Woman wearing Meta’s Quest 3 headset
Meta’s Quest 3 headset © Meta

You are never far from a screen in today’s world. But we are drawing ever closer to the point where, instead of staring down at a phone or tablet, you can simply gaze ahead through a digital lens to find the information you seek.

Global technology giants, including Apple, Meta and Microsoft, are racing to create the hardware that will propel the so-called “immersive era” — when augmented and virtual reality start to mesh with daily life, radically transforming both work and play.

“Immersive tech is going to touch every part of our economy,” says Jessica Driscoll, director of immersive technology at the innovation centre Digital Catapult. She predicts a “big push” for the technology to be used to make the design and manufacture of goods more efficient, and to enable a more environmentally sustainable means of cross-border collaboration.

Consumer spending on VR is expected to triple by 2027, reaching $5.7bn globally, according to tech consultancy Omdia. It will reach $2.83bn in the US and $458mn in China by 2027, Omdia predicts.

But the true potential of immersive tech is still to be unlocked, as developers grapple with the challenges of miniaturisation, design and making different hardware and software interoperable.

AR involves combining a view of the real world with 3D graphics, while VR involves creating a completely virtual world. An early version of the latter was pioneered by General Electric in the 1970s to make a flight simulator for training pilots. But it has only relatively recently found wider adoption among consumers, and usage rates remain low.

“The last 10 years has ushered in a new era in the commercialisation of VR but we are still in our adolescence,” admits Tuong Nguyen, an emerging technologies and trends analyst at the consultancy Gartner. “It’s a small market but growing quickly,” he says — adding that use among consumers is typically sporadic, and on a limited basis.

AR is already a common feature of apps that use smartphone cameras, or photos. Examples include visual translation apps; playful face filters on photo apps such as Instagram; shopping apps that superimpose pairs of glasses on your face or furniture in your living room; and the cult 3D game Pokémon Go.

The Nidoran character of Nintendo Co.’s Pokemon Go augmented-reality game, developed by Niantic Inc., is seen in front of a stall on a smartphone
Pokémon Go in action on the streets of Hong Kong © Anthony Kwan/Bloomberg

VR has made some more inroads in workplaces, though, as headsets have become a key tool for specialist training. For example, BP uses them to train oil rig workers, avoiding the time, expense and safety risks involved in training at an offshore facility. Designers at Ford use them to test new car shapes, instead of making mock-ups using clay.

However, augmented reality — a complex blending of the real and virtual world — is likely to have the biggest impact on capital-intensive heavy industries, such as construction and maintenance, where people are involved in “hands-busy work and need just in time information”, explains Nguyen.

The next tech growth markets in AR and VR

Countries to watch 2023-2027

US A hub for AR/VR innovation, Meta will continue to invest, innovate and drive sales. The launch of the Apple Vision Pro will boost excitement and interest.

UK With a thriving ecosystem of studios and companies, Britain is poised to lead the European market in these fields.

China Despite its fragmented market today, China is set emerge as one of the industry leaders, led by major players like ByteDance.

Japan Japan, driven by Sony’s PSVR2, is set to become the second-largest VR market in Asia after China, with a growing AR/VR presence.

Source: FT-Omdia Digital Economies Index

Microsoft’s HoloLens 2 headset is pitched at the manufacturing, construction and healthcare industries. Mock-ups show a person fixing a piece of machinery while on a video call with someone giving instructions.

But, for now, the most widespread application of VR has been centred around gaming. “The main reason why people buy these devices is games,” notes George Jijiashvili, senior principal analyst at Omdia. This month, Meta released its Quest 3 headset which, priced at $499 in the US, has piqued the interest of game developers.

Even so, Jijiashvili says: “I want to underline that, as much as this is a question around hardware advancements, which are happening, we’re seeing much slower progress in terms of content and use cases. This is the biggest challenge facing VR right now.”

Further use cases are emerging in the auto sector, though. Automotive manufacturers are using AR and VR to develop the next wave of in-car entertainment systems, as well as providing route navigation.

Ford, Volkswagen and BMW are enthusiastic about VR but it is Chinese carmakers who are “very willing and aggressive” in their partnerships, says David Tett, principal analyst at Omdia.

This pivot towards immersive tech by auto companies has been accelerated by the arrival of electric vehicles. But the rise of autonomous cars will spur further demand for in-car diversions ranging from films to karaoke.

“That’s where these car companies are now seeing their long term future: selling you an entertainment package to effectively enable in-car media apps,” says Tett.

Eventually, however, tech experts predict the boundary between AR and VR will blur — and they see the launch of the Apple Tech Vision Pro headset being an important milestone on that path.

The new Apple Vision Pro headset is displayed during the Apple Worldwide Developers Conference
The new Apple Vision Pro is unveiled in June © Justin Sullivan/Getty Images

Due for release early next year and expected to be priced at $3,499, Apple’s headset offers both VR and AR to create “spatial experiences”. What looks like a pair of sci-fi ski googles is, in fact, a sophisticated wearable computer.

The Pro’s antecedents include the Oculus Rift and Metaquest 3 headsets but, according to Driscoll at Catapult, Apple tech Vision Pro is a “step up” in terms of design. Another big advantage is Apple’s ecosystem, which could allow headset users to access pre-existing apps built for the company’s other devices.

At present, however, Meta dominates the market for consumer VR headsets, with a 71.8 per cent share, followed by Sony with 8.8 per cent, and Valve with 2.9 per cent.

How the market pans out may depend on the way both VR and AR developers are able to meet future challenges around interoperability, IP licensing permission, and design — given most current headsets are too clunky to appeal to the average consumer.

A further factor in accelerating wider adoption will be the rollout of the 5G mobile network, which is designed to connect almost everything — including objects, people and devices — and to host complex 3D spaces such as the metaverse.

“5G’s low latency and high bandwidth can open doors to complex mixed reality applications,” suggests Jijiashvili, “further bridging the gap between physical and digital experiences.”

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