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Virtual Reality

Mobile AR to drive $108 billion VR/AR market by 2021

“VR will be big, AR will be bigger and take longer.” What sounded revolutionary when we first said it 2 years ago has become accepted wisdom. But now the market has actually launched, we’ve got 12 months of real world performance and major tech players’ strategies emerging. And that’s changed our views on VR/AR growth. A lot. Our new Augmented/Virtual Reality Report 2017 base case is that Mobile AR could become the primary driver of a $108 billion VR/AR market by 2021 (underperform $94 billion, outperform $122 billion) with AR taking the lion’s share of $83 billion and VR $25 billion.

What went right (and wrong) last year

Let’s start with less than happy times. Facebook (Oculus Rift) and HTC (Vive) had growing pains at launch, whether slower than expected shipping or order cancellations. Oculus launched without Touch controllers, which eventually cost $199 instead of being bundled (i.e. non-PC full system costs hit $798 – same as HTC Vive). Samsung’s Galaxy Note 7 saw part of its mobile VR ambitions literally go up in smoke, as the new Gear VR was designed to be compatible with that flagship device. Magic Leap also received a boatload of speculation about the tech it used to raise $1.4 billion.

Thankfully Nintendo/The Pokémon Company/Niantic had a breakout success that even they didn’t anticipate. Pokémon Go delivered $600 million mobile AR revenue in its first three months alone, making more money through the year than the entire VR games software market in 2016. While this came from a very specific set of circumstances, there have been direct knock-on effects for major tech companies’ mobile AR strategies.

As well as Sony’s solid launch of Playstation VR, the quiet achiever last year was Google. It launched its Daydream View mobile VR headset/controller and the first Tango mobile AR phone. What helped even more was Snap’s genius launch of Spectacles, which made wearing goofy future glasses cool again (no more Glassholes) even though it isn’t really AR.

All out, all change

The absolute performance of VR/AR in 2016 was not as important as how it changed the trajectory of the market. Where at the start of the year we thought 2016 could deliver $4.4 billion VR/AR revenue ($3.8 billion VR, $0.6 billion AR), the launch year’s issues resulted in only $2.7 billion VR revenue. This was counterbalanced by Pokémon Go’s outperformance helping AR to an unexpected $1.2 billion revenue, for a total $3.9 billion VR/AR market in 2016 (we were 11% optimistic).

But the last 12 months have fundamentally reshaped how the market could grow going forward.

Virtually the same, but different

Mobile VR will still produce the dominant “Explorer” (free up to $100) installed base for VR, with Google Daydream View moving things on from Cardboard days. However Samsung’s troubles last year meant that mobile VR didn’t get off to the flying start it could have. A smaller installed base than expected in 2016 reduces the network effects that platforms need to scale, which could slow things by 6 to 12 months. Mobile VR is still going to be big, but it might take a little longer to get there.

Sony’s Playstation VR launch and Microsoft’s upcoming Windows 10 VR headsets are the boosters VR needs, with consumer price points and performance that work for an “Enthusiast” (less than $400) market. Microsoft’s offering with inside-out tracking (inherited from HoloLens) is a game changer at a $299 price point. Plus it doesn’t need a brand new PC to run it, which makes it a genuine consumer product.

Facebook and HTC’s higher priced offerings and platform requirements are at risk of being squeezed into a low volume “Specialist” (less than $1,500 total system cost including platform) market by Sony and Microsoft. A deep niche populated by whales, but one that could become a narrow trench unless something can be done about price.

Augmented by name

In response to Pokémon Go, Apple’s Tim Cook said that Apple is “high on AR in the long run…continue to invest a lot in this…AR can be huge.” Google’s Sundar Pichai, Facebook’s Mark Zuckerberg and Microsoft’s Satya Nadella also hailed Pokémon Go as a major early win for AR.

But there are 5 big challenges AR needs to conquer for mass consumers: (1) hero device (i.e. an Apple quality device, whether made by Apple or someone else), (2) all-day battery life (3) mobile connectivity, (4) app ecosystem, and (5) telco cross-subsidization. While most attention is paid to what that hero device will look like and when it will get here, two of the other challenges are particularly hard to solve.

