VR/AR/MR TRENDS: EXPANDING MARKETS

VR/AR: THE QUICKENING PACE OF THE IMMERSIVE NOW

By CHRIS McGOWAN

TOP: Stockholm-based Resolution Games developed the colorful dueling shooter VR game Blaston. (Image courtesy of Resolution Games) Virtual reality and augmented reality are more tangible now. VR in particular has enjoyed a steady ascent recently, with help from the Oculus Quest headsets and the strong earnings of many VR titles, especially in the gaming realm. This year, VR looks to get a boost from the release of the Sony PlayStation VR2 headset as well as expected introductions of new VR and AR gear from Apple and other tech firms. In addition to games, education, travel, health, enterprise and social interaction apps should all drive VR and AR in the near future. Plus, the pervasive talk of a “metaverse” is attracting interest and investment, and VR and AR look to be the chief modes of access.

Fortune Business Insights projects that the global virtual reality market will grow from around $6.4 billion in 2021 to over $80 billion by 2028. “VR and AR are rapidly gaining traction,” says Christine Cattano, Framestore Head of Immersive, U.S. “I can’t think of an industry that isn’t starting to explore how VR/ AR hardware or software offers transformative new workflows and/or ways to connect with their audiences/customers. At Framestore, our work in this space is largely driven by technology and entertainment clients, but also brands looking to explore these platforms as well.”

“Each generation of headsets has enabled a huge leap forward for our industry,” says Larry Cutler, co-founder and CTO of Baobab Studios, which has released VR titles like Baba Yaga and Namoo. “For example, the release in 2019 of standalone VR headsets such as the Oculus Quest empowered users to be completely mobile and untethered to a high-end gaming PC and sensors. Our 2019 VR

“Creating rich worlds filled with compelling characters that can potentially accommodate more modes of participation will almost certainly grow the audience and, by extension, the market.” —Vicki Dobbs Beck,Vice President of Immersive Content Innovation, ILMxLAB

narrative Bonfire was a launch partner for the Quest, and we saw first-hand how this headset expanded the VR audience.”

In January at CES, Sony revealed details about its next virtual reality headset. The PlayStation VR2 will have high-fidelity visuals with 4K HDR, a 110-degree FOV, a display resolution of 2000 x 2040 per eye and frame rates of 90/120Hz. It will have inside-out tracking with integrated cameras in the VR headset and eye tracking, and be haptic-equipped for sensory feedback. It will compete with the HP Reverb G2, Valve Index VR, HTC Vive Pro 2 and HTC Vive Cosmos Elite, among other headsets, and the HTC Vive Flow glasses.

Ian Hambleton, CEO of London-based immersive studio Maze Theory, comments, “We definitely think the VR2 will be an unexpected hit. It solves many of the issues of the first headset but has loads of great new features, and for PSV5 owners will be so easy to add. We think it will do amazingly well.” Maze Theory developed the VR experience Dr. Who: The Edge of Time and will release Peaky Blinders: The King’s Ransom this year. Hambleton adds, “The Quest 2 has been a huge shot in the arm for the VR market and the ecosystem is growing fast. Attachment rates and software sales are very positive.”

Joanna Peace, Meta Manager of Technology Communications for VR Product, says that Meta’s next headset, a next-generation all-in-one VR hardware, is code-named Project Cambria and will launch in 2022. “This isn’t a Quest 2 replacement or a Quest 3. Project Cambria will be a high-end device at a higher price point, because it’s going to be packed with all the latest advanced technologies, including improved social presence, color Passthrough, pancake optics, and a lot more. We’re designing Project Cambria for people who want to start testing out a new kind of computing on the cutting edge of what’s possible today.”

At CES in January, Microsoft announced a partnership with Qualcomm to develop custom augmented-reality chips that can be used in future lightweight AR glasses. Canon revealed that it is developing a social VR platform for 2022 called “Kokomo” that will mix immersive experiences with video calling. Panasonic subsidiary Shiftall announced lightweight VR glasses known as MeganeX, and numerous other companies announced new VR and AR gear.

