April 5, 2020
After a few weeks of working from home, most of us are eager to return to “normal” life. Being able to socialize, enjoy nature walks, go to a show, enjoy a fitness or yoga class. Hopefully those days are not too far away. In the meantime we are grateful that we can use technology to keep in touch with our loved ones, order food and supplies and be entertained with the latest movie or series. Technology has been flirting with taking this one step further: augmenting our reality with juxtaposition of virtual items in our real world or even transporting us to a new fully virtual reality. The cost is still high and the content is not compelling enough to build a critical mass. Nevertheless, Goldman Sachs believes this market will continue to grow strongly and will surpass $100 bn by 2025 (see figure). I believe the current quarantine may provide a decisive push for these technologies to go mainstream faster.
Sources: Goldman Sachs, Somar Analysis
Several applications have been developed for extended reality with strong benefits to their users:
- Gaming is currently the largest application. The experience of virtual games is highly immersive and realistic;
- E-commerce is an emerging application. There are now apps that let you see how some furniture or decoration will look in your house by superimposing it to a live video of your house. The cosmetics industry has also launched apps that allow you to simulate how their products and style will look on you;
- Healthcare is adopting extended reality to improve patient outcomes. From 3D imaging of our bodies to simulation of surgeries both for training and for evaluating alternative courses of action;
- Education is adopting it to improve learning outcomes and to build virtual classrooms with people from different parts of the world;
- Social Media is an emerging application where you will be able to interact with people from around the world in a virtual space using your own avatar;
- Live events will be augmented through technology. From immersing yourself into a music show, including backstage access to “enjoying” a Formula 1 race through the eyes of a pilot or of an engineer with full access to telemetry data;
- Industrial design and modelling is enhanced with virtual modelling of new products and production processes;
- We are currently only scratching the surface in these and many other applications we currently cannot foresee.
It is still early days for most of these applications. The ongoing pandemic makes their attractiveness higher to mainstream adopters and may accelerate its adoption. Somar is following closely the efforts and success of different players in the sector and is excited about future investment opportunities this space may open to our investors.
— Pedro Ramos