The Down-Low on What You Need to Know (To Be Competitive in XR), with SuperData’s Carter Rogers

XR for Business

English - August 19, 2019 09:49 - 38 minutes - 35.2 MB - ★★★★★ - 12 ratings
Technology Business Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed

Previous Episode: Zambezi Co-Founder Jenna Seiden Partners Up with Jimmy Fallon and Captain Marvel to Showcase Hit VR Game

Next Episode: Designing the User Experience for WebAR, with Google’s Interaction Developer Austin McCasland

If you need well-researched info on
the trends and changing tides of emerging tech to feel confident
dipping your toes into the XR sea, SuperData’s Carter Rogers has you
covered. As their chief analyst, Rogers specializes in turning data
into actionable intelligence, tailored to the needs of businesses who
are just starting to explore the space. In today’s episode, he chats
with Alan about what all the data can mean.

Alan: Today’s guest is Carter
Rogers, and he’s the principal analyst at SuperData, a Nielsen
company. He regularly advises Fortune 500 brands and Triple-A game
publishers on how to succeed in the interactive media space. As
SuperData’s lead XR analyst, Carter is responsible for the company’s
reports on immersive technology. A sought-after authority on
interactive media industry, Carter has presented at every event
around the world, including Casual Connect, the LA Games Conference,
and the VR/AR Global Summit. His commentary has also appeared in USA
Today, Variety, The Guardian, and Verge. He creates and oversees
interactive reports and segments, including virtual and augmented
reality, eSports, mobile games, and he’s really amazing at pulling
together all the data that businesses are using to make real business
decisions, on where to invest their capital. You can learn more about
this data at superdataresearch.com.

I want to welcome Carter to the show.
Welcome!

Carter: Thank you very much for
having me, Alan.

Alan: My absolute pleasure. I’m
really thrilled and excited to have you on the show today. I know
personally, we’ve used your reports for our company several times,
and every time it’s been pragmatic, not pie-in-the-sky numbers;
really validated, well-thought-out reports on where the industry is,
where it’s going, who the players are. I really want to start
digging into this, and learn more about SuperData. For the people
listening, I want them to walk away knowing more about the industry
and know where they can find more information. So, what is SuperData?

Carter: Well, yeah, glad you
read all our reports; that’s what we like to hear! To give everyone a
overhead view, we’re a market research firm. We’re part of Nielsen as
of late 2018, and the original focus of the company was on digital
games — video games, primarily. But we since branched out to cover
other areas, like eSports, game streaming, and of course,
augmented/virtual/mixed reality. Started covering those areas when
they were very tied to games, especially when the original Oculus
Rift was launched. But as the XR space has broadened to include more
enterprise-focused applications, we have also adjusted our research
accordingly, and really cover the enterprise space as well; providing
things like market estimates and things like that, to a wide variety
of companies in VR and AR.

Alan: Ok, so, you provide market
estimates. Where is this market going? What’s one stat that’s going
to blow everybody’s mind?

Carter: I’d say the main thing
is augmented and mixed reality are growing fast, but mainly in the
enterprise space. I’d say that through at least 2022, the enterprise
will account for the majority of augmented and mixed reality headsets
like Hololens and Magic Leap. Enterprise will account for the
majority of those through at least 2022. It’s really going to be the
enterprise that drives this very hot space in the XR industry.

Alan: You think it’s following a
similar trend to mobile cell phones? BlackBerry started off kind of
as an enterprise tool, as well. Is that what we’re seeing here? The
technology’s maybe not quite ready for the mainstream adoption, but
it has very real, very useful bu

I want to welcome Carter to the show.
Welcome!

Carter: Thank you very much for
having me, Alan.

Alan: Ok, so, you provide market
estimates. Where is this market going? What’s one stat that’s going
to blow everybody’s mind?

