While the full fruition of Augmented Reality (AR) is still many years down the road, recent moves by companies in the AR space have shown that AR is, and will continue to be, big business. AR start-ups and existing companies looking to blend AR into their present offerings continue to seek ways to monetize the growing AR trend.
While the space is fraught with risk, there are some business models that, if done right, can be sure-fire roads to success.
What are some of the top augmented reality business models?
Right now, the technology is such as AR users need a special type of glasses or a specially outfitted phone in order to play around in augmented worlds. So, hardware development is very big business. Facebook paid $2 billion for Oculus, the makers of the Oculus Rift virtual reality system.
Magic Leap, a company developing lightweight wearable tech that blends the digital and physical worlds, received a valuation of $1.4 billion from Google and other investors. Apple bought the German augmented reality start-up Metaio for over $34 million. Other companies that have made major investments in augmented reality hardware include Microsoft, HTC/Valve, Sony, and Samsung.
If these tech industry heavyweights see the value of AR hardware, it’s no surprise that getting into this space now is one of the most solid moves any company can make.
Who wouldn’t want to advertise their products or services in an augmented reality experience. Companies are already jumping on the opportunity to engage potential customers in virtual sensory experiences through augmented reality.
According to an article published to TechCrunch.com, “As advertising formats emerge, from virtual banner equivalents to full-blown, native AR/VR formats such as The Martian VR Experience, AR/VR advertising could follow the path blazed by web and mobile. With one-third of global advertising and half of all Chinese advertising in web/mobile in 2016, platform change means serious business for advertisers. AR/VR advertising is more immersive than any rich media (when done right), and ad spend should follow the eyeballs.”
Mobile network data
Augmented reality is at its best when it is implemented in real-world environments, popping up where people are actually out and about, living their lives. The recent Pokemon Go craze—a mobile game that overlaid augmented data on real-world environments—proves that many people are ready for augmented experiences to be a part of their daily lives.
Augmented experiences, however, will typically require heavier use of data networks, and getting into the mobile network space now can be a set-up for great success down the road. TechCrunch reports that “AR devices that can’t make phone calls or access cloud-based services all day out of Wi-Fi range won’t be able to replace smartphones in the long run. AR devices that don’t help mobile networks make money from data/voice won’t be cross-subsidized by the telcos — a key to mass adoption.”
Revenue from mobile network data could become a cash cow for telecommunications companies. YouTube has estimated that the data required for every frame of an AR video is 4-5 times the traditional bandwidth of a regular video. Mobile telecommunication firms have a business model that grows at a rate of 2% per year. AR/VR data could grow that exponentially.
Despite its risks, there is a lot of money to be made in the augmented reality market. While there’s a lot of development taking place that will shape the future of the space, there’s no reason to delay getting into business in that space now.