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Executive Summary

The consumer AR sector still lingers in early stages. Among other things, this means the playbook is being written mid-flight. There’s a great deal of experimentation underway as companies test and iterate rapidly to discover winning formulas and business models.

This goes for consumer AR product strategies. Though a common sentiment in 2016’s hype cycle was that AR applies to everything, it’s become clear that it’s not a silver bullet. It will have native and natural applicability to some aspects of our lives and work… but not all.

Beyond macro categories and use cases where AR should or shouldn’t be developed, there are more granular strategies around user experience (UX). What types of AR interactions resonate with consumers? And what best practices are being standardized for experience and interface design?

Equally important is the question of AR monetization and revenue models. Just as user experience is being refined, questions over what consumers will and won’t pay for are likewise being discovered. The same goes for brand spending in cases of sponsored AR experiences or ads.

These lingering questions compel acute attention to quantifiable AR market successes and best practices. Not only do the sector’s early stages mean that these questions are prevalent… but also that their answers are scarce. That includes evidence of successful execution, as well as transferrable lessons.

With that backdrop, ARtillery Intelligence ventures to find, aggregate and draw meaning from finite AR successes in today’s environment. When examining consumer AR engagement and revenue leaders, what product attributes and tactics are driving their performance?

This started in Part I of the report series with Snapchat. Its social lenses have the greatest consumer AR active usage, and it holds the leading share of AR ad revenue. Among other things, this is propelled by product-market fit, ease of use, distribution and fulfilling key goals for brand advertisers.

Also on the list is Pokémon Go, which we examined in Part II of the series. Though the tech press has moved on to other shiny things, 2019 marks its best revenue performance to date. This is attributed to innovation cycles that breed ongoing novelty and replayability, as well as its sparing use of AR as a game element.

After examining these proven leaders, we now turn attention in the third and final installment of this series to emerging players that show signs of potential. Though earlier and unproven, they show promise and adherence to best practices examined in parts I & II. And they show new best practices worth noting.

These upstarts include 8th Wall, Ubiquity6, and Tilt Five. They also include established brands entering AR, such as Houzz, Instagram and Pinterest. This seemingly random sample shows signs of product and business model traction, which we’ll examine in the coming pages. The goal, as always, is to triangulate best practices and extract tactics and takeaways for AR players today.

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Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure & Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

Price: $499

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Executive Summary

The consumer AR sector still lingers in early stages. Among other things, this means the playbook is being written mid-flight. There’s a great deal of experimentation underway as companies test and iterate rapidly to discover winning formulas and business models.

This goes for consumer AR product strategies. Though a common sentiment in 2016’s hype cycle was that AR applies to everything, it’s become clear that it’s not a silver bullet. It will have native and natural applicability to some aspects of our lives and work… but not all.

Beyond macro-categories and use cases where AR should or shouldn’t be developed, there are more granular strategies around user experience (UX). What types of AR interactions resonate with consumers? And what best practices are being standardized for experience and interface design?

Equally important is the question of AR monetization and revenue models. Just as user experience is being refined, questions over what consumers will and won’t pay for are likewise being discovered. The same goes for brand spending behavior in cases of sponsored AR experiences or ads.

These lingering questions compel acute attention to quantifiable AR market successes and best practices. Not only does the sector’s early stages mean that these questions are prevalent… but also that their answers are scarce. That includes evidence of successful execution, as well as transferrable lessons.

With that backdrop, ARtillery Intelligence ventures to find, aggregate and draw meaning from finite AR successes in today’s environment. And by “success,” we mean large-scale consumer traction and revenue. When examining consumer AR engagement and revenue leaders, what product attributes and tactics are driving their performance?

This includes Snapchat. Its social lenses have the greatest consumer AR active usage, and it holds the leading share of AR ad revenue. Among other things, this is propelled by product-market fit, ease of use, distribution and fulfilling key goals for brand advertisers.

Also on the list is Pokémon Go. Though the tech press has moved on to other shiny things, 2019 marks its best revenue performance to date. This is attributed to innovation cycles that breed ongoing novelty and replayability, as well as its sparing use of AR as a game element.