Carter: I’d say that’s certainly
the case in the AR/MR headset space. We’re obviously seeing more
consumer success — somewhat — in VR. But the two issues for
consumers right now are fashion and price — not to mention, the
availability of compelling content. You have headsets selling for
$3,000+, and they aren’t the sort of thing that most people are going
to be willing to be seen out in public wearing, so–

Alan: Although Magic Leap did
publish some photos of a model wearing the Magic Leap glasses the
other day. So they’re… [chuckles]

Carter: [also
laughs] Companies are definitely trying to make it more
palatable to consumers. But I’d say, in the near term, it’s
definitely going to be a few years before they’re truly
consumer-ready. If you look at someone like Apple, they aren’t about
to put their logo on something like the current developer-focused
headsets out there. I think that — coupled with price — those
aren’t really concerns for the enterprise if the utility is there.
But we definitely do need to see smaller form factors; things like
that, and much more accessible pricing, before it really takes off in
the consumer space. So it is the enterprise that’s definitely driving
this stuff for the near future — for the augmented/mixed reality
side of the equation, at least.

Alan: You’ve
got kind of a divide; entertainment and gaming on one side, and then
you’ve got enterprise applications across medical, healthcare, real
estate, retail — across the whole enterprise. What split is it
between media and entertainment vs. enterprise applications right
now, as far as total market spend? Is that a number that you guys–?

Carter: So, we don’t really
track — from an absolute revenue perspective — the enterprise side
of the market, just because so much of that is internal spending, or
spending that’s not disclosed. It’s very difficult to get an accurate
picture of the question of, “how much enterprise businesses are
spending on their outsourced XR work?” So that’s not really a
number we provide. We provide estimates on hardware numbers for
consumer and enterprise; hardware shipments, hardware revenue for VR
devices, AR/MR devices. And we also look at consumer software numbers
as a whole. But we don’t do a one-size-fits-all sort of enterprise
software number.

Alan: So, what are the headsets
that are poised to take over? Oculus Go came out with this $199
headset – this really inexpensive headset — and they sold millions
of these units. But do you think that, with the introduction of these
new six-degrees-of-freedom [6DoF] headsets, we kind of have some
agency for moving around? Do you think these are going to impact the
sales numbers dramatically? Or it’s going to take some more time?

Carter: Well, I think the Oculus
Quest in particular is very important for VR gaming, because it’s the
first VR device that is suited for gaming that’s not tied to a
console or a PC. I think the three-degrees-of-freedom [3Dof] sets —
like the Go and the Samsung Gear VR before it — are very well-suited
for video viewing, that sort of thing. But the Quest really has the
potential to drive interest in VR gaming, on the enterprise side of
things. I think we’ve seen the Go has seen some early success, with
companies like Walmart announcing that they were buying a lot of them
to train employees for things like customer service. And I can
definitely see some of these standalone headsets fitting in a middle
ground between PC and things like the Oculus Go, where — let’s say
— a training solution might be more immersive than just watching a
passive video. Which still has its uses! But I’ve seen some talk of
doing things like airline flight crews being able to train flight
attendants, training through those sorts of headsets. They’re much
more distributable than the standard Oculus Rift or HTC Vive, which
has to be hooked up to a PC. Those sorts of headsets will definitely
have their use cases going forward, but I think there is a lot of
potential in the sort of middle ground, where it’s not necessarily
training, or using highly-precise training applications; training
things like customer service or things like that, that require a bit
more interactivity than we’ve seen with what’s possible with the Go
or the Gear VR.

Alan: As you were talking, I was
picturing the ways… I actually published a link today on LinkedIn,
about how to select a VR headset for your enterprise, and things like
comfort, weight, computer power. But the interesting thing about it
— and the idea that I had is — in certain circumstances, 3DoF is
being able to just look around. And being immersed in a 360 video,
for example, makes a wonderful training tool. I think we’re sometimes
overcomplicating things by creating all these really in-depth,
computer graphics-heavy things, when you can just simply put a 360
camera on. I know the company STRIVR has done a really good job at
bringing 360 videos with annotations in the video, that give people
that ability to do repetition, or just training on things that maybe
aren’t mission critical.

