The Down-Low on What You Need to Know (To Be Competitive in XR), with SuperData’s Carter Rogers

If you need well-researched info on the trends and changing tides of emerging tech to feel confident dipping your toes into the XR sea, SuperData’s Carter Rogers has you covered. As their chief analyst, Rogers specializes in turning data into actionable intelligence, tailored to the needs of businesses who are just starting to explore the space. In today’s episode, he chats with Alan about what all the data can mean.

Alan: Today’s guest is Carter Rogers, and he’s the principal analyst at SuperData, a Nielsen company. He regularly advises Fortune 500 brands and Triple-A game publishers on how to succeed in the interactive media space. As SuperData’s lead XR analyst, Carter is responsible for the company’s reports on immersive technology. A sought-after authority on interactive media industry, Carter has presented at every event around the world, including Casual Connect, the LA Games Conference, and the VR/AR Global Summit. His commentary has also appeared in USA Today, Variety, The Guardian, and Verge. He creates and oversees interactive reports and segments, including virtual and augmented reality, eSports, mobile games, and he’s really amazing at pulling together all the data that businesses are using to make real business decisions, on where to invest their capital. You can learn more about this data at superdataresearch.com.

I want to welcome Carter to the show. Welcome!

Carter: Thank you very much for having me, Alan.

Alan: My absolute pleasure. I’m really thrilled and excited to have you on the show today. I know personally, we’ve used your reports for our company several times, and every time it’s been pragmatic, not pie-in-the-sky numbers; really validated, well-thought-out reports on where the industry is, where it’s going, who the players are. I really want to start digging into this, and learn more about SuperData. For the people listening, I want them to walk away knowing more about the industry and know where they can find more information. So, what is SuperData?

Carter: Well, yeah, glad you read all our reports; that’s what we like to hear! To give everyone a overhead view, we’re a market research firm. We’re part of Nielsen as of late 2018, and the original focus of the company was on digital games — video games, primarily. But we since branched out to cover other areas, like eSports, game streaming, and of course, augmented/virtual/mixed reality. Started covering those areas when they were very tied to games, especially when the original Oculus Rift was launched. But as the XR space has broadened to include more enterprise-focused applications, we have also adjusted our research accordingly, and really cover the enterprise space as well; providing things like market estimates and things like that, to a wide variety of companies in VR and AR.

Alan: Ok, so, you provide market estimates. Where is this market going? What’s one stat that’s going to blow everybody’s mind?

Carter: I’d say the main thing is augmented and mixed reality are growing fast, but mainly in the enterprise space. I’d say that through at least 2022, the enterprise will account for the majority of augmented and mixed reality headsets like Hololens and Magic Leap. Enterprise will account for the majority of those through at least 2022. It’s really going to be the enterprise that drives this very hot space in the XR industry.

Alan: You think it’s following a similar trend to mobile cell phones? BlackBerry started off kind of as an enterprise tool, as well. Is that what we’re seeing here? The technology’s maybe not quite ready for the mainstream adoption, but it has very real, very useful business use cases that can’t be ignored?

Carter: I’d say that’s certainly the case in the AR/MR headset space. We’re obviously seeing more consumer success — somewhat — in VR. But the two issues for consumers right now are fashion and price — not to mention, the availability of compelling content. You have headsets selling for $3,000+, and they aren’t the sort of thing that most people are going to be willing to be seen out in public wearing, so–

Alan: Although Magic Leap did publish some photos of a model wearing the Magic Leap glasses the other day. So they’re… [chuckles]

Carter: [also laughs] Companies are definitely trying to make it more palatable to consumers. But I’d say, in the near term, it’s definitely going to be a few years before they’re truly consumer-ready. If you look at someone like Apple, they aren’t about to put their logo on something like the current developer-focused headsets out there. I think that — coupled with price — those aren’t really concerns for the enterprise if the utility is there. But we definitely do need to see smaller form factors; things like that, and much more accessible pricing, before it really takes off in the consumer space. So it is the enterprise that’s definitely driving this stuff for the near future — for the augmented/mixed reality side of the equation, at least.

Alan: You’ve got kind of a divide; entertainment and gaming on one side, and then you’ve got enterprise applications across medical, healthcare, real estate, retail — across the whole enterprise. What split is it between media and entertainment vs. enterprise applications right now, as far as total market spend? Is that a number that you guys–?