Other consumer AR exemplars include Houzz and Instagram. Emerging AR players also show early signs of traction that’s worth examining, such as Tilt Five. Altogether, how do we triangulate best practices and extract tactics and takeaways for AR players today?

We’ll do just that in the coming pages, continuing from Part I in which we examined Snapchat. We now pick up the discussion with Niantic and its flagship, Pokémon Go. This draws from the rigor of market watching and analyst work. We’ll synthesize these findings, pursuant to the core mission of empowering you with a knowledge position.

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Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure & Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

Price: $499

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Executive Summary

The consumer AR sector still lingers in early stages. Among other things, this means the playbook is being written mid-flight. There’s a great deal of experimentation underway as companies test and iterate rapidly to discover winning formulas and business models.

This goes for consumer AR product strategies. Though a common sentiment in 2016’s hype cycle was that AR applies to everything, it’s become clear that it’s not a silver bullet. It will have native and natural applicability to some aspects of our lives and work… but not all.

Beyond macro categories and use cases where AR should or shouldn’t be developed, there are more granular strategies around user experience (UX). What types of AR interactions resonate with consumers? And what best practices are being standardized for experience design and interface?

Equally important is the question of AR monetization and revenue models. Just as user experience is being refined, questions over what consumers will and won’t pay for are likewise being discovered. The same goes for brand spending behavior in cases of sponsored AR experiences or ads.

These lingering questions compel acute attention to quantifiable AR market successes and best practices. Not only does the sector’s early stages mean that these questions are prevalent… but also that their answers are scarce. That includes evidence of successful execution and transferrable lessons.

With that backdrop, ARtillery Intelligence ventures to find, aggregate and draw meaning from finite AR successes in today’s environment. And by “success,” we mean large-scale consumer traction and revenue. When examining consumer AR engagement and revenue leaders, what product attributes and tactics are driving their performance?

This includes Snapchat. Its social lenses have the greatest consumer AR active usage, and it holds the leading share of AR ad revenue. Among other things, this is propelled by product-market fit, ease of use, distribution and fulfilling key goals for brand advertisers.

Also on the list is Pokémon Go. Though the tech press has moved on to other shiny things, 2019 marks its best revenue performance to date. This is attributed to innovation cycles that breed ongoing novelty and replayability, as well as its sparing use of AR as a game element.

Other consumer AR exemplars include Houzz and Instagram. Emerging AR players also show early signs of traction that’s worth examining, such as Tilt Five. Altogether, how do we triangulate best practices and extract tactics and takeaways for AR players today?

We’ll do just that in the coming pages, starting with Snapchat. This draws from the rigor of market watching and analyst work – including daily editorial coverage of our sister publication, AR Insider. We’ll synthesize all of these things, pursuant to the core mission of empowering you with a knowledge position.

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Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure & Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

Price: $499

This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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What did we learn in 2019? What can we expect in 2020? 

ARtillery Intelligence’s latest report examines 2019’s biggest lessons in spatial computing and the outlook for 2020. Preview the report below, subscribe to access it in full, or purchase a la carte.  ARtillery PRO subscribers can access the report directly here (login required).

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Executive Summary

They say that patience is a virtue. This applies to the current state of the spatial computing industry. After passing through the boom and bust cycle of 2016 and 2017, the last two years were more about measured optimism in the face of industry shakeout.

At the precipice of 2020, that leaves the question of where we are now? Optimism is still present but AR and VR players continue to be tested as high-flying prospects like ODG, Meta and Daqri dissolve. These events are resetting expectations on revenue outcomes.

But more than the ‘how much?” is a question of “when?” Market timing is quickly becoming a prominent factor to determine success of spatial computing players. This is a common factor in tech cycles historically. Spatial
computing will be no different.

Speaking of history, spatial computing follows a pattern similar to the early 2000’s eCommerce bubble. Exuberance is followed by market correction, followed by slow progression that eventually meets and exceeds early projections… but not until years later.

The good news is that this slow uphill progression has already started, and we believe the worst is behind us. Though the broader tech and media worlds have shrugged off AR and VR as fads that died in 2017, Industry subsectors are signaling growth by quietly gaining traction and revenue.