But Walmart, for example, wants to
train people for Black Friday, to prepare them for the onslaught of
craziness. Well, you can’t really train people for a situation that
only occurs once a year. So something like that, I think is really
interesting and intriguing. But as the headsets start to mature, and
we see this ecosystem develop. I think you’re going to have these
PC-based headsets that designers are going to be able to use, and the
people creating [software]. And then you’re gonna have these
standalone headsets, where they can view what those other people have
created. They can be in a shared space, collaborating. But somebody
who’s just viewing and commenting doesn’t need to have all the
computing power of somebody designing and creating. So, I think there
will be use cases for all of them across the enterprise.

Carter: I will say, also:
anything involving lots of specialized peripherals, — firefighting
training, or something — is, for now, still probably best-suited for
PC, just because there’s more flexibility in what you can do. And
you’ve got things like the VIVE Tracker items that you canaf fix to a
wide variety of things. Stand Alone space hasn’t quite reached that
level, even with the 6DoF stuff. I think the more specialized the
training is, the better fit it is for PC. Certainly for the time
being, at least.

Alan: Absolutely. And actually,
one of the companies we just invested in, they do virtual reality
training for heavy machinery. One of them is an excavator. I’ve never
been in an excavator, nevermind driving one. I got in VR, I operated
the machine, I drove it around, I killed some virtual people.

Carter: [chuckles] Better to do
that in training than afterwards.

Alan: Right. I’m actually gonna
do a little study with my two children, and put them in and let them
spend an hour training on this excavator. And then — my brother owns
a construction company — we’re gonna take them up there. We’re gonna
put them in the excavator, and see if they can drive it.

Carter: All right. Wishing you
all, uh, good luck.

Alan: Hopefully they don’t break
it.

Carter: Under strict
supervision, I’m sure.

Alan: But I think it’s gonna be
a case where they actually can do it. The actions that you do — the
experience of doing something virtually in a virtual environment —
is going to be pretty accurate to the real world. A friend of mine,
James, he went in a virtual reality crane training simulator, spent
an hour in it. Then they took him outside, put him on a real crane.
He was able to drive it. Which is crazy.

Carter: That is. One thing we’ve
seen is knowledge retention is so effective in
virtual/augmented/mixed reality training. I think that’s why — when
going forward — one area we might see a lot of activity is skilled
manufacturing, training; things like that. Especially if a lot of
employees in those areas are starting to age out of the workforce;
companies need to onboard employees really efficiently. I think
that’s a definite future use case — and current use case, really —
for virtual/augmented/mixed reality; training. And that’s going to
get increasingly important as current employees exit the workforce.
They need to get new people in.

Alan: You spoke about the data
that SuperData provides. Can you get a little bit more granular on
what businesses are using this data? How are they using this data,
and what data you’re providing? What seems to be the things that
these businesses and companies are looking to get out of buying these
reports that you create?

Carter: As
for what our customers already can say — the game space — we worked
with a variety of Triple-A game publishers. Outside of that, we’ve
worked with companies like PayPal, Microsoft, Accenture. We have a
number of reports available. As for the ones businesses can actually
use, we’re putting out a report very soon on the consumer markets; an
updated look at what games people are interested in, what software
consumers are interested in, what consumer headsets are selling best.
And we have a webinar for that in May — I think the exact date’s on
our website.

We also put out reports on things like
augmented reality marketing. We did a white paper with — in
association with Friends with Holograms — we put out for free on our
website recently. We put out reports like that. Often, we do consumer
surveys — surveys of enterprise developers, users, that sort of
thing — to gain a better idea of what people are interested in the
market. But, as for the data we provide, we often provide things like
estimates of headset shipments — both to consumer and enterprise
customers — consumer spending on things like games and
location-based entertainment. Some of the stuff, we already talked
about earlier, but also investments; where are venture capitalists
investing? That’s important for a lot of startups in the space who
want to know if they’re going into this — into a subset of the VR/AR
space — are investors going to be potentially interested? So we
project investment outlook in certain segments of the industry. On
the enterprise side of things, we provide numbers like, how many
firms are utilizing VR, AR, and MR per industry? How many in the
travel industry are using? How many in the automotive? To sort of
give people an idea of where there is potential market interest. And
we similarly showcase how many firms are supplying those services, so
that companies on the demand side can really gauge if there might be
companies already serving that space, or if they should build
something internally.