Until a major breakthrough in battery technology, a lightweight pair of AR smartglasses doing heavy duty AR is hard to power all day without a battery pack or hot swappable batteries (which are fine for enterprise customers, but a harder sell for consumers). This is a non-trivial problem. Plus it’s a major risk for the developer ecosystem to invest heavily in building apps for new platforms until the installed base reaches scale. It’s the perennial chicken and egg problem that all new tech platforms face.

So where does this leave titans like Apple, Google, Facebook and Microsoft, and all the high-growth AR smartglasses startups?

Augmented by nature

Mobile AR could conquer the five major challenges for AR to go mass consumer in the short term. Mark Zuckerberg thinks so, “the phone is probably going to be the mainstream consumer platform [where] a lot of these AR features become mainstream, rather than a glasses form factor that people will wear on their face.”

Smartphones solve four of the major challenges for mass consumer AR already: all day battery life, mobile connectivity, app ecosystem and telco cross-subsidization. Plus you’re probably reading this on a hero device (iPhone, Samsung or other great Android phone) – it just doesn’t have the sensors and software to be a full AR phone. Yet.

Pokémon Go is a thin lens into the potential of mobile AR (even if industry insiders don’t like to call it that). The first step to true mobile AR was taken when Google launched its Tango AR phone with Lenovo. While that doesn’t look like the hero device mobile AR needs to take off yet, it points in the direction of the tech that Apple, Samsung and others could use to revitalize innovation and growth in the slowing smartphone market.

And this is where mobile AR’s secret weapon comes into play – replacement cycles.

It’s free after you’ve paid for it

Most developed mobile markets have hit saturation, with sales coming from consumers replacing their phones regularly despite not really needing to. It’s just something that we do. But that replacement cycle has been edging up from under two years towards three years, which is a major headache for Apple, Samsung and others. After nearly a decade of outperformance, Apple saw declining iPhone sales and revenue last year. Samsung’s Kim Gae-youn said it could “secure a baseline profit even if the market stagnates, so long as we don’t make a bad mistake.” And that was before the Galaxy Note 7. Smartphones are a mature market, crying out for innovation to rekindle growth.

So it’s no accident that Apple bought Metaio, with speculation in the industry of the core team working in secret deep inside the company. Similarly Samsung’s Sung-Hoon Hong has talked about its “light field engine” that can produce “really, really realistic” holograms that look “really touchable”, and how augmented reality has “much better business development” potential than virtual reality. Qualcomm’s Seshu Madhavapeddy said that its flagship processors could enable phone based AR with significant battery savings and smaller form factors.

Neither Apple nor Samsung has said anything specific about their mobile AR plans, but our base assumption is that they could launch AR enabled phones in 2018 (outperform 2017, underperform 2019). Other major phone makers might join them. While there is a chance this could happen in 2017, if an iPhone 7S and Galaxy S8 turn out to be standard phones this year, then next year the iPhone 8 and Galaxy S9 could become the dawn of mass mobile AR. The beauty of this approach is that it doesn’t require consumers to do anything they don’t already do – just replace their iPhones and Samsung phones as usual. If they get everything right, AR phones could become the new hotness to drive mobile growth again. Who wants an old smartphone when you can have a magic window on the world?

I want my smartglasses

But where (or rather when) are the “true” augmented reality smartglasses we’ve been promised?

While you’ll be able to buy your smartglasses from ODG, Meta and others this year, AR smartglasses’ 5 big challenges might not all be resolved before 2019. Smartglasses leaders could remain focused on “Enterprise” (>$1,500 total system costs) and consumer Specialist (<$1,500) markets, until they are able to completely replace your smartphone without a battery pack and also offer a full app ecosystem. For the next few years standalone smartglasses could build a deep high-end market as discretionary purchases independent of the phone you’re going to buy anyway. Smartglasses’ inflection point could come when they begin to cannibalize smartphone sales outright.