This includes AR-based advertising. ARtillery Intelligence projects it to grow from $453 million last year to $8.8 billion by 2023. This outlook follows the momentum of advertiser adoption, as well as the continued investment of tech leaders like Facebook and Snap.

There’s also a robust support industry germinating, including “building blocks” which are endemic to this period of any tech sector. Represented by tools such as Unity, Adobe Aero, and 8th Wall, AR-as-a-Service (ARaas) will be a major AR revenue category.

AR’s health also hinges on the outcome of Apple’s rumored AR glasses. Apple has a track record of mainstreaming emerging tech, and the AR industry is hoping for that halo effect. But based on signals we track, this will come a few years past the rumored 2020 launch.

Meanwhile, adjacent sectors will accelerate AR adoption and development. The broader wearables segment is growing rapidly, and will benefit AR by acclimating consumers to wearing tech on their bodies. 5G, self-driving cars and other areas will likewise feed into AR.

There are also lots of positive signals for market growth in VR. Facebook/Oculus continues to invest in hardware subsidies and loss-leader pricing to jumpstart a network effect. The result of this investment is high quality and consumer-friendly price points for Oculus Go and Quest.

What do all of these signals collectively tell us? And where do they point for 2020 outcomes? We’ll unpack the full list of market factors and 2019 lessons in this report, pursuant to illuminating likely paths for spatial computing in 2020. A robust ecosystem is (slowly) building.

Price: $499

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Video Companion

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This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 4 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Price: $499

This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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Disclosure & Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

We project global VR revenues to grow from $3.9 billion in 2018 to $14.8 billion in 2023. 

ARtillery Intelligence’s latest report examines VR market size, projections and revenue drivers across all subsectors. Preview the report below, subscribe to access it in full, or purchase a la carte. ARtillery PRO subscribers can access the report directly here (login required).

Executive Summary

The virtual reality sector continues to show early-stage characteristics, including erratic levels of interest and investment. But how big is it, and how big will it get? ARtillery Intelligence has quantified the sector’s revenue position and outlook, resulting in our latest forecast. This is the fourth wave of ARtillery Intelligence’s VR revenue forecast.

Built from daily market coverage, insider interviews and market-sizing experience from 15 years of analyst work (see methodology section), ARtillery Intelligence has constructed disciplined and independent market-sizing models. The analysis is segmented into revenue categories such as consumer, enterprise and sub-divisions of each.

So what did we find out? At a high level, ARtillery Intelligence’s position on VR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but likely slower than many industry proponents believe, due partly to the pace of adoption and other signals that ARtillery Intelligence tracks.

In fact, you may notice that VR revenue projections in outer years are lower than other firms’ figures. They’re also notably lower than our past estimates, as we adjust to market signals. This is common in market forecasting, as proficient market watchers perpetually course-correct based on dynamic market conditions and variables.

The following pages quantify and project figures within several revenue categories, as well as hardware unit growth. Bulleted insights are included throughout to qualify the revenue drivers and rationale behind the numbers. And further narrative insights can be found in ARtillery Intelligence’s monthly reports, which can be accessed in the PRO library.

The goal, as always, is to empower you with a knowledge position.

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Video Companion

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What’s Covered?

Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 2.5 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Price: $999 

The fastest and most cost-efficient way to get access to this report is by subscribing to ARtillery PRO (Startup or Enterprise Tier). You can also purchase it a la carte.

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Disclosure and Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

Price: $999 

The fastest and most cost-efficient way to get access to this report is by subscribing to ARtillery PRO (Startup or Enterprise Tier). You can also purchase it a la carte.

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Questions?

Mobile AR: What are top business models? What’s driving revenue? 

ARtillery Intelligence’s latest report examines consumer mobile AR business models and strategies. Preview the report below, subscribe to access it in full, or purchase a la carte.  ARtillery PRO subscribers, access the report directly here (login required)

Executive Summary

AR’s early stages are defined by lots of experimentation to see what works natively in this new medium. That goes for product design as well as business models. What do consumers want and how much are they willing to pay for it? These questions continue to be a moving target.