Carter: So, we don’t really track — from an absolute revenue perspective — the enterprise side of the market, just because so much of that is internal spending, or spending that’s not disclosed. It’s very difficult to get an accurate picture of the question of, “how much enterprise businesses are spending on their outsourced XR work?” So that’s not really a number we provide. We provide estimates on hardware numbers for consumer and enterprise; hardware shipments, hardware revenue for VR devices, AR/MR devices. And we also look at consumer software numbers as a whole. But we don’t do a one-size-fits-all sort of enterprise software number.

Alan: So, what are the headsets that are poised to take over? Oculus Go came out with this $199 headset – this really inexpensive headset — and they sold millions of these units. But do you think that, with the introduction of these new six-degrees-of-freedom [6DoF] headsets, we kind of have some agency for moving around? Do you think these are going to impact the sales numbers dramatically? Or it’s going to take some more time?

Carter: Well, I think the Oculus Quest in particular is very important for VR gaming, because it’s the first VR device that is suited for gaming that’s not tied to a console or a PC. I think the three-degrees-of-freedom [3Dof] sets — like the Go and the Samsung Gear VR before it — are very well-suited for video viewing, that sort of thing. But the Quest really has the potential to drive interest in VR gaming, on the enterprise side of things. I think we’ve seen the Go has seen some early success, with companies like Walmart announcing that they were buying a lot of them to train employees for things like customer service. And I can definitely see some of these standalone headsets fitting in a middle ground between PC and things like the Oculus Go, where — let’s say — a training solution might be more immersive than just watching a passive video. Which still has its uses! But I’ve seen some talk of doing things like airline flight crews being able to train flight attendants, training through those sorts of headsets. They’re much more distributable than the standard Oculus Rift or HTC Vive, which has to be hooked up to a PC. Those sorts of headsets will definitely have their use cases going forward, but I think there is a lot of potential in the sort of middle ground, where it’s not necessarily training, or using highly-precise training applications; training things like customer service or things like that, that require a bit more interactivity than we’ve seen with what’s possible with the Go or the Gear VR.

Alan: As you were talking, I was picturing the ways… I actually published a link today on LinkedIn, about how to select a VR headset for your enterprise, and things like comfort, weight, computer power. But the interesting thing about it — and the idea that I had is — in certain circumstances, 3DoF is being able to just look around. And being immersed in a 360 video, for example, makes a wonderful training tool. I think we’re sometimes overcomplicating things by creating all these really in-depth, computer graphics-heavy things, when you can just simply put a 360 camera on. I know the company STRIVR has done a really good job at bringing 360 videos with annotations in the video, that give people that ability to do repetition, or just training on things that maybe aren’t mission critical.

But Walmart, for example, wants to train people for Black Friday, to prepare them for the onslaught of craziness. Well, you can’t really train people for a situation that only occurs once a year. So something like that, I think is really interesting and intriguing. But as the headsets start to mature, and we see this ecosystem develop. I think you’re going to have these PC-based headsets that designers are going to be able to use, and the people creating [software]. And then you’re gonna have these standalone headsets, where they can view what those other people have created. They can be in a shared space, collaborating. But somebody who’s just viewing and commenting doesn’t need to have all the computing power of somebody designing and creating. So, I think there will be use cases for all of them across the enterprise.

Carter: I will say, also: anything involving lots of specialized peripherals, — firefighting training, or something — is, for now, still probably best-suited for PC, just because there’s more flexibility in what you can do. And you’ve got things like the VIVE Tracker items that you canaf fix to a wide variety of things. Stand Alone space hasn’t quite reached that level, even with the 6DoF stuff. I think the more specialized the training is, the better fit it is for PC. Certainly for the time being, at least.

Alan: Absolutely. And actually, one of the companies we just invested in, they do virtual reality training for heavy machinery. One of them is an excavator. I’ve never been in an excavator, nevermind driving one. I got in VR, I operated the machine, I drove it around, I killed some virtual people.

Carter: [chuckles] Better to do that in training than afterwards.

Alan: Right. I’m actually gonna do a little study with my two children, and put them in and let them spend an hour training on this excavator. And then — my brother owns a construction company — we’re gonna take them up there. We’re gonna put them in the excavator, and see if they can drive it.