Apple, Samsung and others could become smartglasses players later (unless Robert Scoble was well informed) as a natural progression from mobile AR, potentially launching them as phone peripherals like smartwatches (only this time cool and disruptive). Google, Facebook, Snap and China’s BAT (Baidu, Alibaba, Tencent) could also have big roles to play.

So what next?

While the market could play out in many ways, let’s look at what major players’ strategies might be. Things could turn out differently, so we’ll revisit as we learn what is (and isn’t) happening.

Facebook is the largest single investor in VR/AR after buying Oculus for $2 billion and investing at least $500 million more. The company began telegraphing what might come next by splitting Oculus into PC and mobile divisions and showcasing two different VR social platforms. Oculus’ PC VR division looks set to remain in VR Specialist and Enthusiast markets because of price, so increasingly doesn’t look like a Facebook-sized (i.e. 100s of millions to billions of users) asset. Facebook could keep the Oculus PC VR division as a high-end test bed to support mobile VR/AR efforts, or spin it out (like Niantic from Google), merge it (potentially consolidating the high-end PC VR market) or sell it outright.

Oculus’ mobile VR division is in a prime position to continue running Samsung’s Gear VR appstore and drive Gear VR innovation. Mark Zuckerberg has already said he believes in mobile AR, but as a non-phone maker Facebook could stick to its roots as a software player in that market. Given its track record as a Snap fast follower, we might end up wearing Facebook “Spectacles” too.

Apple is the best placed of all major tech companies to potentially drive mobile AR, with its end-to-end ecosystem of hardware, software, app store, developers and retail. The company has been characteristically enigmatic despite Tim Cook’s stated enthusiasm for AR, but all it needs are a few additional sensors, integrated Metaio software and some serious intent. As above, our base case sees this happening next year (outperform 2017, underperform 2019). For Apple customers, there would be no marginal cost to buying an AR enabled iPhone – they’re going to buy one anyway.

Nurturing a growing ecosystem of apps and developers is second nature for Apple, so in the long run smartglasses as an iPhone peripheral might be a logical next step from Apple’s mobile AR efforts. It doesn’t look like Apple will disrupt itself with standalone smartglasses to replace your iPhone just yet (again unless Robert Scoble was well informed. If so, our outperform case comes into play).

Samsung is likely to remain a major player in mobile VR, despite what happened with the Galaxy Note 7. But it’s not a full ecosystem play for mobile VR because Facebook runs its Gear VR appstore. Samsung could stick to its hardware roots with mobile AR using similar timing to Apple, with others driving appstores and software in that market too. Also like Apple, AR smartglasses as a Samsung phone peripheral could become a logical progression from mobile AR long-term.

Microsoft’s Satya Nadella focused HoloLens AR/mixed reality on the Enterprise market because of its high spec and price, and going mass consumer doesn’t look likely in coming years. So while you could play Minecraft on HoloLens, you’ll only do so as part of “research” at work. Microsoft’s Windows 10 VR is a game changer for the PC/console VR market with its inside-out tracking, low price and basic platform requirements, and the company is staying true to its Windows playbook with partners HP, Dell, Lenovo, Acer and Asus making the hardware. There’s also a good chance Xbox One Scorpio will see a Windows VR headset bundle at launch to drive console VR growth.

Yet despite all its assets, Microsoft doesn’t have a focused mobile VR/AR play apart from Minecraft (a big game, but not a platform). Until a clear strategy emerges, Satya Nadella’s Microsoft risks missing the mobile VR/AR platform shift in the same way Steve Ballmer’s Microsoft did with phones.

After its misadventures with Glass, Google is doing the Googliest thing possible for VR/AR – everything. For VR Explorers, Cardboard is a low risk entry point for VR and Daydream View could become the mobile VR leader (whether made by Google or others). Google’s approach with Tango (both inhouse and with hardware partners) is at the forefront of the impending mobile AR revolution. However, Apple vs Google in mobile VR/AR could end up looking like iOS vs Android: Apple with a hugely profitable end-to-end mobile AR ecosystem, Google enabling a larger open mobile VR/AR ecosystem to drive its core search advertising and Google Play revenues. A good result either way. Speculation about a merged Tango/Daydream standard using Tango sensors for VR might require a new form factor to the current closed back Daydream View, and it’s still too early to make a call on a potential Google Glass 2.

