A new reality: Key considerations for growing UK VR/AR companies now
Jul 26, 2018
The UK virtual reality (VR) industry could be worth £1.2bn by 2022, with nearly 8m headsets to be sold over that time, according to PwC’s latest forecasts. We may be due to lead the way in Western Europe by VR revenues but what are some of the challenges our homegrown businesses face in getting there, and how can we support their strive for growth?
Whether you’re looking to build a VR/AR company, grow one, or even adopt the technology into your business, one of the main challenges at the moment is predicting when these immersive technologies might become firmly mainstream. Four key areas are holding back the industry potential at the moment:
- Education: there is still a lack of public understanding of what VR/AR technology actually is and the potential it holds across such a wide variety of areas - it’s not all about gaming;
- Content: there isn’t enough quality content available to consumers quite yet to justify purchasing VR/AR hardware;
- User experience: the experience between unboxing some VR/AR hardware and being able to use it can sometimes be arduous. The headsets themselves can be heavy and unfashionable, and users are used to far higher quality screens;
- Cost: although prices have fallen drastically in the past few years, the cost of high-end VR/AR hardware is still a major deterrent for consumers.
The VR/AR industry still represents a relatively early stage venture because of all this. The danger many VR/AR companies face at the moment is executing a big idea without understanding whether there is a significant enough market for it. A number of video game developers are hedging their bets by developing both VR and non-VR content, but expect to see this approach change as the market matures. The recommendation for now though is simple: build for a market, not an idea. Given the wide range of applications across different industries, the future of VR/AR will be driven not by a single killer application for the whole market, but rather by 'killer uses' of the technology which fall broadly into the five categories below. For example, rather than just creating a specialised staff training app for the healthcare industry, think more broadly about how you could address training issues across multiple industries.
Another key barrier to growth, as with any business looking for scale, is funding. It’s important to remember that there are multiple funding opportunities in addition to venture capital, including crowdfunding or government support. Generally, access to funding becomes easier with more mature product development, but there is a £17m government-funded competition for demonstrator projects running at the moment for example, for those exploring new immersive ways of communicating with mass audiences. Digital Catapult also offers VR/AR specific accelerator programmes such as Augmentor and CreativeXR to support immersive product development.
From a legal perspective, there are a few key questions to consider when developing a VR/AR system, content or platform, including:
- IP issues: What can you do to ensure you protect your own IP and how will you licence VR/AR content or technology to your customers or partners? What happens when users create new designs, artwork or products in a VR/AR world?
- Ownership of property: Is it possible to "own" virtual property? How will the law address the "theft" or sale and purchase of virtual assets and currencies?
- Liability and regulation: What if the VR/AR technology and services could bring up risks of injury or legal liability for fraud, harassment or other criminal activities? Also, what regulation and standards apply to virtual content and how might these evolve as the market develops? What about users from different jurisdictions interacting in a virtual world - which countries' laws will apply?
PwC has produced a new business & legal handbook in collaboration with Digital Catapult - Growing VR/AR companies in the UK - with advice on areas to think about across everything from strategy and operations to legal and regulatory issues that these type of businesses face.
With the right support and collaboration between VR/AR stakeholders in industry, academia and government, there’s no doubt that the industry will thrive and that the UK will lead the way for VR/AR in Europe.