Alan: So where’s the biggest
underserved need?

Carter: I would say right now
we’re seeing — well, I can say one area where we see, maybe, an
oversaturation is education. Just because there’s a lot of companies
serving the space, and there’s a lot of educational institutions
using it, but there often is not enough money in the space to support
that many companies.

I think manufacturing is still growing
fast, and people are still sort of wrapping their heads around how to
use it. Manufacturing in particular, there is a challenge there; a
lot of companies are utilizing it, but they’re being very secretive
about how they’re utilizing it. They’re not willing to talk about
stats of how effective it was. And the problem with this is, it means
some companies that aren’t utilizing VR/AR/MR training can’t really
go and see use cases of how other companies have succeeded. We found
that, for companies that are not using XR, only about a third plan to
invest in XR in the future. This is among people that are already
somewhat familiar with the industry. But for companies that are
already using XR, about two thirds plan to invest more in it. And
what this shows is, once companies have tried out XR, they’re very
interested in continuing to invest more and more in the space. But it
really takes a lot to get them over that initial reluctance to use
it, and I think part of the problem we’re seeing is the companies
that are using it and having success are not necessarily willing to
show that success.

Alan: And rightfully so. Let’s
be honest: it is a competitive advantage for now, and there’s very
few times in a company’s lifecycle when you have such a massive
competitive advantage using a technology. That is readily available.

Carter: That’s definitely true.
I think it’s often on the side of the supplier to figure out a way to
disclose that companies have had success, either through not naming
brand names… things like that. But it is definitely a challenge in
the short term, because companies are finding success, but it’s not
public – or, in sort of “trade secret” space.

Alan: Let’s just hammer this
home for a second: companies that are not using XR, about a third of
them are thinking about investing in the technology. The ones who are
using it, two thirds of them are investing more in it. If that gives
you any indication that this is successful – that this is moving
the needle forward — and if you do not start working with this
technologies, you guys are going to get left behind. It’s frustrating
to have companies say, you know, “we tried VR. We tried to
making a Google Cardboard thing,” and they made a little
marketing kitschy thing. And it didn’t go anywhere, because they
didn’t think of it as, “how can this software or solution solve a
problem?” They just said, “oh, I saw VR at a trade show; let’s
make something cool”.

Carter: I’d actually also like
to cite one other stat; we calculated earlier this year that, by the
end of 2019, XR training will save about $13.5-billion. And what I
mean by this stat is that, if every company utilizing XR training
decided, instead, to forego that XR training, or make an equivalent
training program without XR, it would cost $13.5-billion more,
through either the creation of the training, or in terms of lost
productivity. So we’ve really seen some tangible results, especially
for companies that have used it. But it is very hard to get over that
initial question. I think one of the big ways our data is useful is
for companies where people need to convince internal stakeholders,
“this is something we ought to try.” I think that’s one of the
big use cases for enterprise-focused XR market research, for the time
being.

Alan: Interesting. We talk quite
at length about training; it always comes up in every conversation I
do. Training and education: it’s a no-brainer. It just works. But
what about some other things, like augmented reality for retail or
sales? One of the stats here is that social media AR apps are the
most popular among mobile AR users. A sizable percentage of users; 41
percent of users report using AR features in online shopping apps.