Carter: All right. Wishing you all, uh, good luck.

Alan: Hopefully they don’t break it.

Carter: Under strict supervision, I’m sure.

Alan: But I think it’s gonna be a case where they actually can do it. The actions that you do — the experience of doing something virtually in a virtual environment — is going to be pretty accurate to the real world. A friend of mine, James, he went in a virtual reality crane training simulator, spent an hour in it. Then they took him outside, put him on a real crane. He was able to drive it. Which is crazy.

Carter: That is. One thing we’ve seen is knowledge retention is so effective in virtual/augmented/mixed reality training. I think that’s why — when going forward — one area we might see a lot of activity is skilled manufacturing, training; things like that. Especially if a lot of employees in those areas are starting to age out of the workforce; companies need to onboard employees really efficiently. I think that’s a definite future use case — and current use case, really — for virtual/augmented/mixed reality; training. And that’s going to get increasingly important as current employees exit the workforce. They need to get new people in.

Alan: You spoke about the data that SuperData provides. Can you get a little bit more granular on what businesses are using this data? How are they using this data, and what data you’re providing? What seems to be the things that these businesses and companies are looking to get out of buying these reports that you create?

Carter: As for what our customers already can say — the game space — we worked with a variety of Triple-A game publishers. Outside of that, we’ve worked with companies like PayPal, Microsoft, Accenture. We have a number of reports available. As for the ones businesses can actually use, we’re putting out a report very soon on the consumer markets; an updated look at what games people are interested in, what software consumers are interested in, what consumer headsets are selling best. And we have a webinar for that in May — I think the exact date’s on our website.

We also put out reports on things like augmented reality marketing. We did a white paper with — in association with Friends with Holograms — we put out for free on our website recently. We put out reports like that. Often, we do consumer surveys — surveys of enterprise developers, users, that sort of thing — to gain a better idea of what people are interested in the market. But, as for the data we provide, we often provide things like estimates of headset shipments — both to consumer and enterprise customers — consumer spending on things like games and location-based entertainment. Some of the stuff, we already talked about earlier, but also investments; where are venture capitalists investing? That’s important for a lot of startups in the space who want to know if they’re going into this — into a subset of the VR/AR space — are investors going to be potentially interested? So we project investment outlook in certain segments of the industry. On the enterprise side of things, we provide numbers like, how many firms are utilizing VR, AR, and MR per industry? How many in the travel industry are using? How many in the automotive? To sort of give people an idea of where there is potential market interest. And we similarly showcase how many firms are supplying those services, so that companies on the demand side can really gauge if there might be companies already serving that space, or if they should build something internally.

Alan: So where’s the biggest underserved need?

Carter: I would say right now we’re seeing — well, I can say one area where we see, maybe, an oversaturation is education. Just because there’s a lot of companies serving the space, and there’s a lot of educational institutions using it, but there often is not enough money in the space to support that many companies.

I think manufacturing is still growing fast, and people are still sort of wrapping their heads around how to use it. Manufacturing in particular, there is a challenge there; a lot of companies are utilizing it, but they’re being very secretive about how they’re utilizing it. They’re not willing to talk about stats of how effective it was. And the problem with this is, it means some companies that aren’t utilizing VR/AR/MR training can’t really go and see use cases of how other companies have succeeded. We found that, for companies that are not using XR, only about a third plan to invest in XR in the future. This is among people that are already somewhat familiar with the industry. But for companies that are already using XR, about two thirds plan to invest more in it. And what this shows is, once companies have tried out XR, they’re very interested in continuing to invest more and more in the space. But it really takes a lot to get them over that initial reluctance to use it, and I think part of the problem we’re seeing is the companies that are using it and having success are not necessarily willing to show that success.

Alan: And rightfully so. Let’s be honest: it is a competitive advantage for now, and there’s very few times in a company’s lifecycle when you have such a massive competitive advantage using a technology. That is readily available.

Carter: That’s definitely true. I think it’s often on the side of the supplier to figure out a way to disclose that companies have had success, either through not naming brand names… things like that. But it is definitely a challenge in the short term, because companies are finding success, but it’s not public – or, in sort of “trade secret” space.

