Every year, Deloitte’s Digital Media Trends survey explores how consumer attitudes toward media have changed. It tracks generational perceptions of mobile devices, entertainment preferences and advertising, everything from binge-watching TV shows to social media usage. This year’s report also asked consumers how they feel about augmented and virtual reality—and the results were surprising.
In this year’s survey, consumers ranked VR headsets among the least valued devices they own. Consumers’ value of VR headsets dropped 14 percentage points since 2015 (from 20 percent to 6 percent). With many in the industry claiming VR is approaching the end of its hype cycle, the findings imply that consumers may in fact be falling out of love with their AR/VR devices. But why? With VR device ownership on the rise, why has consumer value of VR plummeted?
Making VR a household technology has been described as a “chicken-or-egg” scenario: mass adoption will be either determined by accessible VR hardware or compelling content. But the issue is really a matter of establishing both at the same time. Until recently, digital reality has been lagging on the content side, but we are in fact witnessing a turning point in the industry. Not only are there improved VR devices, but there is also a swell of new content. So despite consumer attitudes, digital reality’s future looks incredibly bright.
Still hungry for digital reality experiences
While consumer value of VR devices has decreased, Deloitte’s study found that there’s an appetite for digital reality experiences. Over 40 percent of consumers, and 57 percent of 14 to 34-year-olds, noted they would go to the movie theater more frequently for an AR, VR or 360-degree experience. This finding is significant, considering movie ticket sales reached an all-time-low in 2017.
Unsurprisingly, consumers also noted interest in using VR devices for gaming (35 percent). However, smartphones still dominate as the gaming device of choice and this trend is likely to continue as developers work to build out AR gaming experiences on mobile devices.
The data indicate that consumers have interest in using their digital reality devices to be entertained—what they already do on their smartphones, laptops, tablets, etc. Additionally, the promise of VR is enough to inspire people to change their behavior, such as going to the movie theater more frequently.
The appeal of digital reality is not limited to tech-savvy Millennials or Gen Z either. Gen X, in particular, is adopting digital behaviors previously seen in younger generations, leading us to coin the term “MilleXZial.” Almost half of Gen Xers frequently play video games now and are the most prominent gaming generation on the smartphone. With net wealth in the U.S. projected to grow to $120 trillion by 2030, Gen X will likely experience the highest increase in share of national wealth. With their growing digital savviness, they will be a prime target for digital reality companies.
The groundwork for digital reality’s takeoff
Consumer interest is still firmly rooted in digital reality, and a growing number of companies are laying the groundwork for mass adoption to finally be realized. With the launches of Apple’s ARKit developer software and Google’s ARCore, developers now have toolkits to craft digital reality experiences on smartphones and tablets.
These experiences span far beyond the Snapchat or Instagram lenses of today, giving brands yet another way to improve customer experience. For example, Ikea’s AR app allows shoppers to virtually visualize items in their homes so they can “try before they buy.” The beauty industry is also capitalizing on AR so consumers can visualize new styles; for example, Sephora’s AR app allows users to virtually try on makeup at home.
We’re also seeing a shift in the kind of content being made available in digital reality. When VR headsets initially launched, content consisted of short-form experiences to show proof of concept. Now, VR content is evolving from experimental shorts to long-form entertainment. Case in point: Hulu’s upcoming VR comedy series, Door No. 1, will feature a “choose-your-own-adventure” storyline.
There are also a number of devices coming on the market that are diminishing barriers to entry for everyday consumers. Facebook’s Oculus Go is priced at an affordable $199, less than the cost of a high-end smartphone. Tethered headsets, improved battery life and, most importantly, an attainable price point set the stage for mass consumer adoption to be possible.
Not just entertainment
Finally, we’d be remiss not to mention digital reality’s impact in the business world. Enterprise adoption of digital reality is outpacing that of consumers and underscoring how these emerging technologies will alter our everyday lives, beyond simply offering a new means of entertainment and engagement.
For example, surgeons are already using VR to operate on patients remotely. In 2017, IDC estimated that the business-focused AR/VR use cases that would attract the largest investments were onsite assembly and safety ($339 million), retail showcasing ($250 million) and process manufacturing training ($248 million). As enterprises leverage digital reality to operate more effectively, they will carve a path for consumer adoption to follow.
Ultimately, it’s safe to say the time is ripe for digital reality to flourish and make significant gains in 2018. Even though consumers’ value of VR devices has decreased, people are still intrigued by the promise of digital reality. The work being done now by developers, studios, hardware companies and enterprises will not only minimize the barrier to entry for consumers, but strengthen the creation of compelling content, ultimately eliminating the chicken-or-egg conundrum. Digital reality’s full potential is just waiting to be realized. And by next year’s Digital Media Trends survey, we may have already seen it.
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Allan Cook is the Global & US Technology, Media & Telecommunications Sector leader for Deloitte’s Operations Transformation practice.. As one of the global leaders of Deloitte’s digital reality offering, he is working with clients to develop and implement their strategies, pilots and solution implementations in extended reality.
