The State of Immersive Technology: Virtual Reality and Augmented Reality Markets

In this report, we’ll take a look at the emerging applications of virtual and augmented reality tech in various industries, from retail to healthcare, covering some of the most promising use cases. This report will be useful for executives and team leaders looking to innovate, improve operational efficiencies, cut costs, and drive better business outcomes with thought-out VR/AR application. 

It’s important to note that organizations using immersive technology prefer investing in AR, not VR—Capgemini Research shows more organizations are implementing AR (45%) than VR (36%)⁹. There might be numerous explanations to this, but the simplest one is that AR allows real-world applications while VR is purely virtual and mostly carries intangible benefits, like improved skills. Not to mention that AR is cheaper and people can start using it with just their smartphone and no additional gear. 

AR is becoming a serious production optimization tool. According to some estimates, at least a quarter of all of the AR projects are being implemented at industrial/manufacturing companies¹⁰. This further reinforces the notion that immersive tech is here to stay, as it’s ‘conquering’ larger enterprises. 

It’s evident that nothing compares to real-world experience. The other end of this spectrum is theoretical learning, which anyone has to go through before the actual practice, be that driving a vehicle or learning how to repair a production line. VR/AR-enabled training capabilities are meant to bridge the gap between investing precious resources into practical skills and spending too much time on theory¹².

This is also reinforced by how humans naturally absorb information and learn. Over 65% of people are visual learners¹³, i.e. those who are more susceptible to learning in a visual format. The rest of the major learning methods (kinesthetic and auditory) can also be entirely covered by VR/AR, as they engage all of these senses. 

Scientific evidence is there to back up these claims. For example, research by the University of Maryland concluded that VR is roughly 8% more efficient at stimulating recall memory than standard computer-based training¹⁴.

That’s why these technologies are already proving to be effective at training. For example, United Rentals had dramatically reduced the time it takes to train workers by 40%¹⁵. A restaurant chain improved onboarding and culture training through the use of VR, boosting successful certifications by over 20%¹⁶. A different restaurant chain managed to double the speed of kitchen skills training for its staff¹⁷. Heavy industries are not an exception too. Boeing was able to cut production training by up to 75%¹⁸. Needless to say, this creates a significant ROI for the whole training and onboarding process. 

The opportunities presented by the virtual and augmented reality market across industries are bountiful:

• Using VR/AR to train medical professionals in equipment operations, diagnosis, and teamwork
• Training military and police personnel by simulating combat and emergencies. For example, NYPD is training its force to deal with active shooters in VR simulations¹⁹.
• Making sure that employees are continuously educated on workplace safety and hazards.
• Training on customer relationship management for the travel and leisure industry.
• Training for extreme conditions and emergencies, like astronaut training at NASA²⁰.

It’s also important to note that VR/AR-based learning has the potential to significantly lower the cost of training:

• Employees don’t have to travel for practical exercises.
• VR/AR is incredibly scalable as the equipment is affordable, and software can be reused for an unlimited number of times.
• Safety and equipment integrity don’t have to be compromised, as everything happens in the digital world.
• The cost of training goes down with time, as the initial cost of producing a training program in VR gets shared among the numerous employees that reuse it. 

The global AR market is set to grow at an unprecedented CAGR of almost 152% between 2019 and 2024²⁵. This development opens up new opportunities in marketing and advertising through immersive experiences, since around 50% of people globally are using different types of ad blockers to improve their experience²⁶. 

And this is where immersion could break the spell. Over a third of AR users consider marketing and advertising applications of the technology to be the most promising²⁷. It’s obvious why. Consumers want to be convinced and wowed. VR and AR provide the perfect opportunity to do that, especially when most people already carry a device that can enable this (like smartphones and tablets). 

Audiences treat product placement in VR a lot better than in traditional forms of advertising. One obvious explanation would be that VR is simulating the real world, where product placement is everywhere, from the bottle of Pepsi on your table to the strategically placed candy bar under your car’s windshield. 

All of this ‘enthusiasm’ is not just true for consumers. Over two thirds of agencies would like to see more VR/AR in digital marketing²⁸. It’s obvious why, given that nearly half of those aged between 18 and 34 in the US intend to purchase a VR/AR device²⁹, which corresponds to the most active spenders or people soon to become them³⁰. 

While it may be harder to get a VR/AR marketing campaign off the ground due to higher costs, it’s also important to remember that the revenue potential, as well as brand recognition growth, can also be significant. This is where you have to figure out if it makes sense to launch this type of a campaign, and whether to do it on your own or engage an experienced VR/AR production partner. Otherwise, you might end up worse off. For example, a study by Purdue concluded that AR ads are significantly less effective than display ads, as 53% fewer people can recall AR ad elements³¹.

It can be argued that it’s all about the execution and not just the fact that you’re running a VR/AR campaign. There are plenty of examples of successful immersive campaigns. Augmented reality can deliver over a minute of dwell time on your ad, with 30%+ conversion rates. Land Rover was able to keep users engaged past the 2-minute mark with their Land Rover Velar ad, achieving an impressive 38% CTR³². 

An AR-enabled device can be used to inspect parts and identify faults or misalignments. In this scenario, the device overlays an image of the part in its perfect condition (i.e. how it’s supposed to be built), and the technician then compares it to the results of their assembly.

Anything from remote collaboration with suppliers and colleagues in other warehouses to safety warnings and inventory counts. This could be achieved with immersive tech, reducing SCM frictions and improving the processes down the supply chain.

With the unrivaled focus on innovation, healthcare organizations are already exploring high-impact VR/AR applications. It’s not surprising that this market is projected to grow at a CAGR of over 23% through 2019-2025³⁴. 

Using VR, healthcare professionals can cure a variety of visual disorders by building VR/AR exercises for eyes. In this case, instead of performing an imagined sequence of actions, patients go through an immersive experience designed to directly help their condition.

In this scenario, immersive technology can be used to superimpose diagnostic images over the surgery area. Such applications can also create a ‘transparency’ effect when the surgeon can see a virtual image of internal organs while performing a surgery. This could greatly improve patients’ safety.

VR applications for mental disorders could be set up to run exercises that treat anxiety. They can also place the patient in a more calming setting, improving the overall therapy immersion and experience.

There’s nothing virtual about the direct impact of VR and AR on businesses across the globe. Industry leaders have to make an effort and explore how immersive technologies can be applied in their niche.

It’s essential to learn from competitors or innovate if the competition is falling behind. However, companies have to be careful with use cases and execution, since a bad VR/AR experience may damage your brand or, if it’s used for internal purposes, even decrease productivity.