Alan: Let’s just hammer this home for a second: companies that are not using XR, about a third of them are thinking about investing in the technology. The ones who are using it, two thirds of them are investing more in it. If that gives you any indication that this is successful – that this is moving the needle forward — and if you do not start working with this technologies, you guys are going to get left behind. It’s frustrating to have companies say, you know, “we tried VR. We tried to making a Google Cardboard thing,” and they made a little marketing kitschy thing. And it didn’t go anywhere, because they didn’t think of it as, “how can this software or solution solve a problem?” They just said, “oh, I saw VR at a trade show; let’s make something cool”.

Carter: I’d actually also like to cite one other stat; we calculated earlier this year that, by the end of 2019, XR training will save about $13.5-billion. And what I mean by this stat is that, if every company utilizing XR training decided, instead, to forego that XR training, or make an equivalent training program without XR, it would cost $13.5-billion more, through either the creation of the training, or in terms of lost productivity. So we’ve really seen some tangible results, especially for companies that have used it. But it is very hard to get over that initial question. I think one of the big ways our data is useful is for companies where people need to convince internal stakeholders, “this is something we ought to try.” I think that’s one of the big use cases for enterprise-focused XR market research, for the time being.

Alan: Interesting. We talk quite at length about training; it always comes up in every conversation I do. Training and education: it’s a no-brainer. It just works. But what about some other things, like augmented reality for retail or sales? One of the stats here is that social media AR apps are the most popular among mobile AR users. A sizable percentage of users; 41 percent of users report using AR features in online shopping apps.

Carter: Marketing is the big use case for mobile AR, for the enterprise right now. That’s because VR doesn’t really… we saw a lot of VR experiences that were marketing-focused in the early lifetime of that technology. We haven’t seen so many in the past year or two, because a lot of that activity and investment has moved over in the AR space. And that’s because it’s very cool and innovative, but it also has scale. MobileAR currently has over a billion users. And it’s interesting; the growth there isn’t really steady growth, year-over-year. You instead see a few giant apps — Pokémon Go, Snapchat, and Instagram with their AR features, most recently TikTok — these sort of giant apps will drive massive explosions in user numbers in the market, and that’s created scale in AR for things like Snapchat, recently having a Game of Thrones augmented reality ad. We’ve got furniture stores or any sort of eCommerce shop — Amazon, Wayfair — offering the ability to view items, to see how they’ll look in your home. So I think marketing/retail is really the big use case for AR. That doesn’t really show up in our consumer spending numbers outside of gaming, because it’s been very advertising-driven, and we track direct consumer spending in our model currently. But it’s absolutely worth noting that that is the big use case for the enterprise for MobileAR right now.

Alan: I think you’re actually bang-on. I wrote an article about the first killer app for augmented reality, and it was virtual try-ons; being able to try on glasses, hats, necklaces, and see what the furniture is going to look like in your house. Really, virtual try-ons is the killer app. It’s easy, it’s simple, it doesn’t require a huge amount of capital outlay from the eCommerce companies. Brands can go direct-to-consumer now, where they maybe went through distributors. It’s opening so many doors for consumers to engage with brands in ways they’ve never done before, and being able to try on a product before you buy it on yourself – real-time — and then hit buy button: sunglasses, makeup.

I was on a panel last week with ModiFace, and ModiFace was so successful, L’Oreal bought them. So, “this is so good, we’re just going to buy you. That way, we own the tech stacks.” I think virtual try-ons is a big one in MobileAR. You said there’s over a billion users now; I’ve read a stat that, by the end of this year of 2019, we’ll have over 2-billion AR-enabled smartphones in the market.

Carter: It’s only going to grow as people… I mean, smartphone upgrade cycles are getting a bit longer, but I think as the stragglers upgrade into the latest ARKit/ARCore-capable smartphones are really going to see some interesting growth there. And it has really reached mass scale, quite a bit faster than VR/MR. For now.

Alan: Yeah. Fair enough. One of the interesting demographic pieces that you put in there is, “the largest a AR demographic is women between 18 to 34.”