The console/PC VR market should also see Sony continue to drive core games revenues with PSVR, while HTC’s Cher Wang could consider how to make the HTC Vive more accessible to a mass consumer audience in terms of price. HTC might also adopt a Facebook-style dual PC/mobile VR strategy and enter mobile AR, but would need to grow its core phone market share to scale. Intel’s Project Alloy all-in-one VR headsets look set to shake up the VR Specialist market when they launch later in the year.

The original source of this content was provided by Digi-Capital. The article can be viewed here:

Virtual Reality
There’s a lot of talk lately about Detroit being a comeback city. Travel + Leisure and Bon Appétit are recognizing Motor City as a major travel and food destination. But what about technology? We’re right in the center of the Midwest, an area set to outpace the famed Silicon Valley for startups. And the exponential growth is happening in part because of another Midwest staple: hospitality.

Partnerships are forged between nonprofits, government agencies, startups and established businesses, because we believe in Michigan and what we can do. Metro Detroit’s economy today is made up of more than just automotive. From embracing autonomous vehicles to groundbreaking augmented reality museum tours, we’re proud to be part of this technological renaissance.

PIXO Group’s Marketing Strategist Kristin recently spoke on augmented reality (AR) as a tool for storytelling at the Michigan Recreation & Park Association’s annual conference. Sound like a strange fit? When you think about it, not really: parks benefited from an influx of visitors thanks to Pokémon Go. By combining existing geolocations, like historical landmarks, with the beloved cartoon, Pokémon Go proved AR is here to stay (even though it’s not technically AR – shh!). There’s a handful of AR developers in the state, and PIXO Group is excited to be among them.  

This week, Michigan business association Automation Alley held their annual Technology Industry Outlook at the perfect location: the DIA. The Detroit Institute of Arts became the first museum in the world to have an AR tour, so filling their space with drones, robots and virtual reality was a natural fit. Companies exhibited their technology, and after networking and demos, participants listened to Automation Alley’s talk on Industry 4.0 and how it’s changing Michigan business. See key takeaways and read the full report here.

Michigan State University is, perhaps not surprisingly, a strong supporter of the tech scene. PIXO Group was at their gaming conference Meaningful Play last year, where our Creative Director Ben spoke on a panel about how the local industry is evolving. And at the end of this month, we’ll be sharing a table with our good friends at the Mobile Technology Association of Michigan for CS First. This is an opportunity to engage primary school students with technology, so we’re packing up all the Google Cardboards we can find!

So what else is on the radar? May will be another big month for the Michigan tech scene, continuing the momentum from last year’s record-breaking Startup Week and innovative Self Conference. We’re hoping to speak on virtual reality and education with our friends at Keep up to date with our social accounts to find out who we’re developing tech with next (or just follow us to watch the robots).


Virtual Reality
Last week, Business Leaders for Michigan held their fifth annual CEO Summit. This day-long event drew an enormous crowd from all areas of the enterprise: healthcare and banking to automotive and education. This year, BLM focused on some timely topics. The speakers discussed disruption, innovation, emergent technology and competing in a global economy. Here’s our Top 5 Takeaways from the day.   Sam Sesti, CEO of ONU One, spoke to one of the key concepts: differentiators. With an ever crowded marketplace, what are the tools companies need to succeed? How do you communicate loudly over the roar of competition? One way is with 3D visualization: engage your customers emotionally and give them an interactive, custom experience with your products. Sam said, though, it might not just be one way – it is the way. Fairly soon, all marketing, sales, service and training will be done using 3D visualization.   Even pizza companies are technology companies. CEO Patrick Doyle spoke about how most of their commercials aren’t about the product, but about how tech delivers it. Have you ordered a pizza with an app yet? What about via emoji? It’s time. Disrupt your Friday night dinner. ?   This fascinating panel, moderated by @ChristyTV, covered so many crucial issues facing business today. Another highlight was PNC VP Ric DeVore talking about bridging the gap between the older generation that will do all of their banking in the branches, and the Millennials that will never set foot in one. We are in transitory times indeed!   Steelcase CEO – and gamer! – Jim Keane spoke about how office furniture design is influenced by technology. His optimistic vision of the future of workspaces is one where people are no longer tethered to any particular location. Steelcase also uses virtual reality so clients can understand relationships between furniture and architecture. And, with the Internet of Things, offices will be as smart as the people who work in them.   These are words to live by. Make a desktop wallpaper, write it on a white board, tattoo it on your arm. If everything around you is changing rapidly, staying the same automatically makes you obsolete. This isn’t about failure, though – many tech leaders talk about the importance of failing fast. Taking risks was central not only to this talk, but embedded into the overall day. What makes this field so exciting and challenging is the opportunity to always push forward and innovate. The real risk is taking no risk at all.             Cover photo courtesy of

