We think augmented reality, virtual reality, and mixed reality (AR, VR, and XR) experiences that blend the digital and physical worlds have enormous potential across a wide range of use cases in both corporate and consumer settings.
However, the current picture for AR/VR/XR is murky. We feel it is still early for AR/VR/XR as a mainstream technology. Consumer adoption for dedicated AR/VR devices is still low. Because it can extend to current mobile devices without waiting for the adoption of new VR hardware, AR represents a significantly bigger market opportunity today, but still far from breakthrough scale. Compelling, joyful experiences in this area remain rare.
Even with these drawbacks, we see investment opportunity in AR/VR/XR. We see the current popular products as building blocks upon which a mainstream ecosystem will be built.
It is important to keep in mind that creative expression is different in AR/VR than in video or static imagery. It requires new tools and new imagination.
For a lasting and valuable VR/AR/XR ecosystem to emerge, technology needs to be standardized in a new software stack widely adopted across the dev community. We believe creation tools pave the way for a 3D future, no matter how quickly or slowly it gets here.
We will focus on technologies that fill foundational roles in the emerging AR/VR/XR software stack. Here is our conception of that stack, with some of the current leading players at each level:
Development platforms: Unity, Unreal, Cryengine, Gamemaker
Design tools: Blender, Maya, Poliigon, Tilt Brush, Blocks
SDKs and dev tools: Improbable (MMO in a box), ARKit, ARCore
3D/volumetric capture: 8i, Depthkit
3D object libraries: Sketchfab, Google Poly, Unity Asset store
Hardware capture: iPhone X, Google Tango (3D capture tools)
Input devices: Oculus Touch, Leap Motion
Hardware consumption: Rift, Vive, PSVR, Daydream, Hololens mobile cardboard
Distribution: Steam, PS4, Oculus, iTunes, Play
Hardware and software that facilitate deeper interaction: Haptics, taste&scent
We see opportunity at every level of this stack.
Investing in 3D creation tools and building blocks will mean we get visibility into where more widespread use cases and avenues of creative expression are emerging. This puts us in a good position later as we begin to look at more consumer-facing deals.
So, our investments this year will focus on:
Creative tools that deliver compelling AR/VR/XR experiences. These can extend beyond just AR/VR into 360-degree mobile & beyond so the immediate addressable market is large and company success does not hinge on consumer adoption of new hardware.
Focused, vertically integrated AR/VR companies that can have an immediate impact in specific areas with strong enough economics to underwrite essential hardware. These applications aren’t limited by broader hardware penetration and can serve as trailblazers for broader use cases. Three examples: VR/AR applications in rehabilitation and physical therapy; VR/AR for mental therapy; VR/AR used for corporate training.
And most importantly, tools that pave the way to move the creative community toward its 3D future at every level of the stack.
If history is any indication, and we believe it is, breakout technological advancement happens when creative tools that a select few had access to migrate into the hands of the mainstream.
Example: Film cameras->digital cameras->networked phone cameras->Instagram.
This process opens massive new consumer opportunities. We will likely see the same in AR/VR. So our perspective is to focus on the pro tools now that show us the way toward the ultimate consumer future.