Carter: Yeah, these social media users are driving interest in this space, for now. Was Pokémon Go initially, but that shifted over to social media pretty quickly, about a year or two ago. And it’s worth mentioning, with Pokémon Go was, there’s lot of debate about whether it’s “real” AR or not, but consumers certainly consider it [as such], and I think Google search interest in augmented reality — the day Pokémon Go launched — hit the highest level up to that point. They definitely raised AR awareness, even if the implementation wasn’t at the time what we’d consider “true” AR. And I think they’ve closed the gap with their latest features, and I’m very interested to see how Harry Potter: Wizards Unite — which looks like it has a bit more AR implementation in the gameplay itself — how that drives consumer interest and awareness in AR, probably in just a few short months.

Alan: One of the features that they added is object occlusion, meaning they use the camera to understand the world around you. So, imagine if you’re playing Pokémon Go, and you’re chasing a Pokémon; instead of it just kind of floating out in midair, it’s actually walking on the sidewalk, and it can run behind a tree or a person, and you have to go around the tree to find it. He’s literally hiding behind the tree! I think this is only the very, very beginning of spatial computing, as it relates to the real world around us; being able to add 3D data — in this case, Pokémon — in the world, in context, is going to be revolutionary. And we’ve only just begun to start to think about what’s possible when this starts to be a thing.

Carter: Yeah, absolutely. As the sort of base-level smartphone gets more powerful, people will be able to design games around those sorts of features like object occlusion. Because right now with Pokémon Go, it’s often more efficient to turn off the AR entirely. And that’s what a lot of hardcore users do. But I think, as we see game designers think about how to incorporate things like that into the game design itself, and not just make it an optional, it’s-nice-to-have-it [thing], that’s where we’ll see some really interesting innovations in the games themselves, and incentivizing people to leave the AR functionality on when they’re playing successor games.

Alan: I made a prediction a couple years ago saying one of the companies — Google or Apple or something — would create a game that would take us into our buildings; the internal world. So, office buildings, your house, or wherever. And you would be chasing Pokémon, or whatever it was, you’d be chasing something. But it would be you alone in a space, and the thing would be bouncing up and down. And what it would really be doing is capturing a point cloud map, or a virtual version of the space inside. Because Google has a fantastic collection of three-dimensional data around the world — Google Earth — but they have no data around the inside. Imagine sending millions of people around the world into buildings, using the game to collect point cloud data of these spaces.

Carter: Yeah, it’s interesting. It’s sort of like the next evolution of reCAPTCHA, where that was used to transcribe books. Now you’re using AR to get more data about the world. I can definitely see that being possible in the long term.

Alan: Yeah. Companies like 6D.ai, these guys developed software that allows you to point cloud map the world using single camera from your phone. And my guess is, within the next six months, I would guess that they’re going to get sold to Apple, or Google, or Amazon, or somebody. Somebody is gonna buy them, because what they built is too valuable right now.

There’s one stat here that I’m reading on SuperData: by 2020, the virtual reality market will be worth eight times what it was in 2016.

Carter: I’m not sure if that’s a current stat… I can see what we have currently, because we do regularly revise our outlook.

Alan: What did we see last year, as far as the whole market? Like, if you included XR — virtual/augmented/mixed reality — where’s the market right now, as far as size? 2018 and then beyond?

Carter: Let me pull up what we have in 2018 really quickly.

Alan: These data points really do inform investment. They inform businesses on their go-to-market strategies. It’s vital that you guys keep these up to date, as well. I know there was some crazy stats out there. Citi Financial came out with things saying eCommerce is going to be a trillion-dollar market by 2030. It may very well be, but man, that… they’ve since taken that report offline.

Carter: I can say that, for now, we have 2018. Our current estimate of that revenue was $6.6-billion, and we’re seeing $33.9-billion by 2022; so yeah, several times multiplier.

Alan: How much was in 2022?

Carter: $33.9-billion is what we’re estimating.

Alan: Is that for VR or AR or both?

Carter: That’s VR, AR and MR combined.

Alan: Got it.

Carter: See, I cansay that includes things like consumer software. So, direct consumer spending; everything from spending on VR arcade tickets, to software downloads, to consumer hardware, straight-up purchases of hardware, and also enterprise hardware.

