The emerging AR/VR landscape

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It must be because it’s still in its infancy, full of potential and jumping here and there to explore all possibilities, that is it so hard to paint an overall picture of the virtual reality and augmented reality (VR/AR) industry. Like a small child it keeps growing and changing in front of your eyes.

The industry defies categorising. There are no neat indices of which companies do hardware, which ones do software; and which ones create content. It’s all a mishmash in the tech cauldron.

In a blog post on CB Insights Mark Linao of Technicolor Ventures has made a valiant attempt to get a grip on the AR/VR ecosystem and its possible future. Using CB Insights along with data collected from meeting with VR/AR entrepreneurs, he tracked roughly 290 companies that have amassed an aggregate of $2.3 billion in disclosed funding to date. He divides the companies into six categories: commercial and industrial applications, content (movies, TV shows, journalism, education and gaming), discovery and distribution, social, hardware, and infrastructure & tools. Many of the companies straddle multiple categories offering both software and hardware solutions, but were categorized according to their main offerings.

When looking at funding over the last two years as applicable to each category a picture emerges. Hardware walked away with the biggest slice of the pie: $1.221 billion or roughly half of all investment. Hardware includes head mounted displays (HMDs), treadmills, 3D cameras, bodysuits, gloves, speciality lenses and accessories.

Infrastructure and tools at $425.3 million garnered the second highest amount. Companies in this category provide the backbone, piping, delivery, building blocks, or creation software for VR/AR. In this category was included creation tools, development tools, gaming engines, SDKs, gesture & motion tracking, haptic feedback technology, WebVR, encoding, and live-streaming tools.

The vast sums invested in hardware and development tools indicate that investors are backing industry participants to build a robust infrastructure for AV/VR, showing faith in the future widespread adoption of the technology and its ability to produce a return on investment.

Within the content category, gaming accounted for more than 80% of the investment according to Linao’s analysis. This confirms the general view that gamers will be the early adopters of VR. The total investment in content was $232.2 million.

Commercial and industrial applications received $391 million of the backing, accounting for almost a third of the total investment. This is a sizable sum which points to industry preparing for AR/VR to be part and parcel of operations in the future.