Questions are also being answered by AR pioneers like Snap and Niantic, who are operating at scale. And by “scale” we mean occasionally Superbowl-sized audiences, and revenue to go with it. But the key word is occasional, as these AR exemplars are the exception rather than the rule.

But there are still valuable lessons to gain from these leading indicators. Though the AR sector will twist around and take shape over the next few years (as historically seen in tech), there are early lessons to learn in what product and business models are working so far.

Some of these signals are already evident in ARtillery Intelligence’s consumer survey with Thrive Analytics. There, we see lots of explicit sentiments from consumers about how they’re using AR, how that’s changing (over three waves of existing research) and what they want to see next.

Takeaways from that survey include the continued popularity of AR gaming (Pokémon Go) and social experiences (AR lenses). But there’s also growing interest in emerging forms of AR such as visual search (Google Lens), navigation (Google Live View) and in-store retail commerce.

But what are the business models that are developing around this evolving consumer behavior? Though varied, we’ve begun to segment these models into three main categories (and several sub-categories). They include AR advertising, in-app purchases and AR-as-a-service.

The first two are fairly well known, though they’re developing in nuanced ways examined in this report. But the third category is a less-discussed revenue category where brands, retailers and app developers pay for tools to build AR experiences for their customers.

This carves out a new category we’re calling B2B2C, which includes software such as Unity, Amazon Sumerian, Adobe Aero and other tools to create AR experiences. Though enterprises are buying and deploying the technology, the AR experiences end up in consumers’ hands.

Adding up all three categories mentioned above and examined in this report, it’s a $1.44 billion market, growing to $20.3 billion by 2023. The common thread is AR technologies where the end users are consumers on mobile devices as opposed to industrial enterprises and/or headworn AR experiences.

The following pages examine each of these revenue categories and how they’re evolving. What are their business models, best practices and strategic takeaways? The goal, as always with ARtillery Intelligence Briefings, is to empower you with a knowledge position.

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This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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Video Companion

Price: $499 

This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 2.5 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Price: $499 

This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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Disclosure and Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

Price: $499 

This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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Hearables: What are they? How are they setting the foundation for an ‘Audio AR’ future? 

ARtillery Intelligence’s September 2019 report can be previewed below. Subscribe to access it and all ARtillery reports, or purchase a la carte. ARtillery PRO subscribers can access the full report directly here (login required).

Executive Summary

Augmented reality’s (AR) definition continues to evolve. Though considered by most to be a graphical format that overlays imagery on the physical world, there’s an emerging sentiment that AR’s definition is too narrow. As the technology grows into its own skin, it’s expanding into alternate forms of “augmentation.”

Chief among them is the emerging area that ARtillery Intelligence calls “audio AR.” It involves AR’s signature overlays… but audible rather than graphical. It can inform users and augment their experiences through audio cues, which are advantaged by subtlety and reduced hardware friction.

In fact, the foundation for this opportunity happens through already-pervasive “hearables” such as Apple AirPods. The popular device sold 25 million units in 2018, which ARtillery Intelligence projects to grow to just over 100 million by 2023. This is the first step to an audio AR future.

The second step is content and apps that developers build on that hardware base. Apple is motivated to make this happen, as audio AR is one component – along with Watch and glasses – of a prospective wearables suite that ARtillery Intelligence believes will be central to the succession plan of a maturing iPhone.

Meanwhile, the BoseAR platform already provides developers a place to build audio AR apps and experiences. This should accelerate audio AR as developers are incentivized by distribution scale from Bose’ hardware base. It’s on pace for one million audio-AR enabled devices by year-end.

Developers are already jumping on this opportunity with audio AR apps that feature guided audio tours, espionage games or fitness management. Going beyond just audio cues, these apps tap into the IMU sensor bundle in BoseAR hardware to sense precise head movement as inputs.

AR’s expansion into new modalities and definitions doesn’t end with audible content. Other key signals and inputs are developing, such as location. In fact, one of the most popular forms of AR to date utilizes device location as a key input to inform and influence user experience: Pokemon Go.