Carter: Marketing is the big use
case for mobile AR, for the enterprise right now. That’s because VR
doesn’t really… we saw a lot of VR experiences that were
marketing-focused in the early lifetime of that technology. We
haven’t seen so many in the past year or two, because a lot of that
activity and investment has moved over in the AR space. And that’s
because it’s very cool and innovative, but it also has scale.
MobileAR currently has over a billion users. And it’s interesting;
the growth there isn’t really steady growth, year-over-year. You
instead see a few giant apps — Pokémon Go, Snapchat, and Instagram
with their AR features, most recently TikTok — these sort of giant
apps will drive massive explosions in user numbers in the market, and
that’s created scale in AR for things like Snapchat, recently having
a Game of Thrones augmented reality ad. We’ve got furniture stores or
any sort of eCommerce shop — Amazon, Wayfair — offering the ability
to view items, to see how they’ll look in your home. So I think
marketing/retail is really the big use case for AR. That doesn’t
really show up in our consumer spending numbers outside of gaming,
because it’s been very advertising-driven, and we track direct
consumer spending in our model currently. But it’s absolutely worth
noting that that is the big use case for the enterprise for MobileAR
right now.

Alan: I think you’re actually
bang-on. I wrote an article about the first killer app for augmented
reality, and it was virtual try-ons; being able to try on glasses,
hats, necklaces, and see what the furniture is going to look like in
your house. Really, virtual try-ons is the killer app. It’s easy,
it’s simple, it doesn’t require a huge amount of capital outlay from
the eCommerce companies. Brands can go direct-to-consumer now, where
they maybe went through distributors. It’s opening so many doors for
consumers to engage with brands in ways they’ve never done before,
and being able to try on a product before you buy it on yourself –
real-time — and then hit buy button: sunglasses, makeup.

I was on a panel last week with
ModiFace, and ModiFace was so successful, L’Oreal bought them. So,
“this is so good, we’re just going to buy you. That way, we own
the tech stacks.” I think virtual try-ons is a big one in
MobileAR. You said there’s over a billion users now; I’ve read a stat
that, by the end of this year of 2019, we’ll have over 2-billion
AR-enabled smartphones in the market.

Carter: It’s only going to grow
as people… I mean, smartphone upgrade cycles are getting a bit
longer, but I think as the stragglers upgrade into the latest
ARKit/ARCore-capable smartphones are really going to see some
interesting growth there. And it has really reached mass scale, quite
a bit faster than VR/MR. For now.

Alan: Yeah. Fair enough. One of
the interesting demographic pieces that you put in there is, “the
largest a AR demographic is women between 18 to 34.”

Carter: Yeah, these social media
users are driving interest in this space, for now. Was Pokémon Go
initially, but that shifted over to social media pretty quickly,
about a year or two ago. And it’s worth mentioning, with Pokémon Go
was, there’s lot of debate about whether it’s “real” AR or
not, but consumers certainly consider it [as such], and I think
Google search interest in augmented reality — the day Pokémon Go
launched — hit the highest level up to that point. They definitely
raised AR awareness, even if the implementation wasn’t at the time
what we’d consider “true” AR. And I think they’ve closed
the gap with their latest features, and I’m very interested to see
how Harry Potter: Wizards Unite — which looks like it has a bit more
AR implementation in the gameplay itself — how that drives consumer
interest and awareness in AR, probably in just a few short months.

Alan: One of the features that
they added is object occlusion, meaning they use the camera to
understand the world around you. So, imagine if you’re playing
Pokémon Go, and you’re chasing a Pokémon; instead of it just kind
of floating out in midair, it’s actually walking on the sidewalk, and
it can run behind a tree or a person, and you have to go around the
tree to find it. He’s literally hiding behind the tree! I think this
is only the very, very beginning of spatial computing, as it relates
to the real world around us; being able to add 3D data — in this
case, Pokémon — in the world, in context, is going to be
revolutionary. And we’ve only just begun to start to think about
what’s possible when this starts to be a thing.

Carter: Yeah, absolutely. As the
sort of base-level smartphone gets more powerful, people will be able
to design games around those sorts of features like object occlusion.
Because right now with Pokémon Go, it’s often more efficient to turn
off the AR entirely. And that’s what a lot of hardcore users do. But
I think, as we see game designers think about how to incorporate
things like that into the game design itself, and not just make it an
optional, it’s-nice-to-have-it [thing], that’s where we’ll see some
really interesting innovations in the games themselves, and
incentivizing people to leave the AR functionality on when they’re
playing successor games.

