The Next Frontier: Augmented and Virtual Reality

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Virtual and augmented reality are about to transform customer experiences. Here's everything brands need to know about these new technologies.
Customer Experience

Virtual reality (VR) and augmented reality (AR) are ready to make a splash across a wide range of industries such as entertainment, healthcare, and travel. A few companies are already experimenting with VR and AR technology: Volvo is working with Microsoft on a "mixed-reality" showroom, Rebecca Minkoff offers digital mirrors, and Marriott Hotels is letting guests explore destinations virtually.

Despite the growth in adoption and popularity of VR and AR, many organization remain confused about how to use and implement the technology. Here's a breakdown of how AR and VR devices are changing the meaning of user engagement.

What's the difference between VR and AR technology?
Virtual reality devices, which are typically headsets, immerse wearers in three-dimensional worlds that they can explore and feel as though they're in another place. Augmented reality devices, which could be a headset or a smartphone app, provide a live view of the real world with computer-generated video or graphics that appear to occupy the space in front of the user. Both AR and VR experiences have been clunky and limited in the past but advances in computing and display technology coupled with online connectivity are making it easier to create innovative, seamless experiences.

Who are the major players in this space?
Large tech companies like Facebook, Google, Microsoft, and Samsung are all diving into the emerging VR and AR market. Facebook acquired Oculus VR, maker of the Oculus Rift headset, for $2 billion last year. Also last year, Samsung and Oculus collaborated to create the Samsung Gear VR headset.

On the AR side, Microsoft unveiled HoloLens, a headset that projects 3D images onto real objects, earlier this year. And even though Google Glass failed to take off as a consumer product, Google is reportedly selling an enterprise version of Glass that it's pitching to businesses, reports The Wall Street Journal.

The search giant is also targeting the VR market with its budget VR viewer, Google Cardboard. Unveiled in June 2014, the viewer is made out of cardboard and a few lenses. All users have to do is insert a smartphone into the viewer and activate the Google Cardboard app to experience richly designed videos including Google's StreetView virtual world tour and 360-degree YouTube videos. Different angles come into view as users move their heads, creating the sense that they're fully immersed in the video world.

Compared to Glass, which had a $1,500 price tag at one point, Cardboard is much more affordable, starting at about $25. The low price point is key, making it easier for Google to drive mass market interest in VR, as well as get more people to create VR content for by buildingan audience for such content.

Venture-backed augmented reality and virtual reality startups are also jumping into the market. Magic Leap, a startup that is working on headsets that superimpose digital imagery over real objects, is seeking to raise $827 million. Blippar, maker of an app that lets consumers photograph a product and instantly see price and location information appear next to the product, has raised $47.2 million. And Jaunt, which built a 3-D camera for filming virtual reality videos, has already raised $100.2 million.

Why do virtual and augmented reality experiences matter?
To be clear, there isn't a viable consumer market for VR or AR technology, yet. Samsung's consumer VR headset, the Gear VR, went on sale just last month for $100. The Oculus Rift is expected to be released in Q1 2016 and the HoloLens developer kit will also be available in the first quarter of 2016.

However, once these devices become widely available, virtual and augmented reality experiences will quickly capture consumer and enterprise audiences and drive revenue, predicts Forrester Research analyst J.P. Gownder. "Virtual and augmented reality open a lot of opportunities to help workers and create new forms of entertainment," Gownder maintains. "All the preconditions-technology and major vendor support-are being met and it's ready for prime time."

As mentioned earlier, a few companies are already dipping their toes in virtual worlds. Last month, The New York Times shipped 1 million free Google Cardboard viewers to print subscribers and created videos specifically for its NYT VR app as an experimental form of storytelling. The New York Times reports that users spent an average of 14.7 minutes using the app and the app had more downloads within the first few days than any other Times app.

InStyle worked with Jaunt and Quad/Graphics, a print and media solutions provider,to give readers a behind-the-scenes look at a fashion shoot with Drew Barrymore using a VR app and viewer. Barrymore walks users through what's happening on the set and users can see different parts of the set as they turn their heads.

Additionally, Arch Virtual, a software developer, is creating medical training simulations for Oculus Rift. And APX Labs is developing smart glasses that display real-time AR notifications for nurses and workers in the automotive and aerospace industries.

Which technology offers the most value?
While both virtual and augmented reality offer numerous uses, analysts predict augmented reality will be more commonly used. The AR/VR market will reach $150 billion by 2020, with AR taking the lion's share at about $120 billion and VR at $30 billion, predicts technology advisor firm Digi-Capital.

"AR has the potential to play the same role in our lives as mobile phones with hundreds of millions of users," writes Tim Merel, founder and managing director of Digi-Capital, on TechCrunch. Where VR is like wearing a console on your face, AR is like wearing a transparent mobile phone."

Gownder agrees. Given that there's only so much you can accomplish in a virtual world, "my guess is AR will be the bigger market in the long run," he says. "That's because what you're looking for is the ability to intersperse digital information into your daily life in an invisible way." At the same time, it's important to experiment, Gownder adds. "It's still very early and people are only beginning to understand how to use [VR and AR] technology so it's important not to restrict yourself, but to keep testing and measuring new approaches."

How can companies deliver the best VR or AR experience possible?
Even though the VR and AR field is still developing, there are already several lessons that companies can learn from. For instance, privacy concerns were one of the main reasons Google Glass failed to gain wide acceptance as a consumer product. Additionally, products that are complicated or simply intimidating will have a low adoption rate. Companies can reduce this challenge by clearly explaining how a VR or AR device works and the data that companies collect to optimize the user experience.

Companies can further mitigate these risks by having their own workers experience AR and VR solutions first, Gownder says. Letting field technicians, product designers, and other employees try out the solution and provide feedback is a "low-risk way" to gain valuable insights, he notes.

Indeed, running short experiments are an effective way to find the "emotional experiences" that will resonate with your customers, agrees Tim Fox, director of custom products at Quad/Graphics. "The measurement capabilities already exist in these applications-you can get time of day, location, track the content people viewed, etc," Fox notes. "And as these devices become more accessible, these experiments are going to take off in 2016 and that's when we'll see who the entrepreneurs are."

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EXPERT OPINION