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The value of VR and AR in a digital world

In today’s always-on world, VR and AR can be used by brands to:

• Build brand affinity

• Deepen customer relationships

• Differentiate the brand

• Stay a step ahead of competition

• Transform strategies and experiences

VR and AR: What’s the difference?

A three-dimensional, computer-generated digital world that can be explored through the use of headsets,

sensors, or other special equipment.

An enhanced environment that seamlessly blends the digital and physical world through advanced technology. While AR is used extensively by the

military and in business-to-business applications, consumer-focused programs are less common.

VR

AR

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Taking VR mainstream: Barriers to adoption

While VR has made great strides in recent years, the technology has yet to reach critical mass.

High hardware costs

Lack of content and experiences

Industry focus on gamingand entertainment

Consumer barriers

High investment costs

Consumer adoption is low

Technology is nascentin most industries

Brand barriers

Advances in technology

Falling hardware costs

Brand experimentation

VR-enabled smartphones

Adoption speed

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Global study: Consumer interest in VR

To help brands better understand consumer awareness of and interest in VR, SapientNitro commissioned a global study of 2500 consumers.

Key findings:

• VR awareness is increasing

• There is strong appetite for VR content and experiences

• VR availability and trial rates remain low, stymieing adoption

• Consumers are willing to invest in VR – once brands commit to the medium

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Key finding: VR awareness is increasing

• 40% of respondents globally could name, without prompting, at least one brand of VR headset

• Highest VR awareness is among global youth (18 to 24 years old) with more than half (54%) of respondents naming at least one headset brand

• Lowest VR awareness is among 55- to 64-year-olds, with just one in five (19%) recalling a headset brand

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Key finding: Consumers have significant appetite for VR

• Almost half (47%) of our respondents said that they were very or extremely interested in using a VR headset

• Emerging markets show the greatest interest, with China and India leading the way (66%and 64%, respectively)

• Relatively low levels of interest in UK and U.S. (35 and 37%, respectively)

• 25- to 34-year-olds (67%) and 18- to 24-year-olds (55%) showed the highest levels of interest in VR technology globally

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Key finding: VR availability and trial rates remain low, stymieing adoption

• Just under one-third (32%) indicated that they have used one or more VR headsets

• U.S. reports the lowest usage rate (18%)

• India reports the highest usage rate (53%)

• The most popular VR headsets, in terms of trial: Samsung Gear VR, Google Cardboard, and Sony PlayStation VR

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Key finding: Consumers are willing to invest in VR

• VR headset ownership remains limited, with just 4%of global respondents saying that they own a device

• Growth appears imminent with two-thirds (66%) of consumers aged 25-34 reporting that they are “extremely” or “very interested” in purchasing a headset in the next two years

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The million dollar question: When will VR become mainstream?

Using these data as a baseline, we can anticipate the following timeline for VR adoption:

PHASE 1Five dedicated headset platforms by the end of 2016

PHASE 2Mobile phone VR technology speeds adoption

PHASE 3Expansion ofnon-gaming content

PHASE 4The rise of augmented reality

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Phase 1: Emerging platforms

• Industry research anticipates up to 7 million headsets will be sold in 2016, with most being mobile VR headsets.

• Sony and HTC have already announced their entries into the full-feature headset market, joining the Samsung Gear VR and Oculus Rift.

• Google Cardboard helps make this trend both inexpensive and accessible for consumers. In less than two years, 5 million headsets have entered the market, thanks in part to promotional giveaways and the sale of specially-branded versions.

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Phase 2: Mobile and VR

• Mobile is the key to VR adoption.

• Nearly every smartphone produced in the last two years is VR-capable – and the experience is getting better as manufacturers are constantly packing more processing power and higher-resolution screens into devices.

• Applications like the Oculus Social Alpha app for Samsung Gear VR users, as well as interactive solutions from companies like AltspaceVR, are leading the exploration into creating connected social experiences in a virtual environment.

• Google's Daydream headset, which enables hands-free viewing on its recently announced Pixel phone, hit the market in November 2016.

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Phase 3: Non-gaming applications

• This phase will see a steady expansion of branded experiences beyond gaming into industries such as entertainment, retail, travel, and health.

• Meanwhile, headsets will continue to get sleeker and cheaper – or be incorporated into smartphone contracts, making more households VR-enabled.

• Brands will need to deliver a library of content that is marketed appropriately, and that drives people to strap in and experience it.

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Phase 4: Augmented reality

• Several major AR technology announcements from established tech companies and billions of venture capital dollars are flooding the AR landscape.

• Hardware pioneers – such as the Microsoft HoloLens, HTC Vive, Epson Moverio, AtheerLabs, Daqri, and Meta – are entering the market, and new pilot applications continue to be launched regularly.

• Consumer applications will follow the pattern of VR adoption, with mobile apps and specialty devices making the technology more accessible.

• Beyond external wearables, the next frontier of AR technology comprises of devices that are put directly into our bodies. For example, the smart contact lens will superimpose computer-generated images over the real world and project them straight into users' eyes.

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Conclusion

VR and AR may represent the next major computing platform. And, as adoption increases, storytelling opportunities will be more widespread.

Now is the time for brands to experiment and explore how they can fit VR and AR into their strategies. Those who recognize and exploit this technology’s ability to generate empathy, develop deeper connections, and create lasting memories are placing themselves on the leading edge of immersive marketing.

For an in-depth review of our key research findings and what they mean for marketing’s future, download our full report, entitled VR and AR Demand Long-Term Action from Innovative Brands.

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About the author

Adrian SlobinManaging Director and Digital Strategist, SapientNitro Minneapolis

aslobin@sapient.com

A member of the North American Leadership team, Adrian Slobinowns SapientNitro’s innovation offering globally, which includes an innovation lab, an investment arm, and formal relationships with university innovation centers.