Will 2020 Be a Great Year for Facebook’s AR and VR Innovations?

In today's world where every technology is advancing at a fast pace and making tech-savvy people to heavily invest in them, the supporters of AR/VR (Augmented Reality and Virtual Reality) have started to feel disappointed and losing interest in it. AR/VR is failing to make a great impact on people and drive expected revenue which is tempering the optimism of investors and supporters.  

However, experts have predicted that next year can be the year for the breakout of practical and marketable applications of AR and VR. 

According to IDC, total spending on augmented and virtual reality would grow a little more than 78 percent next year, reaching US$ 18.8 billion. It also forecasts that the compound annual growth rate for the next five years would be 77 percent, which would make the AR/VR market size to hit US$ 200 billion by 2024.

The prediction shows that 2020 could be a crucial year for companies waiting to invest in AR/VR. According to James Brumley, a former stockbroker from a large Wall Street firm, "IDC's outlook feels like it holds some water all the same though, as the underlying technology necessary to get the most from beyond-reality experiences has finally caught up with the premise and promise of augmented/virtual reality itself. Namely, developers have found ways to make VR and artificial intelligence work together in a way that actually matters beyond mere novelty."

Facebook's Silent Evolution

James believes that most investors may not fully appreciate that Facebook is more than just the owner of Oculus, the brand behind this year's second-best-selling VR headset, according to TrendForce. 

Notably, Facebook Reality Labs (FRL) is into some great and cutting edge work in the AR/VR arena that may end up being more marketable than Sony's market-leading but mostly gaming-oriented gear. Facebook has encouraged its software developers to develop hardware that can serve more practical purposes.

To recall, about a year ago, the tech giant made its DeepFocus AI rendering system freely available which not only lets hardware figure out where and what objects may be in a room, it also provides that image for human eyes the way a human eye would normally see them.  In mid-2019, Facebook's Lab rolled out a piece of similar software called AI Habitat, and another called Replica. Such a platform allows for intelligent navigation of a virtual space.

Moreover, recently, Oculus released hand tracking for its relatively new Oculus Quest headset, which eliminates the need for a physical hand-controller that feels like something between a mouse and a joystick. 

All these advancements depict that the technology ready to take the leap in just a few years. According to Nielsen's SuperData Research arm, since Oculus' affordable Quest headset hit the market in May, VR hardware spending has grown to the tune of 31 percent this year. It further revealed that that's still only US$2.1 billion, but the next generation of virtual reality hardware is still in its infancy (if it's even available yet). In other words, we can consider that the VR market isn't out of the turn rather it's in the midst of the turn.

Additionally, the SuperData Research notes that VR spending growth is being supplied by consumers and corporations alike as more practical-use concerns are addressed. That nuance jibes with IDC's long-term outlook, which suggests that commercial usage rather than consumers will drive the bulk of the expected growth from here. 

Moreover, IDC also believes VR will fare better than AR in terms of revenue, better playing into the VR hand Facebook has been building for itself.

However, the entry of VR in the mainstream market of Facebook will not drive the kind of growth the tech giant enjoyed shortly after its social networking site became a digital centerpiece many years ago. Facebook is significantly sharing the AR/VR market space with other players as well and the 2020s expected US$18.8 billion of AR and VR hardware spending is still only a fraction of Facebook's typical annual revenue.

While the convergence of the right hardware and software developments has recently starting to reach a critical mass, the Facebook's Oculus — and the Oculus Quest in particular – shows the traits of leadership in the market outside of Sony's gaming-oriented share. Moreover, the tech giant has managed to steal VR hardware share from Sony this year, from 19.4 percent in 2018 to 28.3 percent as of TrendForce's most recent look. Also, Sony's share has fallen from 43 percent to 36.7 percent.