Looking at VR’s many possible applications, Tuong H. Nguyen, Senior Principal Analyst at Gartner, Inc., comments, “The volume is mainly consumer entertainment. But I feel the bigger opportunity is in training and simulation. We’re seeing more enterprises looking to use VR for training, simulation and collaboration. The reason I think the enterprise-use cases show promise relative to

TOP TO BOTTOM: Los Angeles-based Stress Level Zero’s platinum title Boneworks is a first-person shooter that is powered by the Unity engine and supports PC-compatible VR headsets. (Image courtesy of Stress Level Zero)

Blade and Sorcery features VR fantasy sword fighting and utilizes the Unity game engine. It was developed and published by WarpFrog, located in Saint-Herblain, France. (Image courtesy of WarpFrog)

The Elder Scrolls V: Skyrim VR is a platinum seller, published by Bethesda Softworks in Rockville, Maryland. It uses the Creation Engine, created by Bethesda Game Studios and based on the Gamebryo engine. (Image courtesy of Bethesda Softworks)

TOP TO BOTTOM: Capetown-based Free Lives’ platinum Gorn is a violent gladiatorial simulator. It uses a “physicsbased combat engine.” (Image courtesy of Free Lives)

Seattle-based Polyarc’s Moss is a single-player action-adventure puzzle game for all ages, made with Unreal Engine. (Image courtesy of Polyarc)

Infiltrate the 1920s Birmingham criminal underworld in Peaky Blinders: The King’s Ransom, developed by London-based Maze Theory. (Image courtesy of BBC/Maze Theory)

The Resident Evil 4 VR, developed by Austin-based Armature Studio along with Capcom and Oculus Studios, utilizing Unreal Engine, was the fastest-selling app in the history of Quest. (Image courtesy of Capcom/Oculus/Armature) entertainment is because of the purpose-built nature of these solutions. As in, to get significant growth in entertainment, you need to address a broad market with both breadth and depth of content. Whereas on the enterprise side, it’s more narrowly scoped as, for example, ‘here’s a tool for you to do the following at work.’ In that sense, the adoption trajectory looks better.”

One of VR’s uses has been for location-based entertainment, which, says Cattano, was “really blossoming pre-2020 [but] saw a bit of a slowdown due to COVID, as clients looked for alternative technology to reach their audiences in a safe and accessible way. But we are seeing this start to bounce back in 2022.” Video games have been a leading driver of VR sales to date. The rhythm game Beat Saber has sold over 4 million units, and estimates place its total revenue (with DLC included) at $180 million, with $100 million of that coming from the Quest store alone. It is followed by other platinum titles (one million units sold) like Seattle-based Polyarc’s Moss and Capetown-based Free Lives’ Gorn.

Skydance Interactive’s The Walking Dead: Saints and Sinners has grossed more than $60 million across all platforms, according to Santa Monica, California-based Skydance. Meanwhile, the Oculus Blog last November revealed that Resident Evil 4 (an exclusive Quest 2 release) had become the fastest-selling app in the history of Quest.

Two other upcoming VR game titles should help boost sales. Sony Interactive Entertainment will exclusively publish a VR2 version of Amsterdam-based Guerrilla Games’ popular Horizon Call of the Mountain (being developed by Guerrilla and Liverpool-based Firesprite). And Meta has an exclusive deal to create an Oculus 2 version of Rockstar Games’ Grand Theft Auto: San Andreas.

More than $1 billion has been spent on Quest store content since its launch in 2019, according to Meta Platforms CEO Mark Zuckerberg in a company earnings call. Last February, Chris Pruett, Director of Content Ecosystem at Meta, noted on Twitter that eight titles have each made over $20 million in gross revenue, another 14 titles more than $10 million and an additional 17 titles over $5 million in the Quest store. More than 120 total VR games available for Oculus Quest and Quest 2 have grossed over $1 million apiece in revenue, according to Pruett. Looking at the entire VR market, some other platinum VR games include Rust’s Hot Dogs, Horseshoes & Hand Grenades; Superhot’s Superhot VR; Vankrupt Games’ Pavlov; Stress Level Zero’s Boneworks; Illusion’s VR Kanojo; Bethesda Software’s The Elder Scrolls V: Skyrim VR; and, WarpFrog’s Blade and Sorcery. Cutler comments, “We are witnessing a big push into multiplayer VR. Some notable examples include Blaston and Demeo [Resolution Games, located in Stockholm], and the battle-royale shooter Population: ONE [BigBox VR, which was purchased by Facebook]. One really ambitious and artistically interesting multiplayer game is Space Pirate Arena [from I-Illusions, located in Geraardsbergen, Belgium], which combines large-scale multiplayer combat in a shared space.

