Connect with us
Click me!

Business

Augmented and virtual reality: The promise and peril

Avatar

Published

on

We are at the cusp of a major revolution from mobile to immersive computing. Last year was seen as the dawn of a third wave of devices employing augmented and virtual reality (AR and VR), which define the two spectrums of immersive technology that could replace mobile computing.

A range of major products came to market in 2016 from companies including Oculus VR, Sony and Google. Since it bought Oculus for $2.1 billion, Facebook has acquired a further 11 AR and VR companies, underscoring the company’s view that AR and VR will form the next frontier. The large investments and acquisitions by tech giants suggest that these technologies will become increasingly integrated with the platforms on which we consume content.

According to a recent estimate by Goldman Sachs, AR and VR are expected to grow into a $95 billion market by 2025. The strongest demand for the technologies currently comes from industries in the creative economy — specifically, gaming, live events, video entertainment and retail — but will find wider applications in industries as diverse as healthcare, education, the military and real estate over time (Exhibit 1).

Four ways AR and VR will change how we create and experience content

Moving from observation to immersion

AR and VR will offer a completely new creative medium — “an artist’s dream to build worlds, pixel by pixel,” according to Drue Kataoka, an artist and technologist. This promises the replacement of rectilinear devices with technologies that depict worlds in ever-expanding concentric circles, providing a level of immersion and experience that has never been seen before. This could be game-changing: users will no longer view content but will be placed inside ever-expanding virtual worlds and find themselves at the center, hence the “immersive” nature of the technology.

“We’ve effectively had the same flat screen medium since 1896. VR/AR uniquely provides a sense of presence and immersion, it’s a brand new art form and brand new form of experiencing,” says Eugene Chung, founder and CEO at Penrose Studios.

Reduced production costs in creative activities

“Virtual prototyping” allows us to shorten the time and cost of iteration in product development while also improving the quality of the end product. For example, one design firm passed $50,000 worth of savings to a client in the aeronautics industry by using VR prototyping to abolish two physical prototype cycles and eliminate the time that would have been required for the assembly of custom samples. Wider use of virtual prototyping will allow companies to reduce the number of costly prototypes needed, as well as significantly decreasing the timeline from conceptual design to production and commercialization.

“You can iterate on your city plan, your home and your construction worksite many more times before you actually start to dig or make a change. As a result, we’re going to get better creations,” says Jeffrey Powers, co-founder and CEO of Occipital.

While traditional technologies also allow companies to prototype, with immersive tech, designers are provided a more direct experience by being able to walk, fly and inter act with their prototypes, either in an AR or VR environment. The implication is that immersive technologies promise higher accuracy in design and, as a consequence, an end product of higher quality at a potentially cheaper cost than traditional prototyping technologies can provide.

Lower barriers to entry for new creators

Immersive technologies will also empower smaller firms to produce higher quality content at lower cost. The technology already exists to process 360-degree imagery in hours — something that until recently would take days — and is within reach for filmmakers on small budgets. In the same way that smartphones and apps moved mobile photography outside the realm of professionals and enthusiastic hobbyists, we can expect AR and VR to open up new creative avenues for all of us.

As a tool for empathy and cognitive enhancement

Immersive technologies may also allow us to feel closer to global issues, such as humanitarian crises, enabling a form of telepresence that evokes levels of empathy as if one were present. According to Lynette Wallworth, an artist and director, AR and VR “provide a layer of authenticity of experience” not offered by other mediums.

Although there are suggestions that increased consumption of digital media can cause a decline in empathy, many artists working with AR and VR are convinced that the medium will become the “ultimate empathy machine,” fostering a society with informed perspectives of other communities and identities. Gabo Arora, founder and president of Lightshed and a creative director and senior advisor at the United Nations, explains: “You’re discovering a new grammar of storytelling and emotions.” If the optimists are right, we could be well on the way to a more informed and creative world.

There is also promise for AR and VR to provide immersive learning experiences. Beyond immediate gamified learning, AR and VR biosensors have been harnessed in therapeutic domains, allowing one man to drive for the first time in his life using just his brain. “[Immersive technologies] are a form of brain augmentation that networks our biological systems to a digital device,” says Tan Le, CEO of Emotiv.

Competition for talent is a limit to growth

Beyond technical challenges — ranging from device size to battery life — one potential barrier to rapid progress in the AR and VR industries is the lack of talent to meet the demand for growth. The industry is at “ground zero,” so it is difficult to show the gap in supply and demand of talent. However, initial informal measures exist, such as US data showing that demand for freelancers with VR expertise grew far faster than that for any other skill in the second quarter of 2017, a 30-fold, year-on-year increase. Similarly, a recent survey of 200 Canadian companies working on VR projects concluded that VR will face a talent crunch that “could fuel consolidation between companies.”