So, sales of VR and AR headsets to the enterprise… I will say, some big drivers that we projected the future are AR and MR headsets, which last year, that market was under a billion. So that is contingent on some big growth we see in the AR/MR headset space. In the AR space, a lot of that was Pokémon Go, which grossed somewhere in the neighborhood of a billion dollars, if not more last year. It’s interesting, the MobileAR market this year is a lot of Pokémon Go last year. This year, it’s undoubtedly going to be Pokémon Go plus Harry Potter: Wizards Unite. So, Niantic is probably going to own the majority of the AR market through at least the end of 2019. We’ll see if any true competitor stacking emerge, maybe in 2020. There was a Tencent game released pretty recently that’s doing some impressive numbers in China, that has very similar concepts. It’s been described as “Pokémon Go meets CryptoKitties.” You’re collecting monsters, and I believe it’s block chain-based. So there may be some competition in that sort of space. I’m not sure if that game has — it’s location-based — but I’m not sure if it’s actually augmented reality-based. It is “Let’s Hunt Monsters.” It’s been described as Pokémon Go meets CryptoKitties, and since Pokémon Go’s not available in China, it certainly has that market to itself for the time being.

Alan: So… the market is growing, and it’s growing dramatically, and it’s growing fast. One of the stats that you’re not collecting right now is, how much enterprises are actually spending on software development, that sort of thing. That could easily double these numbers, just strictly based on what enterprises are gonna be spending to develop internal things that we’ll never even know about.

Carter: Yeah, we are tracking some estimates on how much enterprises are investing in the space, both as a combination of spending on their own internal R&D, and spending on external outsource software to help. That’s not something we’re disclosing publicly right now, but it is in the multi-billion-dollar range certainly, and we expect that’ll shift gradually from VR over to AR and MR in the next three to five years, certainly.

Alan: The big “question mark” outlier is a company that has a fruit as a logo. What are your thoughts on that?

Carter: Yeah. The thing to note about Apple is that aesthetics are important to them. It will be a few years before we see any sort of AR/MR consumer-facing solution from them, I think. Obviously, they see it as a big opportunity; Tim Cook has said as much. They’ve also said a lot of this ARKit stuff is a sort of stepping stone, potentially to those glasses. Any developer that is a big expert in an iOS-based AR app certainly has a leg up when a potential shift to glasses happens. I do think, though, the technology is a few years from being ready for where there is a form factor, and an ease of use that Apple would be comfortable sticking their logo on and selling it. We’re not going to be wearing them end of this year, that’s for sure.

I think there’ll be a few major consumer electronics companies that might release consumer-facing AR glasses before Apple. It’s sort of like, they weren’t the first smartwatch, but they’re certainly the best-known smartwatch now. And I think we might see a similar situation for AR and MR glasses, but they will not be the first to hit the market, certainly, in the consumer space.

Alan: But I think when they do, things are going to get crazy.

Carter: They’re definitely not a company to count out, that’s for sure. Interestingly, in the consumer space, I should mention the Lenovo Jedi Challenges device, where you physically stick your smartphone in, and it creates the fake hologram that you see in front of you. That’s currently probably the best-selling consumer AR device. That’s definitely a bit of a toy. Definitely sort of the Google Cardboard of AR.

Alan: How many units have they sold of that thing?

Carter: I don’t think they’ve disclosed. We have some estimates, but yeah, we’re not disclosing that currently.

Alan: Yeah, because I think that’s a company called Zimmerse that makes that.

Carter: Yeah, and it shows that killer IP drives consumer interest. If that wasn’t branded with “Star Wars,” it certainly would be less popular, I think. We’ve also seen that in the VR space for PS VR. One of the big drivers, their sales with Skyrim VR — which is a well-known Elder Scrolls [title], being a well-known gaming brand — but that game wasn’t necessarily built with VR in mind. But it just shows when there is a household name, it drives a lot of interest. To get consumers interested in AR and MR, it’s going to take those sorts of household names, and Pokémon Go is obviously another great example.

Alan: Yeah. Legend of Zelda is coming out in VR.

Carter: Yeah, I think they just… yeah, with their Labo VR — which is definitely bit of a novelty — but I think that was a smart move to incorporate that, because there is a lot of people who are curious about how Zelda is going to look in VR. That are willing to try that, [more] than they would if it were just the mini games that were included with it in the box. I think those sorts of brands — even if they’re not perfect examples of AR/MR experiences — will be key to driving consumer interest. Whether that’s Star Wars, Marvel, you name it; I think any sort of A-tier entertainment brand will be particularly important in growing the space.

