We know, we know. You’ve been hearing how virtual and augmented reality (AR/VR) will “change our lives” since 2009. Since then, we’ve witnessed the quiet failure of Google Glass, the somewhat controversial Magic Leap, and the slow but steady demise of the QR code.
That’s not to say there hasn’t been progress in the field – the technology has just crept up in quiet, subtle ways.
Since 2015, the ability to use a VR headset with 360-videos on Facebook has captured our imagination (Star Wars: Rogue One, anyone?) Subsequently, more brands (from 2 brands in 2015 to 13 brands in 2016) have also penetrated the action camera market with 360-degree VR cameras. Our Point of Sales (POS) Tracking shows that demand for 360-degree action cameras across Southeast Asia surged tremendously in the past year. All the markets tracked registered rising sales volume and value, with the biggest contributing markets being Singapore and Malaysia. In Singapore, consumer spend on this product registered a whopping eight-fold increase within a year. As Virtual Reality continues gaining popularity, we can expect action cameras to be more sought after in the region.
Apart from Snapchat and Pokemon Go, VR and AR have never really gone mainstream. Since its inception, the technology has been mostly limited to professional products.
For instance, in the medical field, VR applications such as augmented vision surgery, remote treatment and distance diagnosis, are coming of age globally, with new techniques regularly introduced to replace the traditional trial-and-error approach in advanced clinical training.
With strong support from the government, Singapore’s VR/AR industry is quickly developing. The Infocomm Media Development Authority (IMDA) said it is encouraging innovative content by facilitating more cross-collaborations, as well as supporting growth and development of capabilities in new skills.
It can be difficult for the average person to imagine how VR and AR might fit into his or her daily lives. But good things come to those who wait—we believe that the gap between virtual and reality is definitely getting closer.
Cheaper and better—the first step to mass adoption
In a 2016 research carried out in the UK, it was found that the top reason against VR adoption was the price of VR headsets. That’s no surprise as a high-end headset like the Oculus Rift easily puts a hefty $799 dent in the bank account.
But as Business Insider notes, “really good” VR experiences at more affordable costs will likely be the strongest VR growth driver for the next couple of years.
This is already happening—Google’s US$79 Daydream View for smartphones has been called ‘”ridiculously inexpensive” by TechRadar while Samsung’s Gear VR typically goes for around US$99. The latter’s incarnation this year has also been touted to be best yet by CNET.
The price of VR headsets is expected to fall by about 15% over the coming year, with more than 200 million consumer VR head-mounted displays to be sold worldwide by 2020.
Like the ubiquitous smartphone, it’s only a matter of time before the spending power of trusted technology brands behind VR and continual improvements cause a surge in consumer demand.
From gaming to shopping
To date, the most exciting developments in VR/AR have been in gaming. What’s different this year?
VR/AR is reshaping the retail industry and can be proved effective in regaining customer loyalty.
Enter the “connected consumer”—they are savvy, informed, and seek positive shopping experiences but are increasingly less loyal.
In our recent study on connected consumers, we found that 50% of the global online population lives in Asia and that Southeast Asia is one of the world’s most mobile-centric regions. With shoppers being able to experience full retail environments via VR/AR on their smart devices, the potential for brands to win customers at point of sale with VR/AR is massive, whether it’s Sephora’s virtual cosmetics or North Face’s VR headsets featuring stunning imagery of California’s Yosemite National Park, or a simulated dog-sled ride.
The integration of VR and AR into retail models can transform the way people shop and influence how retailers design their stores and user experience.
This is why Amazon hopes to build an augmented reality furniture store. Using VR/AR, they help customers decide if their new sofa will fit into their living room, taking “try before you buy” to a whole new level.
Brands that use VR/AR to enhance customer experiences with a touch of personalisation are more likely to create value for the consumer and deepen customer loyalty.
Harnessing VR/AR to know your shopper
Virtual store research helps retailers gain insights into buying decisions without the need to physically change stores or products.
Using VR/AR, concepts can be tested in such a way that closely mimics consumers’ in-store experiences to capture passive behaviour.
Since most buying decisions are made emotionally rather than rationally, traditional test marketing and research methodologies may have some limitations when it comes to measuring behaviour and changes to that behaviour at point of sale.
During the process of qualifying new product concepts, obtaining category insight into the market share potential is crucial, so is the understanding of the risk of a new product launch cannibalising an existing brand portfolio. In such cases, a virtual store environment is more effective in predicting the sales potential of a new product.
Through VR/AR, retailers and brands can develop a simulated program that is highly customised for their target customers. By combining research methodology, gaming technology and category management, VR/AR can help them predict shopping behaviour and gain loyalty in a short time.
More industries will seek to maximise the potential and benefits of VR/AR in 2017. Offering an enhanced experience over the “real thing” is key to moving the technology from niche interest to mainstream adoption.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Karthik Venkatakrishnan is the Regional Director of GfK Asia. Having consulted numerous Fortune Global 500 companies as a researcher for over 17 years, his skill set leverages a very strong business sense with analytical strength and deep knowledge of developments in the digital space. Venkatakrishnan has also spent over 4 years working in Jakarta and hence has first-hand knowledge of the market.