The Dev Team On: HTC Vive & Unity

This installment of The Dev Team at PIXO features commentary from Tech Director Vinh and Engineer Hasnaa  

The HTC Vive is the newest, and arguably greatest piece of virtual reality hardware on the market right now. While it has yet to penetrate the mainstream marketplace, those lucky enough to use one agree it offers immersion unlike anything else – some of the PIXO Group staff even call it a “religious experience.”  

Most likely, if you’ve already tried the Vive, you either: work for a tech company that develops for it (raises hand); work for a company that’s utilized it in sales & marketing efforts; or you attended an event where you were able to experience the Vive. Consumer adoption has yet to be widespread, but the exceptional experiences should propel it towards becoming commonplace.  

So what does it take to build experiences for this game changer? First, an awesome team. Here at PIXO Group we’re lucky to have awesome modelers, character artists, animators, sound designers, UI/UX experts and engineers. But if you want to start exploring on your own, the Vive’s plugins make development relatively simple for those ready to dive in.  

There are two main 3D game engines for the HTC Vive: Unity or Unreal. At PIXO Group, our history in Unity goes back to our mobile app games, so it’s the plugin of choice for our development team.  

Once you have Unity and the corresponding Steam VR plugin, the setup is straightforward and it contains example scenes. “To get started, you can drag prefabs that come with the plugin,” explains Hasnaa. Some simple first experiences can be things like hitting a ball with a bat. Once the physics of that are set, add in art to the scene to create an entire baseball game. If you’re already familiar with Unity, you’re basically ready to go.  

“If you’re a Unity developer and want to make virtual reality experiences, Unity is so well supported by the VIVE, developing VR is more simple than making an omelette,” said Vinh. (Editor’s Note: That depends a lot on who’s making the omelette. I am much better at omelettes.)  

Vinh and Hasnaa enjoy building worlds in the Vive because of the sense of immersion. Thanks to the high frame rate, there’s less dizziness, which is important not only for the end user, but for the developers during tons of testing. The depth of field feels really natural, the visualization of the controllers is excellent, and the sense of the room scale adds to the experience. Additionally, our team loves the opportunities the Vive afford them to play with physics.  

“When you place something down it feels like it, thanks to the haptic feedback on the controllers,” said Hasnaa. “It’s all very real, physics-based interactions.”  

So, for example, the controller can be replaced by a virtual bat with a collider on it, to hit balls or other projectile objects. The feedback extends beyond just the controllers, though. The Dev Team also wrote code that projects a collider from the headset to the ground. This simulates objects colliding with the players themselves.   The Dev Team wrote code that maps a point in space on the Vive headset and connects it to a point on the ground, so you’re experiencing a projection of yourself standing vertically. So when a ball comes at you and you swing at it with the controller, the accuracy of the experience creates that total immersion that is unlike anything else on the market right now.  

Beyond simple ball and bat projects, what can developers build in the Vive? Vinh encourages the exploration of fantasy realms: “If you ever wanted to be a space ranger fighting aliens, you can do that in the Vive.”  