Alan: I made a prediction a
couple years ago saying one of the companies — Google or Apple or
something — would create a game that would take us into our
buildings; the internal world. So, office buildings, your house, or
wherever. And you would be chasing Pokémon, or whatever it was,
you’d be chasing something. But it would be you alone in a space, and
the thing would be bouncing up and down. And what it would really be
doing is capturing a point cloud map, or a virtual version of the
space inside. Because Google has a fantastic collection of
three-dimensional data around the world — Google Earth — but they
have no data around the inside. Imagine sending millions of people
around the world into buildings, using the game to collect point
cloud data of these spaces.

Carter: Yeah, it’s interesting.
It’s sort of like the next evolution of reCAPTCHA, where that was
used to transcribe books. Now you’re using AR to get more data about
the world. I can definitely see that being possible in the long term.

Alan: Yeah. Companies like
6D.ai, these guys developed software that allows you to point cloud
map the world using single camera from your phone. And my guess is,
within the next six months, I would guess that they’re going to get
sold to Apple, or Google, or Amazon, or somebody. Somebody is gonna
buy them, because what they built is too valuable right now.

There’s one stat here that I’m reading
on SuperData: by 2020, the virtual reality market will be worth eight
times what it was in 2016.

Carter: I’m not sure if that’s a
current stat… I can see what we have currently, because we do
regularly revise our outlook.

Alan: What did we see last year,
as far as the whole market? Like, if you included XR —
virtual/augmented/mixed reality — where’s the market right now, as
far as size? 2018 and then beyond?

Carter: Let me pull up what we
have in 2018 really quickly.

Alan: These data points really
do inform investment. They inform businesses on their go-to-market
strategies. It’s vital that you guys keep these up to date, as well.
I know there was some crazy stats out there. Citi Financial came out
with things saying eCommerce is going to be a trillion-dollar market
by 2030. It may very well be, but man, that… they’ve since taken
that report offline.

Carter: I can say that, for now,
we have 2018. Our current estimate of that revenue was $6.6-billion,
and we’re seeing $33.9-billion by 2022; so yeah, several times
multiplier.

Alan: How much was in 2022?

Carter: $33.9-billion is what
we’re estimating.

Alan: Is that for VR or AR or
both?

Carter: That’s VR, AR and MR
combined.

Alan: Got it.

Carter: See, I cansay that
includes things like consumer software. So, direct consumer spending;
everything from spending on VR arcade tickets, to software downloads,
to consumer hardware, straight-up purchases of hardware, and also
enterprise hardware.

So, sales of VR and AR headsets to the
enterprise… I will say, some big drivers that we projected the
future are AR and MR headsets, which last year, that market was under
a billion. So that is contingent on some big growth we see in the
AR/MR headset space. In the AR space, a lot of that was Pokémon Go,
which grossed somewhere in the neighborhood of a billion dollars, if
not more last year. It’s interesting, the MobileAR market this year
is a lot of Pokémon Go last year. This year, it’s undoubtedly going
to be Pokémon Go plus Harry Potter: Wizards Unite. So, Niantic is
probably going to own the majority of the AR market through at least
the end of 2019. We’ll see if any true competitor stacking emerge,
maybe in 2020. There was a Tencent game released pretty recently
that’s doing some impressive numbers in China, that has very similar
concepts. It’s been described as “Pokémon Go meets CryptoKitties.”
You’re collecting monsters, and I believe it’s block chain-based. So
there may be some competition in that sort of space. I’m not sure if
that game has — it’s location-based — but I’m not sure if it’s
actually augmented reality-based. It is “Let’s Hunt Monsters.”
It’s been described as Pokémon Go meets CryptoKitties, and since
Pokémon Go’s not available in China, it certainly has that market to
itself for the time being.

