Augmented reality (AR) and virtual reality (VR) have the potential to turn into the next big platforms after PC, net, and cellular. Isolated purposes of AR and VR have been round for some time, however the applied sciences to unlock their potential have solely lately turn into out there. We anticipate AR and VR to basically rework how shoppers work together in the bodily world and how enterprises run their operations.
Augmented and virtual reality: Distinct however complementary applied sciences
In a nutshell, AR overlays digital imagery onto the actual world, whereas VR immerses a consumer in an imagined or replicated world (see exhibit 1).
Fundamentally, AR and VR create a new approach of interplay utilizing gestures and graphics which might be extremely intuitive to people. VR creates an illusory “sense of presence” in an imaginary world created by way of a computer-generated simulation. For occasion, this enables customers to expertise travelling, purchasing, creating, speaking or interacting with individuals remotely in a totally totally different means. In distinction, AR permits individuals to entry digital info in their real-world environments, thereby permitting “simultaneous existence” in each bodily and digital worlds. Both AR and VR are transformative in nature and more likely to co-exist as immersive platforms.
A entire new realm of alternatives
We are nonetheless at the starting of the AR and VR revolution, however there isn’t any doubt that they’ve the potential to revolutionise a number of industries over the next 5 to 10 years, reworking the method we work together with the surrounding world, unlocking new experiences, growing productiveness and effectivity (see Exhibit 2).
From the use instances, one can infer that AR and VR will create a shift that’s comparable, if not higher, than that of the smartphone and underlying platforms.
This potential has been recognised by main know-how giants and OEMs. Facebook made an early guess in 2014 when it acquired Oculus for $2.1bn and since then it has acquired over ten different AR/VR gamers. Other know-how giants have adopted go well with – Google launched Google Cardboard, Google Glass and backed Magic Leap; Microsoft launched HoloLens and Apple acquired AR software program maker Metaio. Samsung has a number of tasks coming from its in-house C-lab incubator resembling Monitorless (PC-viewing glasses), Vuildus (VR house furnishing), Relúmῐno (sensible help for the visually impaired) and TraVRer (360-degree journey video platform).
While know-how giants and OEMs have been main the cost, telecom operators have been sluggish to react, however, in current years, we see operators in developed markets starting to dip their toes in the water. For instance, Telefonica launched start-up incubator Wayra presently supporting eight VR and 4 AR start-ups. SK telecom has developed 360-degree VR reside broadcasting capabilities and BT is making an attempt to revolutionise the sports activities expertise by means of VR enabled soccer match telecast.
For AR and VR to develop into the next big platforms, challenges have to be overcome
While vital progress has been made in this area over the previous few years and the ecosystem at present has a whole lot of corporations, hundreds of staff and over $four.5 billion invested, with expectations to grow to be a $80-100 billion business by 2025, AR and VR in the present day are nonetheless rising applied sciences.
For AR and VR to completely materialise and present the impression described above, vital hurdles have to be overcome.
These could be grouped in 4 essential classes:
- Bulky and costly units: Despite the emergence of decrease value hardware choices similar to Google Cardboard ($15) and Google Daydream ($99), the majority of AR and VR gear could be very pricey, e.g. HTC Vibe ($799), Oculus Rift ($600) and Google Glass ($1,500). In addition to the hefty worth tags, the present AR and VR gear is cumbersome and cumbersome (e.g. presence of wires). Though it might be appropriate for static experiences (e.g. watching a film), will probably be a problem in an immersive surroundings that requires freedom of motion and authenticity as performance (e.g. staff in the manufacturing business, who cope with harmful equipment, and can’t be uncovered to potential hazards)
- Scarcity of “killer” content material and purposes: Without all kinds of widespread purposes, it is going to be exhausting for AR and VR to succeed in mainstream success. Although there are lots of purposes on the gaming and video entrance, AR and VR have but to seek out their “superstar app” – i.e. the use case that makes the know-how elementary for each shoppers and enterprises
- Limited penetration of technically prepared smartphones and units: Technical points resembling smartphone battery life and graphical capabilities hinder the adoption of AR and VR. To have the greatest AR and VR expertise, units have to have superior picture show and audio capabilities (at the very least 2560×1440 resolutions), highly effective processors (e.g. 820 Snapdragon), giant reminiscence area and sufficient battery life. Today lower than 10% of two.eight+ billion smartphones worldwide are suitable with Samsung Gear and Google Daydream
- Insufficient community velocity and latency: Fully immersive 360-degree experiences require no less than 25Mbit/s for streaming, and can go as much as 80-100Mbit/s for HD TV. With a worldwide common of seven.2 Mbit/s, solely about 12% of worldwide connections fulfill these necessities. In addition, low latency is crucial to ship the greatest AR and VR expertise as a result of even small delays can have a disorientating impact. For occasion, when a consumer turns and the panorama doesn’t transfer concurrently, the consumer might expertise movement illness. VR requires lower than 1ms latency and at present the international common latency is 36ms on fastened and 81ms on cellular.