Niantic AR lead Ross Finman likes to say “the real world is the content.” Rather than taking a secondary role to graphical overlays, the real world should be a primary component in AR experience creation, similar to how location is a key input that dynamically alters Pokémon Go play.

In what other ways is AR expanding into new modalities and definitions? We unpack this concept in the following pages, including examples, case studies, exclusive interviews, and original data. The goal, as always, is to inform and empower you with a greater knowledge position.

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Excerpt:  The Unsung Modality

In terms of penetration and impact, it could be argued that one of the most successful AR products to date is Apple’s AirPods. That statement sounds strange because the audio device isn’t often classified as AR. But it could represent and lay the foundation for AR’s unsung modality: sound.

With that in mind, we often joke that the original form of AR was radio. It augments your perception of the world while driving, jogging, or zoning out. While meant in jest, this raises an important point about expanding our conceptual understanding of augmentation. It should include all human senses.

Sound in particular could be a more viable near-term AR modality. “Audio AR” as we call it could come sooner than — and eventually coexist with — its graphical cousin. One advantage is subtlety: It’s less cumbersome than pulling out your phone and it sidesteps AR glasses’ style crimes.

That discreetness could in fact be audible AR’s greatest strength. Because AR glasses are held back by cultural and stylistic factors, the subtlety of ambient audio could fill an important gap. And the potential all-day use creates a massive addressable market (in the form of time) for content.

Unpacking that a bit, AirPods’ sleekness and portability have already begun to condition a use case to leave them in your ears all day. That then engenders a new channel for ambient audio. And the foundation is already building with 25 million AirPods sold last year according to ARtillery Intelligence.

As always, Apple’s lead will be followed by hardware commoditization by third parties, and falling hardware component costs that engender ubiquitous penetration. Then it’s all about the apps and use cases that develop. Apple will likely open up its platform in the manner of iOS, and tvOS.

In fact, audio leader Bose has already beaten it to the punch. The BoseAR platform gives developers a place to build audio AR apps. It will accelerate audio AR by incentivizing developers with distribution scale from Bose’ hardware base, including one million audio-AR enabled devices by the end of 2019.

Price: $499 

This report is available by subscribing to ARtillery PRO, You can also purchase it for $499. This includes a briefing with the report’s author to discuss takeaways and answer any questions you may have.

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Video Companion

Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 2.5 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure and Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

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Industrial AR: What is it? Why is it Important? How is it Challenged?

ARtillery Intelligence’s August 2019 report can be previewed below. Subscribe to access it and all ARtillery reports, or purchase a la carte. ARtillery PRO subscribers can access the full report directly here (login required).

Executive Summary

One of augmented reality’s (AR) proposed beneficiaries is the enterprise. That can take many forms including data visualization in corporate settings, or software to create customer-facing AR experiences for brands. Impact will also occur through AR visualization in industrial settings.

The latter includes things like assembly and maintenance in manufacturing facilities. The idea is that AR’s line-of-sight visualization can guide front-line workers. Compared to the “mental mapping” they otherwise do with 2D instructions, line-of-sight support makes them more productive.

This plays out in a few ways including speed, effectiveness, error reduction and safety. These micro efficiencies can add up to worthwhile bottom-line impact in large-scale operations. Macro benefits meanwhile include lower strain and turnover, leading to higher morale and institutional knowledge.

These benefits were examined in ARtillery Intelligence’s February 2018 report, Enterprise XR: Impacting the Bottom Line. But since that analysis, we’ve tracked several growing challenges to AR’s viability and implementation in industrial operations. The picture may not be as rosy as we all thought.

For example, though all of the advantages outlined above are valid, it’s challenging to get to the point of realizing them. Practical and logistical barriers stand in the way such as organizational inertia, politics, change management and fear of new technology among key stakeholders.

The biggest symptom of these stumbling blocks is the dreaded “pilot purgatory.” As its name suggests, and as you may have heard in AR industry narratives, this is when AR is adopted at the pilot stage, but never progresses to full deployment. It’s the biggest pain point in industrial AR today.

