For most of its history, augmented and virtual reality applications have been disappointing and frustrating, often hamstrung by the clunky hardware needed to serve uninspiring experiences with limited utility.

But as big tech chased its investments over the last decade, hardware, software and content have developed to create a genuinely immersive new experience, according to the technology’s advocates.

Demand for developers is at an all-time high, according to employment data, and local universities say Australian students are displaying an appetite to meet it. But geopolitics and a lack of local investment threaten to put another Australian tech industry on the outside looking in.

Facebook’s big bet

The 2020s is the decade mixed reality goes mainstream, according to Facebook founder Mark Zuckerberg, who paid $US2.3 billion for VR startup Oculus in 2014, later setting a goal of having one billion Oculus users.

The company is also reportedly working on separate AR glasses, codenamed Orion, and is in discussions with traditional spectacle manufacturers to launch a version within five years.

“While I expect phones to still be our primary devices through most of this decade, at some point in the 2020s, we will get breakthrough augmented reality glasses that will redefine our relationship with technology,” the Facebook founder wrote earlier this year.

That breakthrough, Zuckerberg says, will remove the longstanding physical barriers devices themselves create, allowing people to be “present” almost anywhere regardless of their physical location.

But according to those at the mixed reality coalface, Zuckerberg may be underestimating the non-technological barriers to mixed reality. And the technology’s real value isn’t necessarily tied to the consumer market.

‘Glassholes’

Jim Cook, Innovation Lead at the University of Sydney, says there is no longer much that’s new about virtual reality technology, nor especially challenging in developing its applications. Rather than the technology itself, a stigma around using it is holding back adoption, stemming from previous failures and its potential misuse.

Jim Cook, Innovation Lead at the University of Sydney. Supplied.

“We developed a few different educational apps for Google Glass in the early stages of last decade — that’s how long that technology has been incubating,” Cook told Which-50. “And I remember being on a trip to San Francisco and Seattle [and] I remember everywhere seeing signs on cafes, and co-work spaces that said ‘no google glass’ and ‘no gl*ssholes’.”

The opposition to wearable mixed reality devices was not without good reason, Cook said.

His team was able to build a LinkedIn aggregator for Google’s AR glasses which, for example, could pull in information about individuals in a meeting in near-real time, displaying people’s data through the glasses’ interface.

“It’s not hard to see how that could be abused.”

Google Glass famously flopped. The tech giant discontinued the $1500 consumer glasses in 2015, switching its focus to a version for enterprises, where privacy concerns and hardware appearance are less of a barrier.

Microsoft is also backing the enterprise and training use cases for its mixed reality technology, HoloLens, rather than the consumer gaming applications it first pitched.

Last year analyst firm Gartner advised that “the disruption potential of AR and VR is stalling as viable use cases are slow to materialise” and advised any investment be considered against a well-defined use case. It warns it will likely take another decade for the technology to mature.

The business case

However, Gartner remains bullish on the long-term impact of the technology, predicting that within two years 70 per cent of enterprises will be experimenting with immersive technologies and 25 per cent will have deployed them to production — up from less than five per cent for both cases in 2018.

The current top business cases for AR and VR are remote field support, training, product design and visualisation, AR retail, and immersive entertainment — the areas the major mixed reality manufacturers are now focused on.

Gartner analyst Tuong Nguyen says mixed reality is in its “adolescent” phase — showing its potential but yet to deliver a fully immersive experience, which will require a collection of integrated technologies working in harmony.

Tuong Nguyen, Gartner
Senior Principal Analyst. Supplied.

But with advances in computer vision, and tech giants like Apple and Google opening up their software development kits, there is potential for rapid advances in the coming decade, according to Nguyen.

He told Which-50 some areas are already showing more promise than others.

“For VR, it’s mostly gaming. We’re also seeing it used for certain decision-making and empathy-based training. On the AR side, the value for consumer-facing applications continues to be limited, but enterprise is showing some good traction — especially in heavy industries where there are desk-less workers with hands-busy tasks.”

Cook agrees those types of enterprise and education applications of mixed reality have a more certain future than the ubiquitous consumer technology Zuckerberg is spruiking. 

Even with the expected advances in hardware, Cook says, consumer adoption of mixed reality will remain limited to certain consumer groups.

“Consumer hardware will be akin to smartwatches now. Yes, they will exist, they will be stylish and subtle, and only used by a small to medium cohort. A breakthrough in the resolution that can be delivered and the cost of manufacture as well as battery life are all needed for these to become a viable mainstream product. Which is probably more than ten years off.”

Opening up mixed reality

The University of Sydney’s innovation lead also remains positive about the technology overall. Cook says he sees the progress and engagement necessary to overcome many of the technology’s barriers in his classrooms.

Each year around 6000 students use VR or AR at the sandstone school as part of certain lessons. The number is expected to double in 2020. 

“It’s particularly effective in the sciences and medicine. We’ve developed content for training anatomy to vets or doctors, exploring the inside of the human skull with anatomists, exploring mitochondria from the size of a hydrogen ion, and many more. What’s more, we are starting to embed our students with a digital fluency that allows them to become the creators.”

