Log In to unlock this content.
This content falls outside of your subscription, but you may view up to five pieces of premium content outside of your subscription each month
You have x unlocks remaining.
Spreading the Love |
NEWS |
It has been another busy month in the Augmented Reality (AR) and Virtual Reality (VR) markets, with a handful of impactful acquisitions and successful funding rounds.
Acquisitions:
Funding:
No One Path to Success |
IMPACT |
This collection of announcements is interesting for two main reasons:
Firstly, activity is broad and varied in terms of portfolio, company types involved, and likely timelines for results/product. Some are long term plays, like Snap and NextMind—brain machine interfaces are incredibly nascent and need significant time to mature into an input solution at scale but investing early to build capability close to home can have advantages as the market scales. Niantic and 8th Wall, on the other hand, can immediately get tools into developers’ hands and spur content creation and broader AR access through browsers. The same is true of Adobe and BRIO XR, with both partnerships targeting democratization of both content creation and access. Both AR and VR are well represented—both markets are expected to see an uptick over the next twelve months, partly driven by metaverse hype but mostly thanks to market alignment of price, performance, and perceived value for users.
Secondly, none of the deals are exorbitantly valued or over-reaching in terms of scope. There have been deals in the AR and VR space in the past that were unfathomable in terms of total value, which ultimately did not deliver to that level of expectation. The same can be said of some acquisitions that never really found traction under the new entity. The news highlighted here is reasonable and sometimes expected, but expectations are attainable as a result.
Does this Pace Continue? |
RECOMMENDATIONS |
Whether this level of Mergers and Acquisitions (M&A) and investment activity continues isn’t assured, but it is likely. AR and VR are at an interesting crossroads, as peak hype has come and gone, with immersive settling into a more stable and mature segment, but at the same time other segments are accelerating interest in immersive. Even ignoring metaverse, enabling technologies like edge compute and 5G, AI for machine vision/automation/spatial analytics, and technology component improvements (e.g., microLED for displays, more efficient and immersive-targeted chipsets) are driving capability farther. Market expansion is happening both in early adopting verticals (industrial, gaming, education), as well as more conservative spaces (healthcare, fitness). That confluence of price, performance, and perceived value mentioned earlier is a key tenet of technology expansion, which has not yet been seen at scale in the AR or VR space.
This pace of play creates an interesting competitive dynamic as well. For smaller companies, go-to-market plans may have to shift from outright technical competition to creating a compelling acquisition target. These go hand in hand—marketing with lack of a compelling product can only get you so far—but as the more established companies continue to acquire and invest internally for the immersive space, the once competition-rich market starts looking starker. There is still plenty of room for outright innovation at a small scale, even in more “mature” segments like VR hardware, as iterations on existing capability, as well as novel approaches like light field displays, will keep the hardware segment interesting. The software and services side shifts far quicker and will hold significant competition especially as tech incumbents compete in house, through partnerships and through acquisition. Immersive is an expensive market to play in, so the scale and resources available to the tech giants becomes increasingly necessary to compete.