The case of Pokémon Go (free-to-play, location-based AR recreation) clearly illustrates the state of affairs. When Pokémon Go was launched in July 2016, it exceeded 100m downloads inside a month of its launch, turning into the most downloaded cellular gaming app of 2016. It single-handedly proved how worthwhile and widespread AR could possibly be, producing over a billion dollars in income for developer Niantic. This was achieved with a recreation that was “simple” sufficient to work with smartphones with out the want of any further system and the content material was a “killer hit” as demonstrated by the take-up.
Despite the success, key points emerged in phrases of gadget capabilities and community. Pokémon Go requires the smartphone system to have lengthy battery life, GPS sensor and compass. Users with out these functionalities would drain their batteries inside a number of hours or should accept a pared down model of the recreation which detracted from their enjoyment and expertise. On prime of system functionality points, Pokémon Go additionally skilled points on cellular networks. Despite solely taking over roughly zero.1% of the general visitors, the recreation accounted for >1% of all periods on the community. This ten occasions differential was the results of communication periods opening with Niantic servers each time an occasion occurred in the recreation. Driven by the large uptake, the cumulative impact from each bandwidth and periods negatively impacted networks, particularly when the recreation drove giant teams of gamers in the direction of particular geographical areas.
What position can telecom operators play in the AR and VR ecosystem?
As talked about, telecom operators are but to make a reputable play in this area. However, we consider that they will play a elementary position in serving to overcome a few of the challenges illustrated and thereby allow earlier materialisation of the AR and VR promise. This is the place operators’ typical strengths similar to community infrastructure deployment or units distribution capabilities come into play. But past serving to drive these new applied sciences, we consider AR and VR have the energy to rework the position of operators in the ecosystem.
If we consider that AR and VR shall be the next big platforms, we should always be capable of think about a world the place we not take a look at our telephones, however moderately look as much as visualise the content material in entrance of our eyes, and work together with the gadget via machine-learning enabled voice or visible recognition. In this state of affairs, the position of the smartphone can be considerably diminished.
This would offer a recent alternative for operators. Operators have missed the alternative to play a big position in the smartphone ecosystem – in phrases of capturing share of a buyer’s thoughts and interplay time, and subsequently monetising it. However, if the position of the smartphone diminishes, and new platforms take over, then alternatives come up for operators to play a pivotal position in the digital ecosystem past connectivity. This is the place the roles of ‘open enablement platform’ and ‘application and content provider’ grow to be related for operators.
Pragmatically, we’ve got categorised the position of operators in the AR / VR ecosystem in 4 teams based mostly on the degree of involvement of the operator and the anticipated transformational outcomes: 1) Device distributor, 2) Connectivity supplier, three) Open enablement platform, and four) Application and content material supplier.
- As a ‘Device distributor’, operators would resell units to end-users, and make them extra accessible by subsidising, leasing or financing them as operators have been doing for smartphones.
