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The value of VR and AR in a digital world

In todays always-on world, VR and AR can be used by brands to:

Build brand affinity
Deepen customer relationships VR and AR: Whats the difference?
Differentiate the brand

Stay a step ahead of competition

Transform strategies and experiences
VR
A three-dimensional, computer-generated digital world
that can be explored through the use of headsets,
sensors, or other special equipment.

AR
An enhanced environment that seamlessly blends
the digital and physical world through advanced
technology. While AR is used extensively by the
military and in business-to-business applications,
consumer-focused programs are less common.

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Taking VR mainstream: Barriers to adoption

While VR has made great strides in recent years, the technology has yet to reach critical mass.

Consumer barriers Brand barriers Adoption speed

High hardware costs High investment costs Advances in technology

Lack of content and Consumer adoption is low Falling hardware costs

experiences

Technology is nascent Brand experimentation

Industry focus on gaming in most industries
and entertainment
VR-enabled smartphones

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Global study: Consumer interest in VR

To help brands better understand consumer awareness of and interest in VR, SapientNitro commissioned a global study
of 2500 consumers.

Key findings:
VR awareness is increasing
There is strong appetite for VR content and experiences
VR availability and trial rates remain low, stymieing adoption
Consumers are willing to invest in VR once brands commit to the medium

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Key finding: VR awareness is increasing

40% of respondents globally could name,

without prompting, at least one brand of VR
headset

Highest VR awareness is among global youth

(18 to 24 years old) with more than half
(54%) of respondents naming at least one
headset brand

Lowest VR awareness is among 55- to 64-

year-olds, with just one in five (19%)
recalling a headset brand

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Key finding: Consumers have significant appetite for VR

Almost half (47%) of our respondents said

that they were very or extremely interested
in using a VR headset

Emerging markets show the greatest interest,

with China and India leading the way (66%
and 64%, respectively)

Relatively low levels of interest in UK and

U.S. (35 and 37%, respectively)

25- to 34-year-olds (67%) and 18- to 24-year-

olds (55%) showed the highest levels of
interest in VR technology globally

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Key finding: VR availability and trial rates remain low, stymieing adoption

Just under one-third (32%) indicated that they

have used one or more VR headsets

U.S. reports the lowest usage rate (18%)

India reports the highest usage rate (53%)

The most popular VR headsets, in terms of trial:

Samsung Gear VR, Google Cardboard, and
Sony PlayStation VR

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Key finding: Consumers are willing to invest in VR

VR headset ownership remains limited, with just 4%

of global respondents saying that they own a device

Growth appears imminent with two-thirds (66%) of

consumers aged 25-34 reporting that they are
extremely or very interested in purchasing a
headset in the next two years

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The million dollar question: When will VR become mainstream?

Using these data as a baseline, we can anticipate the following timeline for VR adoption:

PHASE 1 PHASE 2 PHASE 3 PHASE 4

Five dedicated Mobile phone VR Expansion of The rise of
headset platforms technology speeds non-gaming augmented reality
by the end of 2016 adoption content

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Phase 1: Emerging platforms

Industry research anticipates up to 7 million

headsets will be sold in 2016, with most being
mobile VR headsets.

Sony and HTC have already announced their

entries into the full-feature headset market, joining
the Samsung Gear VR and Oculus Rift.

Google Cardboard helps make this trend both

inexpensive and accessible for consumers. In less
than two years, 5 million headsets have entered
the market, thanks in part to promotional giveaways
and the sale of specially-branded versions.

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Phase 2: Mobile and VR

Mobile is the key to VR adoption.

Nearly every smartphone produced in the last two

years is VR-capable and the experience is getting
better as manufacturers are constantly packing
more processing power and higher-resolution
screens into devices.

Applications like the Oculus Social Alpha app

for Samsung Gear VR users, as well as interactive
solutions from companies like AltspaceVR, are
leading the exploration into creating connected
social experiences in a virtual environment.

Google's Daydream headset, which enables

hands-free viewing on its recently announced Pixel
phone, hit the market in November 2016.

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Phase 3: Non-gaming applications

This phase will see a steady expansion of branded

experiences beyond gaming into industries such
as entertainment, retail, travel, and health.

Meanwhile, headsets will continue to get sleeker

and cheaper or be incorporated into smartphone
contracts, making more households VR-enabled.

Brands will need to deliver a library of content

that is marketed appropriately, and that drives
people to strap in and experience it.

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Phase 4: Augmented reality

Several major AR technology announcements

from established tech companies and billions
of venture capital dollars are flooding the AR
landscape.

Hardware pioneers such as the Microsoft

HoloLens, HTC Vive, Epson Moverio, Atheer
Labs, Daqri, and Meta are entering the
market, and new pilot applications continue to
be launched regularly.

Consumer applications will follow the pattern

of VR adoption, with mobile apps and specialty
devices making the technology more
accessible.

Beyond external wearables, the next frontier of

AR technology comprises of devices that are
put directly into our bodies. For example, the
smart contact lens will superimpose computer-
generated images over the real world and
project them straight into users' eyes.

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Conclusion

VR and AR may represent the next major computing platform.

And, as adoption increases, storytelling opportunities will be
more widespread.

Now is the time for brands to experiment and explore how they
can fit VR and AR into their strategies. Those who recognize and
exploit this technologys ability to generate empathy, develop
deeper connections, and create lasting memories are placing
themselves on the leading edge of immersive marketing.

For an in-depth review of our key research findings and what

they mean for marketings future, download our full report,
entitled VR and AR Demand Long-Term Action from
Innovative Brands.

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About the author

Adrian Slobin
Managing Director and Digital Strategist, SapientNitro Minneapolis
aslobin@sapient.com

A member of the North American Leadership team, Adrian Slobin

owns SapientNitros innovation offering globally, which includes an
innovation lab, an investment arm, and formal relationships with
university innovation centers.

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