Expanded Reality poised to grow in 2020 even with COVID-19

While the global coronavirus pandemic is expected to slow the growth of businesses, one field that continues to grow is that of expanded reality. Market intelligence firm SuperData has released a revised forecast for the segment, raising its projected revenue for 2020 to $6.9 billion.

For those not familiar with the term, XR is a catch-all term that covers both virtual reality (VR) as well as augmented reality and mixed reality (AR/MR).

Back in April, after the effects of the pandemic began to be felt around the world, SuperData had actually lowered its 2020 forecast from $7.7 billion down to $6.3 billion. However, it has now revised the forecast again due to strong expected sales for VR hardware and some promising developments from one of the world’s biggest AR games.

Virtual reality leads the way

In its report, SuperData says that it expects VR hardware alone to net a total of $2.5 billion in revenue this 2020.

In particular, the report noted strong sales of the Oculus Quest, which beat out Sony’s PlayStation VR in Q2—the second time it has done so (the first being Q4 2019). In addition, it expects the Quest to remain the top-selling VR headset through the end of 2021, with Oculus focusing on it fully after discontinuing its Go headset.

In addition, the report noted that the Go performed well despite supply constraints.

That’s not to say that PlayStation VR didn’t do well. While the Quest sold around 177,000 units in Q2, Sony’s headset sold around 155,000—a respectable 22,000 or so behind Oculus’ offering.

Pokemon Go a surprise winner

VR is doing well during the pandemic, but when almost everyone has more free time at home, the results may not really be surprising. With the technology’s ability to transport users into other worlds, its strong performance may almost be a given during these trying times.

However, one surprising driver of XR’s growth is a game that some may not have expected to do well during the pandemic: Pokemon GO.

With its focus on finding Pokemon in and around the real world, the hit AR game doesn’t sound like something that would do well in the pandemic.

Yet, Pokemon Go is doing well. In Q2 of 2020, the game’s earnings actually went up 12 percent compared to what it made during the same time last year.

SuperData attributed the game’s continued success to developer Niantic’s efforts to adapt the game to lockdowns.

Starting at the end of April, Niantic and the Pokemon Company began selling “remote raid passes.”  These passes allow players to join raids—an activity that usually requires them to be at a particular location in real life—from the comfort of their own home.

This has allowed players to continue playing the game, despite the ongoing pandemic.

Other AR/MR not doing as well

Even as Pokemon Go remains a strong performer—strong enough to help boost projections for the XR segment, other mobile AR/MR reality efforts aren’t doing as well.

In their report, SuperData actually revised the projected for AR/MR downwards for Q2 due to setbacks for consumer AR/MR.

A good part of this is that, unlike Pokemon Go and similar AR apps, which simply use people’s smartphones, most big AR/MR startups have focused on AR/MR headsets.

Unlike VR headsets or traditional mobile AR, AM/MR headsets have not seen an uptick in consumer demand.

The ongoing pandemic has also most likely contributed to this, as the devices are meant to be used outside, and not in a confined space like VR.

Businesses founded on wearable AR/MR headsets have also been floundering as of late.

Magic Leap, which had been working on getting its Magic Leap One glasses off the ground since 2010, experienced mass layoffs earlier this year after it both failed to appeal to consumers and developers.

Meanwhile, competing smart glasses maker North was recently bought out by Google (which has itself tried to enter the market on its own) for reportedly less than the firm had initially raised in venture funding.

The one company that is seen as possibly helping save the AR/MR headset market is Apple. Rumors have come out that the Cupertino-based giant is testing its own AR/MR headset. 

Even if Apple is working on its own consumer AR/MR headset, however, SuperData does not expect it to arrive until 2022 at the earliest (regardless of the pandemic). And even when that happens, it still predicts that such a device will take time to reach true mainstream adoption.