Virtual and augmented reality used to be the domain mostly of committed gamers, but improvements in technology and an expanding range of uses has made the segment one of the fastest-growing in the UK.
Start-ups in VR and AR have been pulling in global capital from high-profile names such as Japan’s Softbank and PlayStation co-founder Phil Harrison even while political and economic uncertainty has been obscuring the overall UK outlook in recent years. The sector is likely to continue to attract the best and the brightest talent, particularly now at least some of that uncertainty has been lifted by the recent general election.
Augmented reality adds digital elements to a live view, often from a smartphone, such as the cult game Pokémon Go. Virtual reality on the other hand is a completely immersive experience. According to PwC, the UK has the largest virtual reality market in the Europe, Middle East and African region and is the UK’s fastest growing Entertainment and Media sector. It has revenues predicted to rise at a 20 per cent compound average rate to reach £294 million by 2023.
“The UK’s VR industry will generate more revenue than any other country in Western Europe over this time,” said Mark Maitland, who leads the firm’s UK Media and Entertainment practice.
Worldwide spending on augmented reality and virtual reality (AR/VR) is forecast to reach $160 billion in 2023, up significantly from the $16.8 billion forecast for 2019, according to a June report from the International Data Corporation. The five-year CAGR will be 78.3 per cent, it forecasts.
Gaming is still the biggest sector in the VR and AR universe and is predicted to be worth £149 million by 2023. And entertainment in general is always going to be a core element for the industry, allowing users to experience a tropical vacation from the comfort of an armchair, or enjoy impossible-to-clinch front row seats for a sporting final.
However, VR is no longer just for gamers and its potential across a range of applications from therapy, to surgical training and construction is where much of the excitement lies.
Take for example FloorSwitch, an augmented reality app, which enables users to choose flooring samples and virtually install them all over the house. The app has been backed by several major UK retailers and aims to close a deficit in potential customers’ imagination that flooring retailers think costs them tens of millions a year.
Then there’s Visual-wise, which creates an image of a building before it has been built, allowing the user to walk through the virtual rooms. It has been tested by Purcell Architects to demonstrate how a new extension to a London church would look.
Oil giant Shell has adopted VR technology from London-based Immerse, which provides a platform to create virtual training situations. It’s virtually impossible for the company to recreate the types of emergency situations staff may face in real life, though in a virtual world that fire in an oil tanker becomes scarily real, allowing Shell to instruct its staff and to give them an idea of how they may think and feel when faced with a threat.
According to PwC, there are at least 463 VR and AR firms in the UK, which are in turn creating their own industry ecosystems, such as marketing services and hardware manufacture. It reckons the potential boost to GDP from these technologies may be $2 billion by 2022.
A word of caution though: the industry may be fast growing and spreading into multiple areas, but it’s still far from mainstream. Only two million headsets were sold in 2018, with sales forecast to rise to 3.5 million in 2023. Early adopters have complained the headsets are heavy and nausea inducing, as well as being pricy. Once set up, there is also a relatively limited amount of content currently available to justify the cost.
That should change in coming years as a second-generation of hardware becomes available, such as the standalone Oculus Go, developed by Qualcomm and China’s Xiaomi. The sets retail for just over €200, according to their website.
The rollout of 5G broadband across the country is also expected to add another driver to the industry, improving internet speeds to allow for better quality products.
All this points to a bright future for VR and AR, especially as entrepreneurs glimpse the potential to turn what was once science fiction into hard economic reality.