There Are Some Early AR Numbers - All Looking VERY Good for Augmented Reality

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.....

Comments

[Vladimir K]

Hi Tomi,

If I agree with you that AR will take a great place of our lives and of the economy, I’m not as enthusiast as you about its benefits for people on the long term. Of course, it will let us to get more information, more quickly, more easily (i.e. user friendly), but do we need that, and is it good to us ?
Call me retrogressive, but each revolution gave to the humanity benefits, but also issues.

I’ve read few books of doctors, of scientists who agree about the fact that many diseases come from these revolutions. Humans became less and less active, used more and more processed food, move less and less ; in short, I think we can say humans become lazier and lazier (use of a cars or other means of transport, even for short journeys, food is bought, not hunted or picked, machines replacing humans etc.).

Now we’re in the “super-information” era. We get a lot of information very quickly. In some ways, it can be good, as we’re better informed.

For example more people are informed of fore coming storms, of events happening in the other side of the world, of the delays in transportation systems, of good/bad quality of products without having to buy them… so in one hand, it’s cool. In another hand, we know this easy and fast access to information leads to problems.

Too much and too fast = not enough time to double-check information, so how can we be sure it’s reliable ? See, more and more journalists just copy-paste tweets or other articles, most information nowadays is unverified. Is it still good ?

Talking about social networks, I remember a South Park series about Facebook, which was quite true ; nowadays, one has to have a FB (or twitter account), and to use it. And then, one is aspirated in the spiral of people tweeting, posting, instagraming every 20 seconds, and don’t even think of not answering a tweet, a poke, a comment… don’t even think of not “liking” pictures of friends you never met in reality. All this is time consuming, a time not used reading, discovering, creating… living.

Some Swiss/British studies pointed out a correlation between information and depression. Can you imagine that we’re in general more depressed than our forebears, who witnessed world wars ?
That’s quite weird when you think about it.

So again, call me regressive, but I fear that like with all past revolutions, AR will give us some advantages, but no less abuses, and that’s why it will be successful.

[Chenobyte]

@Vladimir K

You make several excellent points and I agree with you on all except those relating to the use of Facebook and Twitter.

You do *not* have to use these to function successively in the world today - despite what "they" all say.

I know many many people who want and have nothing to do with either of those or the social network (d)evolution as a whole - and as one of them I can promise you that this in no way effects my quality of life or my work (I'm an IT consultant so you'd think I'd be all over this).

It is the ultimate case of the Emperor's New Clothes - at some level everyone knows how stupid and pointless it all is but no-one wants to say anything.

I feel ashamed that after 2 million years of evolution and these incredible bio-computers in our skulls we spend it tweeting empty nothings about trivialities, watching youtube videos about babies falling over or playing "Farmyard" (or whatever its called).

I just hope whatever's coming next has more value to the race as a whole - if it's AR then great.

But I fear as you do, that this will come with many side effects.

[Vladimir K]

@Chenobyte :

What I describe about Facebook and Twitter is the caricature made by South Park : Stan is mocked because he doesn't have a FB account, so his friends create one for him. Then it's a spiral as people around shout at him because he didn't add them as friends, or didn't reply to pokes.

That was 4th episode of season 14 if I recall. Despite caricature, it's unfortunately still close to the reality.

I'm in IT too, but I have to admit that my best holidays were spent without computer, telephone or even TV ; the only piece of technology I allow is a Michigan's V8, preferably in a convertible Mustang to please my wife and myself.

Again, all these technologies are nice, but have serious side-effects

* About Twitter : well of course you're not obliged to, but I had to create an account just for Jolla, as it's the only channel they use correctly (on twitter, answers come in minutes, by support, they come in... weeks).

P.S. why do we twEEt on twItter ?

[Nhick]

Great numbers and still counting eh.. Keep us posted.

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[Winter]

All of the mega successes, facebook, twiiter, whatsapp, sms, were about communicating with peers.

So, the most likely killer application in AR will revolve around communication. Say, sharin yoir current experience, e.g., Google glass like.

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