Experiences don’t always have to be as grandiose as those, though. Vinh explains that you can put a real movie on a texture of an object in the world, so you’re watching a film in virtual space. While this has great implications for experiential marketing – like running promotional videos for a product within an experience – Vinh has a simpler explanation.  

“In virtual space, you can make the television as big as you want. Big screen TVs are expensive – just build one in VR!”

Virtual Reality

If you’re selected to showcase your technology in the TEDxLabs at TEDxDetroit, you better bring something extraordinary. ONU One’s 3D visualization platform is already a disruptive force for ecommerce and sales on the web and mobile. But they needed to demonstrate their capabilities in a big, highly visual way to hundreds of attendees. Virtual reality is the perfect medium for big impact, and ONU One knew PIXO Group is the perfect team to create it.   Find out what we did for ONU One at TEDxDetroit here.


Virtual Reality
By Shannon Bradley  

As marketers look for new ways to differentiate their brands from competitors, they are increasingly turning to virtual reality (VR) to create unique experiences for consumers and engage a global audience that is tired of traditional advertising methods. VR technology has the potential to drastically change how marketers promote their brands and products.  

Virtual Reality For Storytelling

Unlike traditional storytelling mediums, VR is a medium where the audience becomes active participants rather than simply passive observers. VR leaves a lasting impression on users long after the initial interaction. Often, users are so engaged they share their experiences on social media, thereby extending the brand’s reach. With so many consumers looking to social media to help make purchasing decisions, VR provides the opportunity for a brand to stand out. By blurring the lines between marketing and content, companies provide something of value to consumers while still promoting their brand.  

Recently, Six Flags teamed up with Samsung to create North America’s first VR Roller coasters, using Samsung Gear VR powered by Oculus.  VR turns Six Flags’ roller coasters into a fully immersive sensorial experience, synchronizing the action on the VR screen with the movement of the roller coaster, creating a ride unlike anything patrons have ever experienced.  On August 5, 2016, Six Flags announced a more interactive gaming experience, “Rage of the Gargoyles”, would be added to eight roller coasters in parks across the country. The new technology allows Six Flags to refresh a roller coaster by changing the VR visuals, rather than having to build something new.  

Virtual Reality for Entertainment

This convergence between traditional entertainment and virtual reality is just the beginning. Brands are also able to venture into nontraditional spaces to showcase their products.  For the 2015 Major League Baseball All Star Game weekend, PIXO Group created a complete Oculus Rift Virtual Reality experience for Chevrolet, where the user becomes a major league umpire and has to ‘make the call’ from behind the plate.  The VR game allowed fans to engage with the Chevrolet brand and the All Star Game experience.   Aside from entertainment, VR can be used by shoppers to design and experience their dream kitchen or bath with Lowe’s Holoroom.  VR also has a place in hospitals, where patients can immerse themselves in a therapeutic experience to relieve stress and promote healing.  

Virtual Reality Improves ROI

In terms of cost savings, just as Six Flags is disrupting the traditional roller coaster model with VR, so too did the United States Navy with their training. PIXO Group created an immersive underwater world where users pilot a ship, replacing the literal physical fabrication of a vehicle in a swimming pool. The VR simulation was more cost effective and portable for the US Navy.   As new VR headsets like the HTC Vive and Sony PlayStation VR continue to enter the marketplace, it will become easier for companies to add VR to their existing marketing strategies because of consumer familiarity with the hardware.  

It will be exciting to see how brands utilize this technology for experiential marketing to engage consumers. The possibilities for VR are truly limitless.

Virtual Reality
Detroit Startup Week was a massive success! With more than 3,300 registered attendees, it was the largest opening Startup Week ever! PIXO Group was proud to sponsor the inaugural Startup Week in Detroit, and had a great time at the Masonic Temple during Happy Hour all week, meeting tons of people and introducing them to the creative tech we make here. Some highlights of Startup Week included drones, art exhibits, hearing from industry leaders like Chase CEO Jamie Dimon and local leaders like the City of Detroit’s Jill Ford, networking, and most of all, watching people experience VR for the first time! Download our free undersea adventure virtual reality experience we were showing off all week: Android | iOS   ccx-01