VR (virtual reality) and AR (augmented reality) are expected to bring changes to society as the third platform, after computers and mobile devices. Today, these technologies are still in their nascent stages, often referred to as a chasm in the market. However, the possibilities of the new experience-based value that VR and AR could provide, such as changing people's awareness and actions, is immeasurable. Here, a consultant of Fujitsu Research Institute (FRI) explains how to become the winners in the VR/AR market.
Section Chief, Digital Service Development Section
Fujitsu Research Institute
Atsushi Hirano joined the Fujitsu Consulting Business Division in 2001. In 2007, he transferred to Fujitsu Research Institute. Before assuming his current position, he worked as a business strategy and business improvement consultant for the distribution and service industries, ventured into new areas of development in the fields of security and safety, environmental issues and overseas businesses, and he was also involved in many national projects.
* This article was published in Chisounomori 2018, volume 2 (pages. 29-34) on March. 19, 2018.
Chisounomori is an information magazine published by Fujitsu Research Institute (FRI).
* The author's title and article contents are from the time of publication.
VR and AR are the Third Platform After Computers and Mobile Devices
VR is an acronym for "virtual reality," and AR is an acronym for "augmented reality." When you hear people talk about VR and AR, what comes to mind? I imagine many of you associate these technologies with computer games like PlayStation games and Pokemon Go, or amusement parks like Disneyland or Joypolis. You might also be aware that these technologies have been used in services like virtual vacations and condo tours, as well as manufacturing designs and surgery simulations. This is probably the extent to which most of you are familiar with these technologies.
However, VR and AR are not just forms of entertainment. They're not just about the ubiquitous "virtual this-or-that." These technologies and services are expected to bring big changes to society, as a sort of third platform following computers and mobile devices. We've seen one application after another that we used to use on computers transfer over to smartphones. Today, there are new forms of value (joy) that only smartphones can provide. The same thing is about to happen with VR and AR. Mark Zuckerberg frequently claims that VR and AR are going to be the next social platform. As predicted by many experts, an age in which VR and AR play vital roles in various scenarios of life and business is going to arrive. Let me paint a picture of what this means specifically.
"Walking VR/AR" Will Become the Norm
You will be walking on the street wearing VR/AR glasses or contacts. You will no longer be holding smartphones. In your field of vision, against the background of reality, you'll see information about a building on your right, what bargains are offered at the shop on the left, and when you look up at the sky, you'll see the weather forecast for the next 12 hours. Information on a nearby convenience store or on the crowding conditions of the next train will appear in the air. If you say your destination out loud, an arrow will appear telling you where to turn. If you want to see the names and profiles of people walking on the street or the person sitting next to you, that information will be floating by them. You might notice that the person standing at the traffic lights went to the same college as you, you could "like" a passerby's fashion choice, and so on. You can pull information you want, and push information you want others to see.
If you want to talk to someone who's not physically present, you can sit alone at a cafe and have a face-to-face chat with one friend who's in London, and another who's in Beijing. And, if you're so inclined, you could even journey into the deep seas or into outer space. A world where the body exists in ubiquity―such is the brave new world of the future.
Today, we're told not to look at our phones while walking. In the future, walking with VR and AR will be a matter of course. This new world is arriving in the not-so-distant future. Businesses will change in the same way. Methods of communication such as meetings, presentations, email, Skype conferences or business activities like planning, procurement, manufacturing and sales―all these will be affected. Using these examples, I'd like you to imagine how your business would change with VR and AR.
VR/AR is a Massive Untapped Market―How Will Japanese Companies Seize It?
As you may have noticed, the VR/AR technologies that will make this new world a reality are connected to AI through IoT. It is all supported by big data, based on affective computing and protected by blockchain technology. As such, the group of technologies that are the center of attention today is aimed toward the third platform of VR/AR as the destination, and is taking shape and becoming more effective in front of our eyes. Anticipating these developments, companies like Facebook, Google, Microsoft and Apple are investing in and venturing into the VR/AR market en masse. It is no mystery that all these companies are aiming to take the reins of leadership of this untapped market. How can Japanese companies (especially major corporations with investment power) enter this market?
Goldman Sachs estimates that by 2025, the VR/AR market will grow to a scale of 95 billion dollars (about 11 trillion yen). If you break that down, entertainment will take up about 75 percent, while the rest will be industrial, including the business fields of medical care, manufacturing, retail, education and tourism. It is expected that simulation, navigation and simulated experiences immersed in three-dimensional spaces will go beyond the boundaries of entertainment, and expand into various aspects of our lives.
2025 is less than 10 years away. This may be the extent to which the market can grow. However, 20 years from now, the 75 percent of the market occupied by entertainment, which includes computer games, videos and live streaming will permeate our everyday lives, and will not be constrained by the narrow definition of entertainment that we recognize today. Considering this, 11 trillion yen is only the beginning.
In order to cross the market chasm, what is needed is patience during times of low profitability.
The sudden rise of the VR/AR market in the medium and long term is considered inevitable. The problem is understanding the chasm. A chasm refers to the period of low market profitability after an innovative product or service first arrives and before its widespread diffusion.
