AR is undergoing restructuring, and a midfield battle of billions of tracks has quietly begun | Titanium Media Depth

Image source @ Visual China

Three quarters of 2023 has passed, and looking back over the past ten months, only three things have left a significant mark in the technology industry: the explosion of big models, the release of Apple VisionPro, and the return of Huawei 5G.

It is interesting that the hot big model has cooled the frenzy of the metaverse over the past two to three years, and the release of Apple VisionPro has reignited some confidence in the entire XR industry.

In the technology industry, there is an exaggerated statement that Apple seems to be a company that has traveled back from the future, stepping on multiple products such as the iPhone, iPad, and AppleWatch, becoming the industry leader and driving the explosion of the industry. It is not difficult to understand why Apple VisionPro has received so much anticipation and attention this time.

The entire industry is waiting for Apple's products to land. If Apple says the XR industry is not good, there is a high probability that it is not, "Li Xin (pseudonym), who has been working in the XR industry for nearly 10 years, told Titanium Media App." Not to mention anything else, after the release of VisionPro, everyone has moved from the terminal to the industry chain, and at least there is a 'imitator' with a lower failure rate. If you benchmark Apple with financing, it will also make investors more convinced

However, it is unknown whether it is due to the fact that Apple VisionPro has not yet been officially released, and the XR industry has not experienced the expected frenzy. The performance of the financing and terminal markets is relatively "calm". An investor pointed out the general reason for this, "We are still looking too much and investing too little. Firstly, it is due to current environmental factors, and secondly, Apple's products have not yet been tested in the market.

Data reports from multiple institutions show that the XR sales market experienced a significant decline in the first half of the year, but through surface data, changes in the industry path can be observed. Compared to VR, AR is in an upward development trend, with good performance in both the market and products.

After the release of Apple VisionPro, multiple AR companies announced their financing progress and also released multiple AR products. At the recently concluded Hangzhou Asian Games, the application of AR fireworks, AR invitations, AR navigation and other AR scenarios also made more public users feel the charm of AR.

Image source: Lotu Technology

According to data compiled by RUNTO, in the second half of the year, a total of 15 brands in the global XR market have released 18 new products, including 4 VR products and 14 AR products. Li Xin told Titanium Media App, "Compared to the 'stagnation' of VR, Apple's proposed concept of spatial computing has further boosted the development of AR. Whether it is VST or OST, the next generation of computing platforms is really not far away

The XR industry is experiencing a dual cycle of ice and fire, while VR is lagging behind

According to data released by IDC, in the first half of 2023, China shipped 328000 AR/VR head displays (in sales), a year-on-year decrease of 44%. According to online monitoring data from RUNTO, the online sales of XR equipment in China from January to August this year were 173000 units, a year-on-year decrease of 38.8%; The sales volume was 540 million yuan, a year-on-year decrease of 36.2%. After entering the second half of the year, the market did not rebound and continued the decline in the first half of the year.

Image source: IDC

It should be noted that XR is a collective term for various technologies such as VR and AR, and the decline of the entire industry is more caused by the drag of the VR industry. In the first half of the year, the Chinese market shipped 260000 VR units, a year-on-year decrease of 53.3%, and AR shipped 68000 units, a year-on-year increase of 142%; From January to August, the online monitoring sales of VR devices decreased by 55% year-on-year, while the sales of AR devices increased by 176% year-on-year.

Although VR still dominates in terms of volume, AR has shown a strong upward trend. From January to August, the sales share of VR in the online market decreased by 24.7% compared to the same period last year, while AR's sales share increased from 7.0% last year to 31.7% this year.

The current VR market is in a downturn, which has become a foregone conclusion. In contrast, looking back on the development of the AR industry for over 20 years, from enlightenment to boom, and then to re enlightenment, it is currently in a period of recovery and growth. When it comes to the polarization of the AR and VR markets, analysts at Lotu Technology told the Titanium Media App that VR devices are not just in demand, and the high prices make consumers have no urgent demand; Once again, the content library of VR devices is relatively small and lacks diversity, with shortcomings.