Alan: So… the market is
growing, and it’s growing dramatically, and it’s growing fast. One of
the stats that you’re not collecting right now is, how much
enterprises are actually spending on software development, that sort
of thing. That could easily double these numbers, just strictly based
on what enterprises are gonna be spending to develop internal things
that we’ll never even know about.

Carter: Yeah, we are tracking
some estimates on how much enterprises are investing in the space,
both as a combination of spending on their own internal R&D, and
spending on external outsource software to help. That’s not something
we’re disclosing publicly right now, but it is in the
multi-billion-dollar range certainly, and we expect that’ll shift
gradually from VR over to AR and MR in the next three to five years,
certainly.

Alan: The big “question mark”
outlier is a company that has a fruit as a logo. What are your
thoughts on that?

Carter: Yeah. The thing to note
about Apple is that aesthetics are important to them. It will be a
few years before we see any sort of AR/MR consumer-facing solution
from them, I think. Obviously, they see it as a big opportunity; Tim
Cook has said as much. They’ve also said a lot of this ARKit stuff is
a sort of stepping stone, potentially to those glasses. Any developer
that is a big expert in an iOS-based AR app certainly has a leg up
when a potential shift to glasses happens. I do think, though, the
technology is a few years from being ready for where there is a form
factor, and an ease of use that Apple would be comfortable sticking
their logo on and selling it. We’re not going to be wearing them end
of this year, that’s for sure.

I think there’ll be a few major
consumer electronics companies that might release consumer-facing AR
glasses before Apple. It’s sort of like, they weren’t the first
smartwatch, but they’re certainly the best-known smartwatch now. And
I think we might see a similar situation for AR and MR glasses, but
they will not be the first to hit the market, certainly, in the
consumer space.

Alan: But I think when they do,
things are going to get crazy.

Carter: They’re definitely not a
company to count out, that’s for sure. Interestingly, in the consumer
space, I should mention the Lenovo Jedi Challenges device, where you
physically stick your smartphone in, and it creates the fake hologram
that you see in front of you. That’s currently probably the
best-selling consumer AR device. That’s definitely a bit of a toy.
Definitely sort of the Google Cardboard of AR.

Alan: How many units have they
sold of that thing?

Carter: I don’t think they’ve
disclosed. We have some estimates, but yeah, we’re not disclosing
that currently.

Alan: Yeah, because I think
that’s a company called Zimmerse that makes that.

Carter: Yeah, and it shows that
killer IP drives consumer interest. If that wasn’t branded with “Star
Wars,” it certainly would be less popular, I think. We’ve also seen
that in the VR space for PS VR. One of the big drivers, their sales
with Skyrim VR — which is a well-known Elder Scrolls [title], being
a well-known gaming brand — but that game wasn’t necessarily built
with VR in mind. But it just shows when there is a household name, it
drives a lot of interest. To get consumers interested in AR and MR,
it’s going to take those sorts of household names, and Pokémon Go is
obviously another great example.

Alan: Yeah. Legend of Zelda is
coming out in VR.

Carter: Yeah, I think they
just… yeah, with their Labo VR — which is definitely bit of a
novelty — but I think that was a smart move to incorporate that,
because there is a lot of people who are curious about how Zelda is
going to look in VR. That are willing to try that, [more] than they
would if it were just the mini games that were included with it in
the box. I think those sorts of brands — even if they’re not perfect
examples of AR/MR experiences — will be key to driving consumer
interest. Whether that’s Star Wars, Marvel, you name it; I think any
sort of A-tier entertainment brand will be particularly important in
growing the space.

Alan: Even location-based
entertainment companies like The Void, they’re leveraging IP like the
Ghostbusters, and Wreck-It Ralph, and Star Wars. I think you have the
quote of the day: “killer IP drives consumer interest,” and
I think that should resonate with listeners. If you’re building
something in this technology, if you can partner with a killer IP
brand, you’re going to increase your success. Like, the guys at
Pokémon, Niantic; they — I think there were five or six years
building different AR apps that nobody cared about.

Carter: Yeah. Ingress plays very
similarly to Pokémon Go, but–

Alan: Nobody’s ever heard of it!

