Image of the COVID-19 virus, which is affecting the AR/VR industry, for better or worse.

AR/VR Industry Faces Uncertain Future Amid Opportunities

Can you even imagine going through this pandemic lockdown without the use of the internet, or the phone, or even the television? Back in 1918, none of those conveniences existed. Civilization now can even be entertained by augmented and virtual reality platforms. And those platforms can stand alone in offering entertainment possibilities. published an article by Tim Merel, who took a careful look at how the pandemic is affecting this sector, which is in for an “interesting” time.

Digi-Capital’s long-term virtual and augmented reality forecast is for the AR/VR market to reach around $65 billion revenue by 2024,” Merel writes. “However, the next two years are forecast to be impacted by COVID-19-related factors including (but not limited to) physical lockdowns, brick-and-mortar retail closures, essential ecommerce delivery limitations, supply chain disruption (supplier, manufacturer, distribution, wholesale, retail) and recession/depression economic impacts.”

Several VR firms that were struggling before the lockdown have laid off staff members, but most recently Magic Leap was hit hard by a drop-off of sales after the lockdown. Its hardware costs more than $2,000, making it a hard sell for many. About 1,000 employees, half of the company’s staff, lost their jobs.

Hardware Sales

Physical lockdown could be a plus for AR/VR hardware demand, as people and businesses try to stay connected during the crisis. However, brick-and-mortar retail closures might hurt AR/VR hardware sales, as mass consumers may not be able or willing to try the headsets before they buy. This is a bigger deal for AR/VR than smartphones, tablets, PCs and consoles.

The lockdown appears have a positive result for mobile AR advertising, since mobile messaging use has greatly risen. For instance, TikTok usage in the first week of March grew by 130% for a weekly total of more than 3 billion hours, with increases in both user numbers and average time per session. This provides more viewers and advertising opportunities.

Retail News Is Daunting

Brick-and-mortar retail closures have been devastating for physical retail, bringing the sector to a standstill and accelerating some long-term trends by years. The future of surviving stores is uncertain, too, with varying short- to long-term goals.

However, mobile AR-enabled e-commerce could become a primary beneficiary, due to the high active installed base of mobile AR and the ability to show products virtually using mobile AR at home during lockdown. Mobile AR e-commerce’s ability to increase customer buys could surge. Yet the data on e-commerce impacts from COVID-19 have shown mixed results.

Merel goes deeper with his outlook on what could be a recession- or depression-era economy after the lockdown is. Still, if companies address this paradigm shift with optimism, planning and a vision, they may prosper during this trying time.