There are multiple reasons for the growth of AR. Firstly, multiple new products have been launched, secondly, various companies have promoted the deployment of 618 additional code traffic, and thirdly, application scenarios have increased to improve the experience for consumers. Currently, there are constantly large manufacturers joining to inject new strength into the industry. New mobile phone and home appliance brands such as ZTE and Skyworth have launched AR new products for consumers, which further stimulates the market

At the same time, the rapid growth of AR is also related to the lower price threshold. IDC China Senior Analyst Zhao Siquan pointed out to Titanium Media App that the reason for the rise in the AR market is that since the second half of last year, domestic manufacturers have successively launched low-priced viewing and projection glasses, with a significant increase in shipment volume. In the past, the AR market has been dominated by commercial products in the high-priced segment.

According to data obtained from enterprise investigation by Titanium Media App, a total of 22 investment and financing events were completed on AR track in the first half of this year, with publicly disclosed financing amounts exceeding 600 million yuan, mostly concentrated at the level of 10 million yuan financing, accounting for 66.7%, and mainly equity financing, accounting for 45%. The upward market and gradually maturing consumer environment have also led many entrepreneurs to choose to enter the AR industry.

At present, VR is still difficult to achieve lightweight. Compared to AR, it is more lightweight and can efficiently provide users with information feedback, and this track is large enough. "Speaking of the choice of entrepreneurial direction, Wu Dezhou, the unknown founder and CEO, is now paying tribute to the titanium media app." We firmly believe that AR will usher in the opportunity to transition from a feature machine to a smartphone era like a mobile phone, and the explosion of AR technology will surely usher in the next Internet era

According to IDC's Quarterly Tracking Report on the Global AR/VR Head Display Market, the Chinese AR market is expected to ship 206000 units for the entire year of 2023, a year-on-year increase of 100.2%. RUNTO predicts that throughout 2023, the omnichannel sales of consumer grade AR devices in China will reach 220000 units, a year-on-year increase of 120%.

Apple VisionPro, AR Crosscycle Accelerator

In 1968, Ivan Sutherland, the father of computer graphics and a renowned computer scientist, designed the headworn virtual reality device - Sutherland. It was called the "Sword of Damocles" due to its shape, and is also considered the first true VR head display.

Over the past decade, Google has released Google Glass, Sony has vigorously promoted VR gaming devices, and the Zack Burke Allin Metaverse. However, compared to the development trajectory of terminal devices such as smartphones, PCs, and tablets, both the VR and AR industries have experienced peaks and suddenly fell to the bottom.

Given the current market environment, analysts at Lotu Technology have informed us that in the near future, the space for VR will be in the B-end market, while AR in the C-end market will perform better. On the one hand, it is the acceptance of consumers; On the other hand, it is the enthusiasm of enterprises. The price of VR is already very low, and there is no room for enterprises anymore. Therefore, enterprises are also willing to enter the B-end market.

The market is not humane and is the most cruel, and there is also a "shelf life" for the market. As a member of the entrepreneurial team in the AR industry, when it comes to industry fluctuations, Wu Fei, the founder of Liangliang Vision, believes that "the development of the industry has cycles, so there is no need to pay too much attention to this. If your company develops long enough, it will definitely encounter industry peaks and valleys. A good company can cross cycles, which is the philosophy I have always believed in

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An investor who has been watching the XR industry for many years also told Titanium Media App, "Since the cooling of the metaverse, everyone is looking forward to the release of Apple's VR/AR products. The industry needs a leader to define and lead the ecological improvement, as well as a stronger endorsement and good story. AR is a new way of human-computer interaction, a transformation of interaction. Apple has pointed out a path for the industry, which may not necessarily be right, but the probability of a car overturning is very low.