Carter: Yeah. Once they stuck
the Pokémon brand on there and made some tweaks, that’s when it
really took off. I think what we also saw at the early days of VR is,
there were a lot of pretty good games, but there wasn’t necessarily
that one standout, “you have to play this.” I think Beat
Saber has been sort of the breakout hit in many ways. I think that’ll
be interesting to see how Oculus and the next wave of standalone
devices leverage well-known IP, because I think that’s very important
for getting mainstream, everyday consumers — who aren’t necessarily
reading various tech blogs and stuff — interested.

Alan: You mentioned Beat Saber,
and it was just on The Late Show with…

Carter: I think Brie Larson was
there?

Alan: Yeah, that was the other
day. We’re getting this mainstream adoption; mainstream media
coverage! Beat Saber is just an amazing game, but it is now its own
IP. There’s a really great opportunity for developers to not only
develop with the existing IP, but create new titles that are made for
VR. You’ve seen a few of them that have taken off, Beat Saber being
one of them.

Carter: And I think the Star
Wars experience that Oculus has announced they’re working on; it will
be definitely be interesting to see what the business model is, what
the length of the experience is, because I think we have seen the
non-game experiences haven’t really taken off… outside of a few
notable exceptions, like Tilt Brush, things like that. A lot of the
interest in the consumer space has sort of shifted from experiences,
to people wanting full-fledged games. I think it’ll be very
interesting to see if that’s more of a interactive movie, more of a
game. Definitely interested in seeing more about that, because
obviously – consumer-wise — there aren’t many things as big a Star
Wars, so that’ll be potentially a very big interest driver going
forward.

Alan: Yeah, I think there’s also
going to be… one of the very first VR things that we were showing
as demo was The Avengers, and then, it was just a 3DOF kind of scene
where you flew through the Avengers Tower — and it was mind-blowing,
flying through the scene, where things are going around you in slow
motion all around you. I must have shown that demo to 700 people, and
everybody’s reaction was the same. Just like, “wow, this is
amazing.” And that was three and a half, four years ago; I can
only imagine how much that cost to make then. Oh, my God.

Carter: Yeah, I think it’s
interesting. There’s still obviously a lot of consumer interest —
maybe not as much hype as there was a few years ago around consumer
VR — but I was at Pax East, and you go and there’s still massive,
massive lines around the Oculus booth to try out the Quests. So there
is definite consumer interest. It’s just about getting the
convenience right, getting the content right. I think the standalone
does have the potential to be a sort of restart moment for the
consumer side of the industry. If the brands are there, at least.

Alan: With these standalones —
these powerful standalones, the VIVE Focus Plus and the Oculus Quest
— being able to use it for training; $400-$700 headset, which is
really cheap if you consider how much it costs to have a trainer
train individual people, fly them around and one-on-one. You can have
now, one-to-unlimited; you make one great experience, and now you can
train everybody, and they all get the equal best training. I think
enterprise is going to adopt these much faster than consumer. And in
that case, what’s going to happen is people are gonna use it at work,
and then they’ll bring it home maybe. It’ll be that cross pollination
between work life and home life.

Carter: I think that does have a
lot of potential; people try it out for the first time and then
think, “you can play games on this?” Yeah.

Alan: [laughs] Where they just
download a game and go, “Oh, this is awesome!”

Well, I want to thank you so much,
Carter, for taking the time out of your busy schedule to join us on
the show today. Is there anything that you want to say to people
listening who are considering creating an XR strategy in their
business? What would advice would you give them?

Carter: I would say, in the long
term, AR and MR probably has the biggest potential for use; but I
think VR definitely will count for the majority of enterprise
interest in the very short term. So, I think looking at ways the
companies that need training applications can be served is very
important in the short term. We have seen sort of a contraction in
investor dollars, and it gets very important to show a concrete
business use case and revenue potential in the very short term for
some of the VR projects. And really, to demonstrate to investors that
there is potential for that business is, I think, one important area.