Is it a gimmick?
Is it a game-changing technology?
Is it destined to be abused by spammers?
Is it the holy grail to bridging the gap between our digital and physical worlds?
These are just some of the questions circling above augmented reality, a technology that can superimpose graphics or information over the real world in your phone’s viewfinder. The hype around augmented reality is at a deafening level. While some are sounding its death knell, the majority are beating the drum of the technology solution’s mainstream arrival.
The question still remains, however, as to how large the augmented reality market will be.
Juniper Research is saying the market could grow to $732 million in five years, from just under $2 million next year. ABI Research has a more modest estimate: $350 million in annual revenues by 2014. That’s on the back of three primary revenue models: upfront payments to buy an app, subscription fees or paid premium versions and advertising.
The first two are self-explanatory, and might work well with augmented reality games. Advertising could take several forms. You might see augmented reality coupons or sponsored information tags as location-based services become more adept at serving ads based on your historical search needs and where you are. A couple of augmented reality browsers like Acrossair’s Nearest Tube or Layar could incorporate sponsored layers. For example, Starbucks could pay to add a special augmented reality layer to an existing browser showing nearby coffee spots. Or it could buy access to the technology to build its own app.
But there are reasons to remain skeptical. Venture capital firms have been relatively reluctant to back these young companies — Amsterdam-based Layar is the only company in the last three months to announce a round of venture funding. The larger and older businesses, Metaio and Total Immersion, are launching mobile products on the back of the businesses they’ve already built through augmented reality marketing and factory layout projects from the past. ( See an example here.) (via VentureBeat)
The greatest hurdles to augmented reality’s growth are the pace and depth of adoption. In order to generate significant attention from advertisers, beyond experimentation with the technology, augmented reality needs to reach critical mass. The more people that download and use applications like Layar, the greater the market’s upside potential. With greater buy-in from mobile operators (choosing to pre-install augmented reality applications on their phones), the technology could experience accelerated growth.
Just as we’re seeing with 2D barcode technology, the market will only grow as fast as user demand and adoption dictates.