The players in the VR/AR market in Japan are fighting to survive in this chasm as we speak. In the Japan VR Summit held in Tokyo in October 2017, there was a session titled Global VR/AR: Roadmap to a 12-Trillion Yen Market. The first topic in this session was "why the VR market isn't growing." To paraphrase what all the VR advocates in Japan are saying, it's because it's not profitable yet. For all the noise it's making, there's no profit in it. So companies stop investing. In the industry, the year 2016 was referred to as the "year zero of VR." It was expected that VR would expand into areas outside of computer games and other forms of entertainment. However, the market hasn't blossomed, and many companies have given up.
The only prescription for overcoming this chasm is patience during times of low profitability. What companies need to invest in is the creation (planning and development) of new and exciting services that can only be achieved with VR/AR, and introducing them into the market, with a special focus on application in areas outside of entertainment, such as life and business. They must create services that utilize VR/AR to make things more convenient, fun, high-quality and efficient. Even if they're small initiatives, what's important is to take specific steps and produce results. This is the key to entering the market, and to cross the chasm with what you gain through a combination of service ideas and the technology to realize them.
Changing People's Awareness and Actions by Steering Their Attention to Visual Data
With that said, it is not easy to plan and develop new services. In this context, I'd like to propose an idea. Instead of approaching service development by imagining how it might manifest itself in the future, let's look at it from a tangible data perspective.
As in every other field of computing, in the field of VR/AR, you can acquire and accumulate data. If you can do that, then a cycle of analysis, evaluation and feedback perpetuates. So, what are the characteristics of data acquired from VR/AR?
VR/AR is a technology that takes perceptive reality and projects it directly to the brain, which triggers responses. I want people to focus on how it's possible to trace this response data. How you look at something, that is, how your line of sight and vision moves, how long you gaze at something, what kinds of things enter your field of vision without you noticing―these are examples of responses you have toward the things that enter your vision. These elements can be captured as tangible, three-dimensional data.
By leveraging this data, you could perpetuate a cycle of evaluation and feedback for displaying and presenting information in more perceptive and intuitive ways. VR and AR are extremely effective tools for conveying, capturing, imitating, guiding, helping and changing various aspects of human movements, behavior and even shapes and appearances. Our sense of vision is said to be 80 percent of the input we take into our consciousness. By using these types of stimuli, we can trace those responses as data and analyze them to not only capture the human consciousness, but to change it, along with our actions and behavior. This technology can be combined with other information captured by tools like sensors to make it even more effective.
For example, there was a major story last year about how Walmart was introducing VR technology to its employees. The aim was to train staff and teach them how to serve customers and line products on shelves in a virtual store using VR. However, the application of this technology will not stop at simply using three-dimensional virtual experiences for the purpose of improving staff capacity and efficiency.
The various forms of visual input can be used to develop the insight and know-how surrounding the awareness of employees and how to change their courses of action through the information accumulated by analyzing traced data. This technology can be used not just for employees, but for customers as well. You can change people's awareness and encourage changes in their behavior, whether they are employees or customers. To achieve this, VR/AR technology is used to acquire, analyze and utilize three-dimensional visual data (as well as the data of impacted awareness and behavior), which in turn improves the effectiveness of the technology. The applications for this technology may start with staff capacity development, but it can also expand to service improvement, store quality improvement, behavioral changes in customers, improved effectiveness of announcements and various other purposes.
Data utilization can be said to be Walmart's specialty. Designing stores and services that makes it more appealing for customers to purchase goods, such as the way the sales floor, shelves and customer traffic flows are designed, as well as the measurements of the yielded results, and finally, the continuous improvement achieved through the feedback cycle are few of the results that can be expected.
Furthermore, from the perspective of VR/AR technology, integration with other forms of sensory information such as auditory information and haptics (information obtained from the sense of touch, including force, movement, vibrations and texture) are continuing to advance. In the near future, we'll even begin to integrate the sense of taste and smell into VR/AR, finally capturing all five human senses. The usage potential of data that can be gathered through these technologies will be carefully studied, leading to the development of new services.
The Core of VR/AR Technology is the Creation of a New Reality
Past technological platforms have created new value: personal computers offered convenience, cell phones offered mobility and smartphones offered connectivity. The value that VR/AR offers is experience. All the new services that are beginning to appear in the world today are interactive in some way, whether it be safety education and training through virtual crisis simulations, wandering around virtual stores or task and operation simulations.
I believe that the core of VR/AR is not limited to what I described above, which are essentially imitations or replacements of reality. I believe it is the creation of a truly new form of experience-based value―a brand new reality―that is at the core. I'm talking about a kind of experience-based value that goes beyond what we call "virtual" or "real" today, something that can only be achieved by VR and AR, which directly influence our brains through first our vision, and eventually all five of our senses. I want to take on that innovative challenge and paint a picture of a prosperous and exciting future.
The VR/AR market has no winners as of yet. Everyone still has a chance. The key for seizing this opportunity is to have conviction and embark on this venture with full force and persistence.