A year ago I made the bold prediction that 2018 would be the year of Augmented Reality:

An explosion of interest in VR gaming this year will pave the way for AR to be the killer app of 2018. By then we’ll have 5G networks in place that can handle the data loads of bi-directional video streams and symmetrical fiber networks to provide the backhaul. We will also have to work out the policy barriers to the deployment of such networks, which now looks like the greatest barrier to overcome.But I can’t wait. Here’s to augmented reality, the killer app of the 5G revolution. Happy 2018.

This prediction was predicated on this year being great for Virtual Reality, which didn’t exactly happen (unless you count the November election as an unreal event). But AR leap-frogged VR on the strength of Pokèmon Go, the app that showed millions what it’s all about. Rather than VR paving the way for AR, they’re both going to develop in parallel.

AR/VR Equipment Sales

Headsets are a vital part of VR since it blocks out the real world in order to replace it with the virtual world. Headsets are optional for AR since it’s about enriching the real world to create a more intense or better informed version of reality. VR headsets tend to be clunky, while AR headsets are more like conventional eyeglasses.

While both headset types have been around for a long time, they’ve never generated enough interest to warrant tracking by the research groups that tell us how many gizmos are bought and sold each year so investors know what stocks to buy and what markets to pursue. This has changed with the first VR headset market report from The NPD Group: “during the six-month period between May and October, U.S. dollar sales of VR and AR devices combined were up 300% compared to the previous six months.”

Regardless of the baseline, sales tripling in six months is a big deal. New tech markets  are often slow to take off because they depend on equipment, software, and user acceptance. But when the ingredients are in place, they accelerate very rapidly as they’re doing now.

Best Selling Headsets

Another research firm, SuperData, estimates that Sony’s PlayStation VR, Samsung’s Galaxy Gear, Google Daydream, HTC Vive, and Facebook’s Oculus Rift are the best-selling VR headsets. These products vary radically in price, from $80 for Google Daydream to $800 for HTC Vive. And they also vary in functionality, from the very basic models meant to supplement mobile phones with a second screen to the high-powered Vive with its full-body motion tracking in the VR space.

There’s a similar arms gap with AR smart glasses. The $130  Snapchat Spectacles do nothing more than record 10 second video clips. But the fancy ODG R-7 is a computing cornucopia, featuring a 3D stereoscopic see-through HD display, stereo sound, Wi-Fi, GPS, gyroscope, humidity sensor, altitude sensor, and more. The company has even ported Pokémon GO to the glasses. 

In between these price points lie number of variations tailored to applications. The $500 Solos is built for cyclists, hence it connects to Garmin cyclist gear and apps such as Strava, like its rival the Recon Jet. Hence, there are specialized smart glasses for social sharing, fitness, and commercial applications such as device repair.

Applications and AR Use Cases

The sky’s the limit for AR apps. At one end so the spectrum there are military apps focused on better situational awareness and navigation for warriors, like you’ve probably seen in movies ever since Terminator. At the other end, there are healthcare apps that keep people alive by helping surgeons operate more effectively, either close by or from a remote location. Surgical AR can also be used teach surgery and anatomy and to optimize surgical room work flow.

In between saving lives and taking them away we have the things that make life worth living: social life, entertainment, commerce, and learning. AR is set to make great advances in all these spheres, and quite rapidly. Pokémon GO went from zero to the most downloaded game in history in a few days, as we discussed with venture capitalist Om Malik.

As much fun as it is, it’s a very basic application in terms of imagery. It’s likely that next-generation AR will build on rich content.

AR Content Houses

In response to AR’s need for specialized video content, AR/VR specialty studios are already forming. The same skillset allows AR content creators to work with both education and entertainment. As needs are well beyond traditional practices in cinema and advertising, these must be fun places to work. Most of the entertainment industry follows a well worn path, but AR is at the cutting edge.

Just as Steve Jobs energized Pixar with this unique Silicon Valley point of view, it’s likely that highly interactive and personalized AR will disrupt Hollywood.

In the next post I’ll take up the opportunities for content and network developments in entertainment.