Now we have some serious AR numbers. AR as in Augmented Reality the next mass media channel after internet and after mobile. As AR started we’d only seen some very early numbers in the AR space. First numbers were only tidbits, one particular AR provider, perhaps only in one country and possibly only on one smartphone platform etc. Now in late 2013 we have seen the very first global numbers.
Those who read this blog frequently may remember that I gave the AR industry its first global forecast for this decade, predicting roughly 1 Billion media audience for AR by year 2020. As we count the start of AR from year 2009 it means 12 years to 1 Billion. This forecast was (and still is) based on the adoption rate of mobile media, which hit that milestone of 1 Billion users globally in 12 years from its commercial launch in 1998 - the first paid downloadable mobile media content was the basic ringing tone which was launched in Finland back then...
So, as Augmented Reality media formats are currently primarily designed for mobile phone ie smartphone use (but not exclusively so) we can use the mobile media adoption rate as a model. And then monitor as data comes in over the early years to see if my initial forecast turns out roughly in line with the future that emerges. Note that a mass media audience of 1 Billion users is massive globally - newspapers worldwide have only a combined daily circulation of less than 450 million...
That was the context of where the industry was most of last year. I had the honor of presenting the keynote to the Augmented World Expo (AWE) in Silicon Valley last year and made a lot of new friendships in the AR space. But I also eagerly was scouring any data sources for any stats we might have for this young industry in its fourth year. Then towards the end of the year we found some. We have the first global stats for AR. Now the story gets interesting...
60 MILLION USERS IN 2013
Juniper Research is the first analyst house to release into the public domain a count of global users of AR. They announced in November that the world has 60 million AR users at the end of 2013. 60 million might not sound like much. Remember, AR is primarily a media type accessable to smartphone users not all mobile phone users. 60 million AR users means 4% of all smartphone users globally are already using AR. That my friends, IS a HUGE number. AR is not on par with the growth rate of mobile media. AR is ahead of where mobile media was four years in.
AR REVENUES HALF A BILLION DOLLARS
So that is users. Many AR offerings are gimmicks, often advertising and marketing related and often free. Does this industry make any money? Good that you asked. We have that too. The first global number for AR revenues was also released late last year. Research and Markets found the AR global revenues for 2013 to be almost half a Billion dollars. They counted 496 million dollars in October 2013 for the full year.
If we use those two separate studies we get a preliminary ARPU number too. The annual average revenue of the AR industry per user is US $8.27 so the monthly ARPU is 67 cents per active user. This is VASTLY ahead of the early mobile media revenue and ARPU levels. It again points to AR likely to overperform vs mobile media not that it would underperform. My 1 Billion user forecast for 2020 is looking very solid by these early numbers.
MORE DATA, NOW IN SAMPLE CASES
During 2013 we saw more sample case numbers. Layar the AR browser people from the Netherlands reported in April that they had passed 30 million downloads of their browser. Note that a download is not the same as user, but this is very good validating data to put the 60 million user number from Juniper into context. The Juniper number is definitely not too big, it may in fact be too low. Meanwhile in the Netherlands, the home of Layar, they had achieved 1.3 million downloads which was 14% of the total Dutch smartphone user base at the time. Again the 4% adoption rate globally seems not to be in any way a kind of ‘ceiling’ if a leading country is far ahead of it already.
Then Cherry Picks of Hong Kong has released some new data on iButterfly. We already knew before that in the first year iButterfly had achieved 300,000 users in Hong Kong who collected 10 million virtual butterflies (and received 10 million mobile coupons in that media’s advertising channel which serves one coupon for every butterfly that is caught by a user). Some stats on those - remember this is 2012 data - 7% of Hong Kong’s total smartphone user base had used iButterfly and the average user caught 33 iButterflies in the first year meaning average user caught nearly 3 butterflies per month. One roughly every 11 days. But that is not the big news. This is:
Now Cherry Picks told us in 2013 the redemption rate of those iButterfly coupons. Are you sitting down? So these frivolous virtual AR butterflies fluttering around Hong Kong are hunted by 7% of Hong Kong’s smartphone users - Hong Kong with the world’s second highest smartphone penetration rate behind only Singapore and ahead of the UAE. The average person isn’t tired of this silly hobby, they collect these iButterflies on average once every 11 days. And are served a mobile coupon as reward for doing so. How are these coupons redeemed. Would you believe 7.5% ie more than 10x better than coupons on the internet? No. Thats not the case. Try ... 75% !!!!! Yes, 100x better than coupons on the internet! iButterfly achieves 75% redemption rate on the mobile coupons served via Augmented Reality on smartphones!!! Yippee !!! This IS good news! So we have the first actual advertising that is sustainable on AR, not just a one-time gimmick.
Wait. I’m not done. We’ve done Europe, we’ve done Asia. Now lets go to North America. Canadian newspaper group Glacier Media spoke about their AR innovation at the WNC13 event for the newspaper industry in May of 2013. They had just completed their first full quarter of using AR to enchance print advertising sales. Yes, to enhance print ads in newspapers they used Layar’s AR engine to sell online digital mobile connectivity to print ads. Just like inserting QR codes or putting an URL on a printed page, except that it is done via AR so its far more user friendly and doesn’t need to waste ad print space for the QR code etc... How did Glacier Media do with it? They sell the Augmentation of any ad in their newspapers for a premium ad price of 99 Canadian dollars extra, above the cost of the normal print ad. The actual effort to Augment a printed page (inserting the web link to the advertiser’s website or campaign site or YouTube video or whatnot) takes 60 second of work by a sales assistant. So this is nearly pure profit. And how much did Glacier Media do in Q1 of 2013? 7.5 Million Canadian Dollars of bonus income to the newspaper group. Cool !!!!!!
We have the first sustainable business model for an AR solution in media. Enhance you advertising sales by Augmenting it. I love it !!!
Yes. Augmented Reality is definitely emerging as a new mass media channel. It is well on track to outperform mobile media in the equivalent amount of time. Talking of mobile media did you notice that Strategy Analytics counted mobile media to be worth 161 Billion dollars annually when they reported it in June of 2013. Thats bigger than recorded music worldwide. Its bigger than cinema, all movies Hollywood, Bollywood, Nollywood and all others - added together, including DVD sales and rentals and so forth. And 161 Billion dollars in media income is bigger than videogaming global revenues in 2013. Wait. Mobile media is bigger than music, movies AND videogaming - added together!!
That is where mobile media has gotten in 15 years from launch. If AR gets to about a Billion users by year 2020, it may well hit these kinds of revenue numbers when AR is 15 years old, by year 2024. To give a round number, I’d be happy to say 150 Billion dollars of AR revenues is my forecast for AR media in 2024. Counting backwards, that could be around 60 to 70 Billion dollars in year 2020.
Am I confident in my initial forecast. Yes. All published AR numbers so far are strongly consistent with 1 Billion users of mobile media by 2020. And again lets be cautious, lets say the revenue number in 2020 to be at least 50 Billion dollars globally. That would be a monthly ARPU of about 4.17 US dollars. Keep collecting those iButterflies.....