Of course, multiplayer leads us to the VR metaverse, which opens a ton of creative possibilities but is still in its infancy.” Hambleton notes that VR has an advantage with video games: “You’re fully immersed in a way no other device can match.” “VR is perhaps the most powerful means of transporting people to another time and/or place including to a ‘galaxy far, far away,’” says Vicki Dobbs Beck, ILMxLAB Vice President of Immersive Content Innovation, which has released the much-lauded VR title Star Wars: Tales from the Galaxy’s Edge. “VR’s appeal will continue to grow as the breadth and nature of experiences speak to all kinds of engagement. Some people want to leap into high-stakes adventures while others wish to explore and discover at their own pace. Creating rich worlds filled with compelling characters that can potentially accommodate more modes of participation will almost certainly grow the audience and, by extension, the market.” While gaming has so far had the most success in VR, “other popular content includes fitness, productivity and social experiences,” says Peace. “Developer success in VR is broad. You’re seeing developers and studios pursue making VR content in those categories. And the strong foundation in today’s popular VR categories enables people to imagine and build engaging apps for more use cases. There’s also a burgeoning group of creators, aka builders, who are actively building worlds and experiences, whether it’s in Horizon Worlds, Rec Room or other [Social VR] apps. Those apps are great examples of VR inspiring creative pursuits.” Venice, California-based Wevr has worked on the TheBlu (Sundance), the immersive Harry Potter experiences with Warner Bros. and the Gnomes & Goblins VR game with Jon Favreau. Wevr’s next project strives “to empower interactive creators and developers around the world to more easily collaborate and share their creations. We are developing a cloud software platform to do just that – we call it Wevr Virtual Studio (WVS).” Peace says, “On the AR side, we’re seeing wide adoption of free tooling via our Spark AR platform. Hundreds of thousands of creators are using AR to build interactive experiences that do everything from transform dancers on Instagram Reels and let people play multiplayer games on Messenger, to helping others try on – and buy – makeup from the comfort of their home. With AR embedded at the center of Meta apps and experiences, creators and studios have amazing opportunities to reimagine the way people connect, share and explore.” Nguyen adds, “Generally speaking, AR is much more broadly applicable because it’s rooted in the physical world. Since we live in the physical world, there are more scenarios where this applies.” Cattano comments, “AR applications are extremely popular. There’s no doubt that audiences see the allure of interacting with virtual content in their physical environment, provided it’s contextualized properly and is user-friendly.” Framestore developed the His Dark Materials: My Daemon AR app for HBO. With the help of a growing number of high-quality VR titles, the popularity of the Oculus Quest 2 headset, and the looming arrival of PlayStation VR2 and other new big-tech immersive gear, the mainstream light can be seen at the end of the VR/AR tunnel.

TOP TO BOTTOM: Population: ONE is a multiplayer, battle-royale-style VR game developed by BigBox VR that includes a “vertical combat system” and is powered by the Unity game engine. BigBox VR is located in Seattle and was acquired by Facebook in 2021. (Image courtesy of Meta/BigBox VR)

The hall-scale VR game Space Pirate Arena seeks to get players off their couches and into a multiplayer game of hide and seek. It was developed by I-Illusions, located in Geraardsbergen, Belgium. (Image courtesy of I-Illusions)

Skydance Interactive’s first-person VR game The Walking Dead: Saints and Sinners, in which the player battles with zombies, has grossed over $60 million in revenue across all platforms. (Image courtesy of Skydance Interactive)