- As a ‘Connectivity provider’, operators would wish to make sure that final mile networks have clever visitors administration options, top quality compression algorithms, low-latency and excessive bandwidth capabilities to supply customers immersive experiences which are lifelike, partaking and entertaining. As such, 5G know-how shall be important in serving to overcome community limitations. Similarly, the Telecom Infra Project (TIP), an initiative launched by Facebook in collaboration with operators, infrastructure suppliers and system integrators, targeted on tackling the engineering challenges of delivering high-resolution video and virtual reality, will play a key position in enabling AR and VR take-up. However, driving these community transformation tasks would require giant investments on prime of ongoing CAPEX necessities. Operators want to find out whether or not they can efficiently and sustainably monetise this funding, which poses the following key questions:
- Will the surge in knowledge utilization from AR and VR purposes be sufficient to justify the effort? Could operators monetise the high quality of service demanded by AR and VR by means of particular tariffs or community increase add-ons?
- Can an AR and VR prepared community be leveraged as a software to spice up differentiation, therefore buyer acquisition and retention, subsequently driving the operators’ income share in the market?
- In an ‘Open enablement platform’ position, operators place themselves as the ‘glue’ that brings collectively totally different gamers in the AR/VR ecosystem: end-users, builders, units producers and content material creators, successfully permitting totally different gamers inside the ecosystem to develop options, making certain interoperability and widespread adoption. This enablement platform won’t solely have typical community functionalities similar to QoS administration (deploying bandwidth intelligently based mostly on pre-defined guidelines and parameters), strong content material supply community, and compression algorithms (to scale back community pressure), but in addition a developer portal with instruments reminiscent of APIs (to attach the totally different ecosystem suppliers and allow the longer tail of builders), devoted SDKs, ready-to-use ‘basic’ AR/VR algorithms, billing capabilities and an analytics layer.
- As an ‘Application and content provider’, operators would collaborate with business gamers to ship AR and VR particular purposes and content material (e.g. video, gaming, purchasing, manufacturing, and so forth.), the place AR and VR will help particular use instances. This will assist operators discover new income streams instantly by way of app/content material based mostly income fashions, and income sharing with app/content material builders but in addition not directly via improved positioning (which means higher buyer acquisition and retention), and greater buyer engagement (translating in share of pockets and knowledge utilization increase). Korea Telecom (KT) is an instance of an operator that’s taking place this path. For the 2018 PyeongChang Winter Olympic Games, KT plans to launch an entire suite of AR and VR purposes. These embrace Sync View (viewers watch the games by means of athlete’s lens), Interactive Time Slice (100 digital camera angles and screens), 360 VR Live (panoramic view of the games) and Omni Point View (throughout view of the games). Along comparable strains, BT is planning to drive its ambition to revolutionise sports activities watching to a new degree by delivering fully-immersive, interactive VR content material, which can place individuals proper at the coronary heart of the motion.
While AR and VR are nonetheless rising applied sciences, their mainstream adoption will improve dramatically as hardware prices fall, system performance will get extra refined, extra ‘killer’ content material is developed, and community velocity and latency enhance. While it’s true that in the short-term, AR and VR will stay comparatively area of interest, the mid to long run potential might be transformational.
Operators can undertake a passive strategy, the place no particular step is taken in the development of the AR and VR business past the ongoing modernisation of the community (e.g. 5G deployment), which naturally helps the materialisation of the AR and VR promise. This is unlikely to end result in vital monetisation potential, and might additional lower operator relevance in the ecosystem, pushing operators additional in the direction of being pure connectivity suppliers.
Alternatively, digitally-minded formidable operators can champion and drive the AR/VR area by positioning themselves deeper in the worth chain as a ‘platform enabler’ and/or ‘application and content provider’. This implies early funding in the required community capabilities, build-up of further competencies on prime of the connectivity layer and collaboration with know-how gamers which might be pushing the boundaries of the business to develop end-user options. Operators that select this path and do it proper can leverage the novelty issue to reposition themselves inside the ecosystem of tech and system gamers, and in the eyes of the finish consumer.
The telecom business monitor report suggests this can be a lengthy shot for operators. Over the final decade, they’ve usually been poor at innovation and have time and once more missed the alternative to leverage their distinctive belongings to place themselves strongly in the digital area. Nevertheless, there’s intention from many main operators to make a critical play inside the digital area – AR and VR might properly be the basis to spearhead this transformation.