In a recent analysis with Re’Flekt, ARtillery Intelligence identified the sources and solution areas for these challenges: the “Three P’s.” Comprising People, Product & Process, they’re the top areas where effective AR implementation strategies should focus in order to avoid pilot purgatory.

For product, it’s all about addressing real operational pain points, uncovered through ground-level research. For people, it’s about customizing AR’s ROI story to individuals at all levels of the organization. For process, it’s about multi-disciplinary prototyping rather than top-down innovation.

We’ll go deeper on all of these in the coming pages, including demonstrable case studies. We’ll examine industrial AR’s benefits and barriers. This entails everything from product planning to internal communications refinement. The name of the game is to set up industrial AR to succeed.

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Excerpt:  Product/Market Fit

Beyond the people that represent barriers to AR success, there’s also the product itself. Its success hinges on a few main factors that should be considered when in development and strategic planning. They include product/market fit as well as a deliberate and targeted user experience.

Right Tool For the Job

Enterprise technology adoption is a microcosm of open market dynamics. So just as “product/market fit” is a key success factor in consumer technology products, it can make or break successful enterprise deployments. And the name of the game is deploying AR where it can have real impact.

This thinking is grounded in the fact that AR is not a “silver bullet” and it excels in some areas more than others. For example, AR’s visualization advantages can be most effective in jobs that require guidance for complex and non-repetitive tasks such as large-equipment maintenance.

Conversely, it’s less effective in jobs that involve repetitive simple task such as assembly line work. With this type of work, front-line workers are already well-equipped by “muscle memory.” Therefore AR products deployed in these settings will fail to add any value or gain traction.

“You don’t want to use AR to help somebody change the oil in your car,” said Atheer’s Amer Diawali at AWE. “You train somebody to change the oil, because that is a task that they’re going to be doing repeatedly. “They should be able to do it without having to read any instructions.”

Target the Right Markets

Beyond targeting the right job functions for AR, it’s likewise important to target the right companies and industry verticals. ARtillery Intelligence’s recent AR revenue forecast mapped industry-specific AR adaptiveness based on factors such as spending power and product fit (see slide below).

By targeting markets that score high on these criteria, adoption likelihood is greater. For example, education has a high product fit but low spending power. Medicine has high product fit but low regulatory autonomy. Military has high spending power, regulatory freedom and product fit.

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Methodology

This report highlights ARtillery’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillery Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 2.5 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure and Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

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We project global AR revenues to grow from $1.96 billion in 2018 to $27.4 billion in 2023. 

ARtillery Intelligence’s July 2019 report can be previewed below. Subscribe to access it and all ARtillery reports, or purchase a la carte. ARtillery PRO subscribers can access the full report directly here (login required).

Executive Summary

The augmented reality sector continues to show early-stage characteristics, including volatile levels of interest and investment. But how big is it now, and how big will it get? ARtillery Intelligence has quantified its revenue position and outlook, resulting in our latest forecast. This is the fourth wave of ARtillery’s AR revenue forecast.

Built from daily market coverage, insider interviews and market-sizing experience from 15 years of analyst work (see methodology section), ARtillery Intelligence has devised a disciplined and independent market-sizing process. The analysis is segmented into revenue categories such as consumer, enterprise and sub-divisions of each.

So what did we find out? At a high level, ARtillery Intelligence’s position on AR revenue growth is best characterized as cautiously optimistic. Growth and scale will come, but likely slower than many industry proponents believe, due partly to the pace of adoption and other signals that ARtillery Intelligence – and its sister publication AR Insider — tracks.

In fact, you may notice that AR revenue projections in outer years are lower than other firms’ figures. They’re also notably lower than our past estimates, as we adjust to market signals. This is common in market forecasting, as proficient market watchers perpetually course-correct based on dynamic market conditions and variables.

The following pages quantify and project figures within several revenue categories, as well as hardware unit growth. Bulleted insights are included throughout to qualify the revenue drivers and rationale behind the numbers. And further narrative insights can be found in ARtillery Intelligence’s monthly reports, which can be accessed in the PRO library.

The goal, as always, is to empower you with a knowledge position.

