Consumer AR will be the second largest XR sub-sector in the outer years of the forecast. We project it to grow from 12 percent of XR revenues in 2017 to 29 percent in 2022, totaling $16.5 billion at that point. That includes hardware (smart glasses) premium apps and in-app purchases.
The latter will dominate software revenues, due to consumer hesitance to pay upfront for AR apps. This was shown in our survey data that indicates consumers are more comfortable with in-app payments, especially new and non AR users, which are the largest segment.
A leading indicator for IAP also comes from Pokémon Go, which validated the model with $2 billion in revenue to date. Niantic will also find success in Harry Potter, Wizard Unite. These and other apps, including those built on Niantic’s Real World Platform, will rely heavily on IAP.
Meanwhile, mobile AR’s killer apps could arrive in 2019 — likely built around a utility like visual search, or the viral growth of a social app. That will be two years after ARkit’s launch, a similar timeframe after the iPhone’s 2007 launch when we began to see killer apps like Uber and Waze.
But interestingly, software at that time will begin to shift to premium apps (as opposed to in-app purchases) as it’s a model conducive to dedicated AR hardware like smart glasses. This is similar to how apps/games are purchased in VR, and will boost the premium app spend beyond 2022.
Previous Previous post: Q&A: Where’s the Money in AR?
Next Next post: XR Talks: How Will AR Impact Retail Commerce?