The vast majority of University of Sydney science and engineering majors, as well as postgraduate medicine students, will have used mixed reality by the time they reach second year. 

“Three years ago students asked us why they were doing VR, now they are asking us when.”

Australian students experiment with virtual reality. Supplied.

Students are also transitioning from mixed reality consumers at the University to creators thanks to the increasing ease of development and relatively cheap modeling software, Cook said. The falling barriers mean over half of the mixed reality content developed by the University of Sydney now comes from students without a design or gaming background.

“We are able to take students from a concept to building their own app in hours rather than weeks. This is a key mitigation to these barriers [to mixed reality]; a population of informed intelligent budding scientists who aren’t afraid to try something.”

According to Cook, the students using mixed reality are typically more engaged with academia — as well as contributing to it — while at university. And, he says, they are developing the creative and digital capabilities to set them apart when they leave.

For those who dedicate their studies to the technology, a potentially lucrative future awaits. 

Analysis of more than 400,000 interview requests and job offers in the US last year by employment marketplace Hired shows there has been an explosion in demand for AR and VR software engineers in the last year — up 1400 per cent.

The average salaries for these positions in major US tech hubs are typically north of $US100, 000.

“Each year, there appears to be a trendy new role that explodes onto the hiring scene,” Hired’s latest report states.

“Last year, that unexpected ‘dark horse’ was the blockchain engineer, while 2020 seems to be the year of AR/VR … We see the growth in AR/VR demand as a direct reflection of the technology itself coming of age for a broader swathe of business outside of gaming.”

Almost three quarters (74 per cent) of software engineers surveyed for the report predict the full impact of AR and VR will be felt in the next five years, and nearly half of them have it as one of the top three technologies they would like to learn this year.

But for Australia’s industry to keep up with the skyrocketing demand, changes are needed.

Australia’s potential

Currently, the Australian ecosystem lacks the subsidies and policy settings to keep pace with the global market, according to Cook. It’s a problem he says will worsen as trade and political tensions with China begin to bite.

Without investment subsidies it can be difficult to demonstrate the direct returns of mixed reality startups and NGO or educational studios, Cook said.

“Not every concept has the direct venture capital appeal of a Canva, an Afterpay, or even an Atlassian. The current trade insecurity with China is also reducing the available venture capital for small Aussie start-ups … These will be the companies that can help to create impactful [mixed reality] applications.”

The West’s banning of Huawei products and services also means China, the world’s biggest mixed reality investor, will begin looking elsewhere to invest in the coming years, Cook said. China’s potential retaliation makes domestic settings increasingly important.

“This really means that internal industry linkages and government funding of innovation are the only way Australia can move to the fore,” Cook says. 

“While the Morrison government rolls back over $4 billion in R&D tax incentives for innovation, small agencies and companies won’t be willing to take the risks that someone in a Silicon Valley incubation would.”

Advertising demand

Australia already has some mixed reality bright spots. UNBND, an immersive technology company with offices in Sydney, Canberra and Melbourne, has a client list including the likes of the NBA, FIFA, and Westfield.

UNBND founder and CEO Antony Arena told Which-50 he took a chance on mixed reality following a fact-finding trip to the US. Around five years ago Arena took his employees at the then digital agency to Silicon Valley in search of the next marketing industry disruption.

The tech giants and US agencies there largely agreed virtual reality was the “next big thing” to disrupt marketing. But the ensuing adoption was slow — something Arena puts down to a lag between the medium and the content being used.

“Headset sales weren’t what everyone thought they were going to be. My gut feel [then] was because the content wasn’t very good.”

Arena says demand is growing now because the content is catching up and the hardware has improved.

He says the immersive technology can help advertisers recapture younger audiences — particularly for sports, where consumers are increasingly using multiple devices at once.

UNBND’s AR applications, for example, allow the addition of more screen “real estate” on a single device. The company’s sports apps allow users to watch games on the phone and then, by physically moving the phone, look at additional information to the sides of the main screen.

“In one environment, now you’ve got the game, you’ve got access to [match] data, you’ve got access to merchandise, you’ve got access to fantasy league, you’ve got access to betting. These are the features that we are building out as we work with [sporting] codes.”

UNBND’s NBA app, MIA. Supplied.

The features appeal to advertisers not only because of the extra real estate, Arena says, but because it keeps users more engaged with the devices. That helps with traditional advertising strategies like pre-roll ads, programmatic and display ads. But, Arena said, there are completely new opportunities too.

One example is the ability to automatically switch a device into a different AR mode that displays digital objects in the consumer’s real-world environment.

UNBND is currently demoing one such feature that allows consumers to open boxes of shoes and “try on” the virtual footwear, eventually completing the purchase from within the app.

“They’re cool new ad formats that fit with our philosophy of ‘doing over viewing’. Get the audience to engage and interact and have control over that environment.”

Arena said the demo will eventually work in VR environments too which, along with 5G, creates even more possibilities.

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