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Excerpt: Key Takeaways

Takeaways and growth dynamics for XR and its sub-sectors.

Consumer AR will grow from $* million in 2018 to $* billion in 2023, a 53 percent compound annual growth rate. Near-term revenues will be dominated by mobile AR. Revenues will also be software-centric during that time (mobile device sales aren’t counted as AR revenue) and will include premium apps and in-app purchases. The latter will dominate software revenues in the near term, due to consumer resistance to pay upfront for AR apps,* as well as the in-app revenue model validated by Pokémon Go. Niantic will find success in its Harry Potter-themed follow-up…

Enterprise AR will grow from $* billion in 2018 to $* billion in 2023, an 81 percent compound annual growth rate. This is subdivided between hardware, enterprise productivity software (e.g. visualization support in industrial settings), enterprise advertising, affiliate commerce revenue, and AR developer/enablement platforms. In industrial/productivity contexts, growth will result from wide applicability across enterprise verticals, and clear ROI (e.g. manufacturing efficiencies). Adoption is currently dampened by typical organizational inertia and risk aversion. ARtillery Intelligence…

AR Advertising will grow from $* million in 2018 to $* billion in 2023, an 81 percent compound annual growth rate. Included in our classification of “Enterprise AR” (due to the spending source), this involves product promotions through AR interfaces. As proved by Snapchat and Facebook, AR lenses can demonstrate products in highly immersive ways. This has shown relatively strong ad performance, which continues to attract brand advertisers and reinforce return on ad spend (ROAS). AR advertising also has a rare ability to span the “purchase funnel” from awareness…

AR Headsets will grow in unit sales from * hundred thousand in 2018 to * million in 2023. That correlates to an installed base of 5.03 million units in market by 2023. This includes both enterprise and consumer, the former leading in early years with 160,000 units sold in 2019. Consumer AR glasses will pull ahead in 2022 with 1.15 million units sold. This will result from improving standards and specs for consumer-grade smart glasses (size, weight, style, etc.). It will be further accelerated through Apple’s market entrance – both through its own AR glasses sales…

*See full report for revenue details

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What’s Covered

Methodology

ARtillery Intelligence follows disciplined best practices in market sizing and forecasting, developed and reinforced through its principles’ 18 years in research and intelligence in the tech sector. This includes the past 2.5 years covering AR & VR as a main focus.

This report focuses on AR and VR revenue projections in various sub-sectors and product areas. ARtillery Intelligence has built financial models that are customized to the specific dynamics and unit economics of each. These include variables like unit sales, company revenues, pricing trends, market trajectory and several other micro and macro factors that ARtillery Intelligence tracks.

This approach primarily applies a bottom-up forecasting methodology, which is secondarily vetted against a top-down analysis. Together, confidence is achieved through triangulating revenues and projections in a disciplined way. For more information on what’s included and not included in the forecast, see the slide above.

More about ARtillery Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

Disclosure and Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

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VR: Who’s Using it? When? And How? 

ARtillery Intelligence’s June 2019 report can be previewed below. Subscribe to access it and all ARtillery reports, or purchase a la carte. ARtillery PRO subscribers can access the full report directly here (login required).

Executive Summary

How do consumers feel about VR? Who’s using it? What devices and apps do they prefer? And what do they want to see next? Perhaps more important, what are non-users’ reasons for disinterest? And how can VR software developers and hardware players optimize product strategies accordingly?

These are key questions at VR’s early stages that we set out to answer. Working closely with Thrive Analytics, ARtillery Intelligence wrote questions to be presented to more than 3,100 U.S. adults in Thrive’s established consumer survey engine. And we’ve analyzed the results in a narrative report.

This follows similar reports we’ve completed over the last two years. Wave III of the research now emboldens our perspective and brings new insights and trend data to light. All three waves represent a collective base of 7,065 U.S. adults for a robust longitudinal analysis. This will continue to improve.

Meanwhile, what did we find out? At a high level, 16 percent of consumers surveyed have bought or used a VR headset, up from 11 percent in 2018. More importantly, VR users indicate high levels of satisfaction with the experience: 67 percent reported extreme or moderate satisfaction with VR.