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B-side of AR: immature technology and ecological deficiency

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IResearch Consulting pointed out that AR technology can overlay virtual information data on top of the real world, with characteristics such as interactivity, immersion, and real-time. In the short term, AR can be used as an efficiency tool to fill the industry gap; In the long run, it has the potential to become the next generation computing platform.

The AR industry has formed a consensus on the positioning of next-generation computing platforms. However, there are still controversies and shortcomings in the entire industry in terms of technical roadmap, optical display, interaction, and other aspects.

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The OST solution is now more popular, allowing for direct viewing of real scenes through optical lenses, saving camera space and computing resources for real-time image processing. Overall, it is more lightweight and compact, making it more suitable for long-term wear. At present, common solutions such as Thunderbird and Rokid in the domestic market are all based on this solution. However, OST also has drawbacks. Under limited computing power, the boundary processing between virtual and reality is poor, making it difficult to perform pixel level fine processing. The virtual view and the real world also have a certain degree of delay and asynchrony.

From the perspective of entrepreneurs, Wu Dezhou believes that "AR glasses must be able to be worn and integrated with the physical world for interaction, so lightweight is crucial." With the improvement of computing power and performance, VST solutions can indeed achieve a sense of authenticity, which may be the mainstream in the future. However, before addressing issues such as weight, power consumption, heat generation, and cost, OST is more accepted by the mass market.

Image source: iResearch Consulting

At the technical level, there is still a certain distance between the AR and the expected effect. Currently, Birdbath is the most commonly used optical solution module for C-end AR glasses. According to data released by China Mobile, the proportion of AR glasses released globally in 2022 using optical waveguides, Birdbath, and free form surfaces is 36%, 32%, and 20%, respectively. In the first half of this year, Birdbath's penetration rate in the AR online market reached as high as 94%.

Image source: iResearch Consulting

Lotu Technology pointed out that Birdbath is a compromise solution that balances display and portability. With the progress and mass production of optical waveguide technology, the high-end AR glasses market will gradually be replaced by optical waveguide solutions that are lighter, thinner, and more similar in form. BirdBath technology solutions mainly focus on cost-effectiveness and low-end markets.

It is understood that the optical waveguide scheme has the characteristics of small volume, high transmittance, and large FOV, but the price is relatively higher. IDC predicts that the shipment of Birdbath solution products will maintain a positive growth for some time in 2023 and 2024, until the next generation optical solution glasses are introduced.

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In addition to the immaturity of the hardware side, the ecological deficiency of AR is also a major obstacle for it to become the next generation computing platform. As the gateway to the mobile internet, smartphones have been able to connect everything, and the improvement of the application ecosystem has made them the most important terminal. On the other hand, watching movies, videos, simple interactions, and games do not provide sufficient reasons for users to have to pay.

It can be confirmed that with the entry of Apple and the improvement of the industry chain, AR is once again on the track of rapid development. Previously, multiple departments in the country have also issued policies to encourage the development of the AR industry, and a midfield battle of billions has quietly begun.

Industry chain insiders have revealed to Titanium Media App that in the future, it will not only be a competition for traditional AR companies, but also an important level for mobile phone companies such as Huami Ov, and it will be a redistribution of the internet industry. The Prospective Industry Research Institute pointed out that with the increase of AR products and the enrichment of content, it is expected that by 2027, the market size of China's augmented reality (AR) industry will exceed 200 billion yuan.

In addition, for end brands, who can enjoy the dividends of this trillion dollar market is more important to go far than to go fast. Beyond technology, supply chain, and ecology, it is even more important to ensure the health of the funding chain before AR truly enters a positive cycle. In the AR industry, brands rise quickly, but their disappearance may also be faster. Yesterday was still a leading manufacturer, and the next day they may close. Knowing how to avoid uncertainty on a certain track is the key to the survival of the AR industry, "said Li Xin.(This article premieres the Titanium Media App, authored by Du Zhiqiang and edited by Zhong Yi)