Given the business opportunities, the range of possible applications, and the hundreds of billions of dollars expected to swarm the AR/VR market, knowing when the now nascent technology will become mainstream can be a valuable bit of information for many companies and consumers.
Authored by Stefan Zimmermann, Stephen Robnett and Tibor Mérey
If you’re one of those people who can’t wait to spend some quality time in the metaverse, hold your horses. Although Augmented Reality and Virtual Reality (AR/VR) and the intriguing world that they inhabit have been buzzing around for some time and has enthusiastic supporters in the tech glitterati (Facebook is now Meta Platforms), the actual reality is that the big, transformative uses of both AR and VR are still at least a few years away.
And this is not merely an idle observation; it has implications. Technology, media and telecommunications companies as well as manufacturers that produce autos, consumer goods, electronics and healthcare equipment all have their eyes on AR/VR as a product, a revenue stream or an application to improve efficiency and performance. Examples abound: an AI software-based wearable device that guides an assembly worker through a complex wiring process or an e-commerce display that lets customers use their avatars to try on clothes or a training tool that lets medical students peer over the shoulder of a surgeon during a real operation — to name just a few. Given the business opportunities, the extraordinary range of possible applications and the hundreds of billions of dollars expected to swarm around the AR/VR market before too long, knowing when the now nascent technology will become mainstream can be a valuable bit of information for many companies and consumers.
Hazarding an educated guess, we believe that virtual reality applications — where people routinely spend parts of their days enveloped in a digital world divorced from the real one — will appear with increasing regularity over the next few years (see Exhibit 1). Creating seamless, self-contained social metaverses in which holograms, for instance, replace real estate agents and in-person open houses will require improvements in wireless communications and off-device computing. However, these advances are occurring more frequently now, and we expect that a spate of VR gaming and entertainment, design and planning, and team building programs, to name just a few, will hit the market relatively soon.
Augmented reality — because it is essentially adding new technological layers to our existing environment — is a bit further off. It may take five years or longer to overcome the technological barriers that are making some of the initial versions of AR — for instance, for gaming, therapy and 3D cinema — a less than satisfying experience for some users.
The determining factor for the full-fledged emergence of augmented and virtual reality will be the speed of hardware breakthroughs. The most pressing hardware issues and the likely solutions can be viewed best through these categories:
Optics and Displays. AR/VR equipment is improving but is still limited in its field of vision (less than 100 degrees for the most advanced devices) and the quality of displays is about equal to a relatively common television set (full HD). By contrast, the human visual field can be more than 180 degrees. In addition, AR/VR hardware produces a problematic vergence-accommodation conflict (VAC), which means in simpler terms that these devices ask us to stare at a screen inches from our eyes while focusing on a simulated 3D environment at a much further distance. We can do that in the real world deftly but not so much in the confines of a piece of equipment.
Technologists are working to match the performance of human vision in near-eye compact display modules through improvements in holography and lithography. We believe that there will be sufficient progress in these areas to extend field of vision to over 100 degrees by 2025. These advances should allow AR to leapfrog into a wider array of possible applications, particularly as display technologies allow content of all types to be easily seen against a bright real-world background.
In VR systems other optics improvements, such as more advanced lenses and so-called 5D light field displays — which provide a realistic field of vision by summing light rays flowing from every point and every direction — will make the experience much more immersive. Also, the computing power and battery life to render environments directly on headsets will have to be enhanced. And, finally, there is the remaining issue of cybersickness — the feeling of nausea and dizziness that occurs when your body and brain seem to be at war trying to adjust to virtual reality devices. In the latest headsets, this is not a persistent problem anymore. Still, in the meta world some people may continue to experience some degree of cybersickness.
Equipment Specs. AR/VR headsets suffer from a range of problems related to their form factor and performance requirements. Primarily, many people complain that these headsets feel oversized and heavy when worn and that they can get too hot and are not designed with ergonomics in mind. Some of these issues are related to the size and weight of the high-quality displays, the need for arrays of sensors and cameras, and stability requirements so that excessive movement doesn’t interfere with the user field of vision. In addition, the lithium batteries that power most AR/VR systems tend to conduct heat during charge and discharge. The goal is to reduce the weight of VR headsets to below 100 grams from around 500 grams for today’s equipment.
To address these problems, one familiar solution is in the offing — downsizing technology to meet market appetites. We’ve seen it with smartphones and computers, semiconductors and GPS, just to name a few. Lightweight nanotech materials and shrinking chips, wiring, sensors and other technical aspects of AR/VR headsets will drive a transformation in the size and comfort levels of the devices. Untethering the equipment from computers will also help. New battery breakthroughs, which seem to be occurring with regularity these days particularly as electric cars become more prevalent, will eliminate thermal issues. In our view, all of these advances will be evident if not fully achieved within the next five years, the result of Big Tech players fighting for position in the metaverse as it becomes closer to day-to-day reality. And as large companies pour money into research, venture capital will ramp up its already significant support for competitive startup efforts.
Communications Constraints. Two of the most frustrating aspects of AR/VR systems today are too much latency and too little connectivity. Delays between when a person’s movement occurs and is registered in an AR/VR headset can make the whole experience feel asymmetrical and disconnected. Moreover, slow Wi-Fi and wired connections with frequent processing interruptions and even total freezes are deal breakers for many users.
These limitations are already on the road to being fixed. As 5G networks become more prevalent and reliable in part because of advances in edge computing, which flexibly divides processing loads among local and cloud systems, most of the communications shortcomings of AR/VR systems will be a thing of the past. But that will take some time before coming to fruition. Cloud streaming today is not practical or economical. However, with some compromises in performance of AR/VR systems, this approach may slowly begin to be used and improvements should follow from that. Given the immense importance of networking advances to everything from the most complex industrial processes to streaming at home, connectivity and computing speed breakthroughs that ultimately improve the AR/VR experience are likely in the immediate future.
Even with all of the impediments to growth in the AR/VR world, perhaps the most telling sign that they will be overcome before long is the sheer number of technology companies that are investing significant capital and resources into playing a large role in the metaverse. Facebook, Snapchat, TikTok, Google and Apple are each developing AR/VR software, hardware, platforms and app ecosystems and rushing these projects to completion.
Meanwhile, the publicity surrounding these R&D initiatives and augmented or virtual reality in general are already whetting the appetite of large industries to implement these new technologies in a variety of creative ways (see Exhibit 2). Among other things, different industries hope to improve labor productivity and efficiency, increase consumer engagement and revenue, improve brand equity and performance, enhance entertainment and travel, introduce new healthcare techniques, launch new and more effective healthcare methods and facilities and augment education. In a recent BCG survey of executives in multiple sectors, 45% of retailers and 43% of real estate and hospitality respondents said that among all deep technologies they considered AR/VR to be most relevant in the coming years for their industries. About a third of transportation and pharmaceuticals companies also agreed with that stance.
As the activity on the development side speeds up, hardware and software costs should decline rapidly even as they become more feature-rich and functional. And as platform ecosystems emerge investments in app companies will likely spur volume and mainstream usage of AR/VR. In recent years, venture and private capital as well as M&A investments in augmented and virtual reality has grown at a 33 percent clip, with a temporary decline in 2021 due to Covid-19 disruptions. So, while we may have to wait a little longer than originally hoped to feel welcome in the metaverse, it is just a short detour.
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