Strategically developing domestic talent

Governments would be wise to develop strategic planning that captures talent in emerging technologies to guarantee their countries are at the leading edge of the next computing frontier. China is one example of an early mover and, according to Di Yi, vice-president of Perfect World Co., “the Chinese government offers substantial support for the VR industry.”

Areas such as Zhongguancun, Beijing, are subsidizing companies by up to $1.45 million to further develop the VR industry and position the region as the next global technological hub.
Other locales, including Beidouwan VR Village, in Guizhou province, offer grants to support content development and investment. By 2019, the village is expected to produce 1.5 million pieces of VR-related hardware, as well as 500,000 transactions of software content —delivering 3,500 new jobs in the process.

Enticing foreign talent

Governments can also take an active role in investing in immersive content. A 2016 survey of 500 AR and VR professionals reported that almost 50 percent are using their own personal funds to develop their companies. Fewer than 8 percent reported “other” sources of funds, including government. Given that VR production costs can run into the hundreds of thousands, forward-looking policy-makers are promoting subsidies to entice VR talent from around the world. The canniest ensure that, in the process of doing so, they protect and develop their own industries at the same time.

In France, for example, the government-backed CNC Fund provides funding for AR and VR producers to co-produce content with local teams, offering grants that cover both development and production. In one recent example, the fund supported around 40 percent of the €500,000 costs required to produce a VR short film. The CNC also has the authority to award a tax rebate of up to 30 percent of qualifying expenditures to projects wholly or partly made in France and initiated by non-French companies.

Do these approaches work? While the effect on VR content is still being evaluated, the policy appears to have been effective in supporting “traditional” filmmaking in France. Around a year after implementation, 31 projects from eight different countries had been launched, compared to only four in the previous year. These projects, which included blockbusters such as Inception, were estimated to generate approximately 119 million in direct spending in France and involve 450 days of filming — compared to 7.4 million in spending and 84 days of filming in the year leading up to the policy. Considering the nascent stage of VR, it is too early to tell whether the gains can be transferred to this new industry, but the attractiveness of the mechanism to creators is clear.

Immersive content will be more personalized — but at a cost

Designers of software have an incentive to keep users inside of their websites and apps because their business models increasingly rely on the collection of personal data as a way to personalize content.

Adam Alter, associate professor of marketing at NYU’s Stern School of Business, describes the strategy as a “brute force, big data-driven” approach: “Companies A/B test different features of a product and iterate to the point that is maximally difficult to avoid.” In addition, deep-pocketed companies have “teams of psychologists working according to the latest information to make humans more engaged.”

Indeed, evidence from the last decade shows that, while our overall leisure time is increasing, we are spending more of it using screen-based devices (Exhibit 3). A key driver of this shift is the practice of taking engagement as the main success metric for digital technology. The more time we spend on a device, the more data there is to collect about our interactions and the more targeted product offerings become — a reinforcing cycle that is likely to speed up as immersive technologies enter the mainstream.

The result is that the content we experience in immersive technology will be increasingly personalized. This could play out in a number of ways, but advertising, in particular, is well-placed to benefit.

Advertising promises to be more targeted

Advertising is already increasingly personalized as our personal data allows better and better targeting. In the context of immersive technologies, the term “gaze-through rate” has been coined to describe the effectiveness of an augmented or virtual advertisement in capturing user attention. Companies such as Retinad offer analytics to track behavior on AR and VR devices with an aim to increase the conversion rate from advertisements as well as user engagement with content. Thus far, they have been shown to be up to 30 times more effective in engaging users than mobile advertisements.

Greater engagement may negatively impact well-being and privacy

The drive to capture our attention creates two challenges. First, our well-being is at stake: non-screen activities are more clearly linked to happiness than not. One longitudinal study of a major social network found a negative association with increased engagement and individual well-being, suggesting “a possible trade-off between offline and online relationships.”
Teenagers in the US who devote just six to nine hours a week to social media are 47 percent more likely to say they are unhappy than those who use social media even less.

Secondly, a lack of sovereignty over personal data may push users away from the long-term adoption of new technologies. A report by the World Economic Forum shows that 47 percent of people across six countries have stopped or avoided using a service because of inadequate user controls and this figure rises as high as 70 percent for China.

Click to comment