterprise applications, according to a new survey. The UBM Game Network*, which runs the Virtual Reality Developers Conference (VRDC) as well as the Game Developers Conference (GDC), polled over 600 professional VR, AR, and MR developers in order to gain insight into the industry, including funding, hardware preferences, and market trends and challenges.

 Despite a stronger long-term outlook in regards to enterprise applications, the vast majority of VR, AR, and mixed reality development is still in games and entertainment. (Image source: UBM Game Network).

The second annual VRDC VR/AR Innovation Report reveals a cautiously optimistic community around virtual, augmented, and mixed reality, with developers seeing less potential for short-term profits. Long story short, developers feel VR, AR, and MR are viable, but have a long road ahead to the sort of mass adoption seen by the smartphone, for instance.

“While money still flows freely through the VR/AR/MR industries, it’s clear that most industry professionals aren’t expecting to turn a profit in the short-term,” according to the survey. When asked when they believed VR, AR, or MR would generate a profit for them or their client, 16 percent of respondents said in the short term, 39 percent said medium term, and 38 percent said only in the long term.

“The market still must mature,” commented one respondent who expected VR to be profitable only in the long term. “We are now in the ‘trough of disillusionment’ and there is no indicator as to exactly when that will end. I believe it has much to do with hardware.”

Another respondent agreed, saying that VR's biggest failure thus far has been not subsidizing the cost of headsets. “This is what caused smartphones to get such adoption,” the respondent said. “If the iPhone cost $1,200 when it first launched, we would have seen the same slow growth as VR.”

“For enterprise clients, the ROI is clear in the medium term,” another respondent said. “The consumer market is yet taking form, so I have no hopes of creating a monetizable consumer-facing experience that'll make money anytime in the next four to five years.”

Enterprise was called a go-to for developers looking for “easy answers” and “greater revenue” but was outpaced by VR, which succeeded in going straight to the consumer, by one respondent. “VR needed to embrace the enterprise first and get essential elements and cost down before going retail with unproven experiences,” another said.

Opinions on what market positions AR, MR, and VR would take were mixed. One respondent said, “I believe AR will be integrated into daily life (think mobile phone/second screen replacement) while VR with be used for education, gaming, and some enterprise.” While another commented, “Industrial, commercial and enterprise AR applications have more of an immediate business need to fulfill ... as opposed to discretionary gaming/entertainment."

“Likely AR wins in the long run because the market potential and markets served have a larger revenue potential in things like construction,

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