According to the third survey conducted by Perkins Coie law firm and XR Association, by 2025, XR technology will be as present as mobile phones today. The leading industries that will see the biggest rate of application are gaming, healthcare and education. Apart from the positive outlook, the survey also reveals that there are still barriers to mass adoption that must be overcome.
North America Will Lead in Investments in XR Technology
The survey consisted of 200 respondents, including executives of established tech companies (67%), founders or executives of XR technology startups (18%), advisers or outside consultants (7%), policymakers or government representatives (4%), as well as investors (4%).
Immersive technology will be as ubiquitous as mobile devices by the year 2025.
In their opinion, the North American region will be the leader in terms of investment opportunities (62% of answers), followed by the EU (21%) as well as the APAC region (13%). Also, stakeholders see North America as the fastest growing market in the next 5 years. According to the survey, the top markets for XR technology will be:
- North America (57%)
- EU (20%)
- APAC (18%)
And while the Asia-Pacific area is constantly on the third place in their predictions, one of the US based respondents said: “Although the US may be the start of the technology, APAC will be the center of utilization, given the regulations favor the new technology to be adopted.”
Also, another respondent, a manger in the content development sector, summarized the outlook on investment opportunities at global level:
“North America tends to build upon Asian advances. We both create advancements in the technology itself, but America applies it in a wider variety of ways, then it goes back to Asia for further development on the tech and creative side. The EU plays a role similar to the U.S., but not quite as much on the tech development.”
Early Adopters of XR Technology Will Continue to Drive Investments
The industries that made the first step towards adopting immersive technologies will continue to drive the adoption rate. In the respondents’ opinion, these industries will attract most investments in the next year:
- Gaming (54%);
- Healthcare and medical devices (43%);
- Education (36%);
- Military and defense (28%);
- Manufacturing and automotive (20%);
- Movies and television (17%).
Unsurprisingly, the respondents believe that gaming, healthcare and education are the industries where XR technology is currently most applicable. However, there are other industry sectors that the survey identifies as having a good potential for XR adoption.
For example, the workforce development sector can benefit from immersive technologies in the following ways:
- providing real time access to information;
- simplifying training and mirroring real-life experiences;
- increasing creativity in product design;
- enabling collaboration between team members in different geographical areas.
Challenges and Risks in Extended Reality Technology Adoption
The Perkins Coie survey indicates three large areas of concern for the stakeholders: consumer-related, investor-related, as well as legal risks.
As far as the consumer and market-related challenges go, the respondents identified user experience (such as bulky hardware and technical problems) as the biggest obstacle for both AR and VR adoption. The second most important obstacle is the quality and quantity of available content. The third is the fact that both consumers and businesses are still hesitant to embrace the XR technology.
On the other hand, the number one concern of investors is the slow adoption (69%). Lack of an established market (58%), untested technology (34%), as well as too much competition from startups that develop similar products (22%) also present concerns.
Nonetheless, the most significant concerns are those connected with legal risks. As expected, respondents identify data protection, liability and intellectual property concerns as the most significant risks.
However, their companies are already taking steps to mitigate some of these concerns. So far, their actions focused on:
- updating privacy policies (47%);
- improving data security measures to prevent hacks or breaches (42%);
- limiting the amount of collected personal data (40%);
- training employees on cyber security risks (26%).
Speaking of the above results, Kirk Soderquist, co-chair of Perkins Coie’s Interactive Entertainment Practice, explained:
“Privacy and data security are prevalent topics across the board in technology companies, so it is not surprising that those involved with AR, VR, and MR are focused on these issues as well. But maybe more interesting is how companies are working to protect their consumers’ data and themselves in the process of complying with the GDPR and the CCPA. As companies work toward compliance as even more regulations are passed, I expect this to be a continued discussion in coming years.”
Monetization Models for XR Technology
Moving on to the topic of sources of revenue from XR technology, the respondents rely on:
- direct sales of hardware and content subscriptions (48%);
- in-app purchases or charging for additional features (41%);
- in-app advertising (39%);
- product placement in AR/VR experiences (30%);
- charging for live events access (19%);
- location-based XR entertainment (16%).
Augmented Reality vs. Virtual Reality
And of course, the survey also tackled the question of which market will develop more and faster. Most respondents (70%) believe that the augmented reality market will surpass the virtual reality market in revenue. And that will happen in the next 3-5 years.
That’s not too surprising since some of the biggest names in tech are also supporters of AR, such as Apple’s Tim Cook, who said that “AR is that big, it’s huge.” As one of the survey respondents, a CTO of an established US-based tech company, point out: ““Big tech companies like IBM, Dell, Apple, Google and Microsoft are all pumping millions into AR research and development.”