Alan: Even location-based entertainment companies like The Void, they’re leveraging IP like the Ghostbusters, and Wreck-It Ralph, and Star Wars. I think you have the quote of the day: “killer IP drives consumer interest,” and I think that should resonate with listeners. If you’re building something in this technology, if you can partner with a killer IP brand, you’re going to increase your success. Like, the guys at Pokémon, Niantic; they — I think there were five or six years building different AR apps that nobody cared about.

Carter: Yeah. Ingress plays very similarly to Pokémon Go, but–

Alan: Nobody’s ever heard of it!

Carter: Yeah. Once they stuck the Pokémon brand on there and made some tweaks, that’s when it really took off. I think what we also saw at the early days of VR is, there were a lot of pretty good games, but there wasn’t necessarily that one standout, “you have to play this.” I think Beat Saber has been sort of the breakout hit in many ways. I think that’ll be interesting to see how Oculus and the next wave of standalone devices leverage well-known IP, because I think that’s very important for getting mainstream, everyday consumers — who aren’t necessarily reading various tech blogs and stuff — interested.

Alan: You mentioned Beat Saber, and it was just on The Late Show with…

Carter: I think Brie Larson was there?

Alan: Yeah, that was the other day. We’re getting this mainstream adoption; mainstream media coverage! Beat Saber is just an amazing game, but it is now its own IP. There’s a really great opportunity for developers to not only develop with the existing IP, but create new titles that are made for VR. You’ve seen a few of them that have taken off, Beat Saber being one of them.

Carter: And I think the Star Wars experience that Oculus has announced they’re working on; it will be definitely be interesting to see what the business model is, what the length of the experience is, because I think we have seen the non-game experiences haven’t really taken off… outside of a few notable exceptions, like Tilt Brush, things like that. A lot of the interest in the consumer space has sort of shifted from experiences, to people wanting full-fledged games. I think it’ll be very interesting to see if that’s more of a interactive movie, more of a game. Definitely interested in seeing more about that, because obviously – consumer-wise — there aren’t many things as big a Star Wars, so that’ll be potentially a very big interest driver going forward.

Alan: Yeah, I think there’s also going to be… one of the very first VR things that we were showing as demo was The Avengers, and then, it was just a 3DOF kind of scene where you flew through the Avengers Tower — and it was mind-blowing, flying through the scene, where things are going around you in slow motion all around you. I must have shown that demo to 700 people, and everybody’s reaction was the same. Just like, “wow, this is amazing.” And that was three and a half, four years ago; I can only imagine how much that cost to make then. Oh, my God.

Carter: Yeah, I think it’s interesting. There’s still obviously a lot of consumer interest — maybe not as much hype as there was a few years ago around consumer VR — but I was at Pax East, and you go and there’s still massive, massive lines around the Oculus booth to try out the Quests. So there is definite consumer interest. It’s just about getting the convenience right, getting the content right. I think the standalone does have the potential to be a sort of restart moment for the consumer side of the industry. If the brands are there, at least.

Alan: With these standalones — these powerful standalones, the VIVE Focus Plus and the Oculus Quest — being able to use it for training; $400-$700 headset, which is really cheap if you consider how much it costs to have a trainer train individual people, fly them around and one-on-one. You can have now, one-to-unlimited; you make one great experience, and now you can train everybody, and they all get the equal best training. I think enterprise is going to adopt these much faster than consumer. And in that case, what’s going to happen is people are gonna use it at work, and then they’ll bring it home maybe. It’ll be that cross pollination between work life and home life.

Carter: I think that does have a lot of potential; people try it out for the first time and then think, “you can play games on this?” Yeah.

Alan: [laughs] Where they just download a game and go, “Oh, this is awesome!”

Well, I want to thank you so much, Carter, for taking the time out of your busy schedule to join us on the show today. Is there anything that you want to say to people listening who are considering creating an XR strategy in their business? What would advice would you give them?

Carter: I would say, in the long term, AR and MR probably has the biggest potential for use; but I think VR definitely will count for the majority of enterprise interest in the very short term. So, I think looking at ways the companies that need training applications can be served is very important in the short term. We have seen sort of a contraction in investor dollars, and it gets very important to show a concrete business use case and revenue potential in the very short term for some of the VR projects. And really, to demonstrate to investors that there is potential for that business is, I think, one important area.