As for price sensitivity, demand seems to inflect at $400 and $200. These are interestingly the price points for Oculus headsets including Quest, Rift S and GO. This indicates Oculus’ competitive edge aggressive price competition and accelerating market share, congruent with our separate projections.

Furthermore standalone VR – embodied by Oculus Quest, Go and other emerging headsets – represents a key inflection point for VR this year. Though still early (this survey was fielded before Quest’s market launch), standalone VR addresses many consumer objections evident in this survey.

However, it’s not all good news: Non-VR users report relatively low interest in VR ownership – 27 percent, down from 31 percent in 2018 – and explicit lack of interest. This downward trend in interest is concerning for VR but isn’t surprising given the dip in excitement we’ve anecdotally observed.

Moreover, the disparity between current-user satisfaction and non-user disinterest underscores a key challenge for VR: you have to “see it to believe it.” In order to reach high satisfaction levels, VR has to first be tried. This presents marketing and logistical challenges for the industry to push that first taste.

The same challenge was evident in our corresponding AR report, but mobile AR’s adoption barriers are lower. This is nonetheless a common challenge for immersive technologies. It will take time, acclimation and price reductions before they reach a more meaningful share of the consumer public.

These points join several other strategic implications that flow from latest consumer VR sentiments. We’ll examine those takeaways in the coming pages, including the latest wave of findings, and our narrative analysis for what it means. The goal is to empower you with a greater knowledge position.

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Introduction:  A Snapshot

In VR’s early stages it’s important to understand consumer behavior and desires in order to optimize product strategies. We kicked off this process in 2017 with our first survey-based report on VR adoption. Now, our third-annual report offers experienced perspective on market evolution.

Working with our data partner Thrive Analytics, ARtillery Intelligence wrote questions to present to Virtual Reality Monitor’s sample of more than 3,100 U.S. adult consumers. All three waves done to date now represent a cumulative base of 7,065 U.S. adults, enabling robust longitudinal analysis.

These survey results are a telling snapshot of VR adoption, which we’ll detail in the coming pages. That will include charts and a narrative story arc that unpacks strategic takeaways, and our outlook for consumer VR. But before we take that deeper dive, here’s a highlight reel of survey findings.

— 16% of respondents own or have tried VR, up from 11% last year.
— 35% of users engage VR monthly, 25% weekly and 18% daily.
— *% of users own or use Samsung Gear VR, followed by PSVR (*%) and Oculus Rift (*%).
— *% of users are extremely satisfied with VR, *% are moderately satisfied.
— *% of users are extremely dissatisfied with VR, *% are moderately dissatisfied.
— *% of Windows Mixed Reality users are satisfied, *% for Rift and *% for Oculus Go.
— *% of users want more content, *% want better content and *% want better functionality.
— *% of non-VR users are interested in owning or trying VR, down from *% last year.
— *% of disinterested non-VR users cited “just not interested” as the reason.
— *% of VR users would pay up to $400 for a headset. *% of non-users would pay up to $200.

*Subscribe to see the full data set.

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Methodology

ARtillery Intelligence has partnered with Thrive Analytics by writing the questions for the Virtual Reality Monitor consumer survey. These questions were fielded to more than 3000 U.S. Adults. ARtillery Intelligence wrote this report, containing its insights and viewpoints on the survey results.

For market sizing and analysis, ARtillery Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in research and intelligence in the tech sector. This includes the past 2.5 years covering AR & VR exclusively, as seen in research reports and daily reporting.

Thrive Analytics likewise follows best practices in consumer research, developed over its long tenure as a consumer research firm. More information and background on each firm can be seen in the preceding “about us,” sections, or through the website links included with those descriptions.

More details about the survey sample (demographics, etc.) can be seen in this report’s introduction and more on ARtillery Intelligence market-sizing research and methodologies can be read here.

Disclosure and Ethics Statement

ARtillery Intelligence has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillery Intelligence remains independent of players and practitioners in the sectors it covers, thus mitigating bias in industry revenue calculations and projections. Disclosure and ethics policy can be seen in full here.

Price: $699 

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