Augmented Reality Reached 3 Billion Dollars in Annual Revenues, Powered by Pokemon Go

Augmented Reality will be the next mass media.

WHAT ARE THE 7 MASS MEDIA?

So AR will be a mass media. That will be the 8th mass media in chronological sequence. Print was first, then came Recordings, Cinema, Radio and TV. These 5 'analog' legacy media are well known and all classic mass media studies cover them well. Print is the basis of such giant industries as newspapers and magazines, books, posters and more obscure smaller printed media like playing cards and post cards (remember those?) etc. Recordings was first only the music recording industry but expanded later to include the videogaming industry which now towers over music by size. Cinema was said to kill print. It didn't. Radio was supposed to kill the record industry. It didn't. And TV was supposed to kill cinema, print and radio. It didn't. All five legacy mass media still survive today but when a new mass media came along, they adjusted.

The internet (or more accurately the WorldWide Web evolution of the internet) became the sixth mass media and it was the first inherent-threat mass media - the internet could destroy and cannibalize all of the previous media. Note this was never true before. For example you could not sell music through the traditional broadcast TV network. The internet has done a pretty good number on the old media too, in particular the music recordings industry that has been devastated by the internet. Still, the other media mostly adjusted and none are actually dead yet. The internet introduced several new elements to mass media such as sharing and interactivity. 

Then we have the current champion, mobile. Mobile became a mass media when the first music downloads to mobile emerged out of Finland in 1998 (originally the basic downloadable ringing tones). Mobile media today is far larger than the recordings industry, radio, cinema and the internet. Mobile is now catching up to in size to the print and TV industries and will pass those soon. Mobile media is worth 407 Billion dollars annually (says the TomiAhonen Almanac 2017) and that is not 'smartphone apps'. Apps are only a small fraction of the mobile media revenues. Like the internet, mobile is an 'inherent threat' mass media because mobile can do what all previous SIX media could do - including now the internet. It means mobile can cannibalize all previous six. Note that this does not go the other way. The internet (PC based internet, legacy internet) cannot cannibalize mobile. We see this in the numbers too, even the USA, online PC/legacy internet revenues are flat or declining but mobile revenues are skyrocketing. Mobile as a media is nearly twice as big as the older internet as a media channel already.

AR IS 8TH MASS MEDIA

And that gets us to Augmented Reality. Note first, that VR Virtual Reality has nothing to do with AR. They are regularly mentioned together. VR needs the specal headgear like an Oculus viewer and you immerse yourself into that environment to take some virtual reality journey. It is good for gaming and some education and training purposes. VR is not and will not be a mass media by itself. It will be a MEDIA FORMAT for recordings. It will be a FORM of videogaming. VR will be a SUBSET of videogaming, which itself is a subset of the Recordings industry, the Second Mass Media channel. VR will never be as big as AR. And VR will not be universally used like a mass media would. VR may some day be common in many gaming households (time will tell) but AR is already today far larger and far more used and making tons of money. So don't mistake these two. Don't think because there is a letter R in both words, you should think of them as a group. They are not. VR is a niche play. AR is a mass market play. Its like Apple Watch vs a smartphone. VR will be for geeks mostly (initially). But AR is for the masses.

Augmented Reality? We all now know what it is thanks to Pokemon Go. I wrote earlier that Pokemon Go is the most successful game in history (for this point in time in its launch from zero) and has broken all records in downloads and revenues earned so far. Pokemon Go reached 500 million downloads in four months and made its first Billion dollars in only 7 months. It has now just announced its 650 millionth download and keeps growing. You may hear silly stories saying some users are tiring of the game - this happens in EVERY GAME. That doesn't take away from the fact that we are witnessing a more massive launch than Angry Birds. Pokemon Go is literally the most successful game launched in history. And it is obviously a game for mobile and it uses Augmented Reality so it is also an AR game.

While many discovered the magic of AR via Pokemon Go, that is not the start of the AR journey. This blog has been chronicling AR from literally its beginning via such pioneers as Layar and the iButterfly. My TEDx Talk in Hong Kong was about AR (has had over 30,000 viewings and many say its the must-see TED Talk about AR). I explained how AR will become a mass media. Now when you consider Pokemon Go and you watch that video, you can see the elements of Pokemon Go are all in that talk I gave years ago. I made a prediction back then that AR will become a mass media. That AR would be the 8th mass media. This is not my invention, Raimo Van der Klein actually came up with that point, I just adopted it from Raimo. And now for the year that just ended, we are having meaningful numbers we can start to report. We have enough data that we can report the annual revenues of AR. I added the AR chart to the 'Other Services' chapter and measured that AR today is worth 3 Billion dollars worldwide. Here is the chart from the Almanac (it was the most requested chart in my vote where I gave out 3 charts for free out of the Almanac)




Augmented Reality Revenues Globally $3 Billion USD in 2016 
Source TomiAhonen Almanac 2017
This chart may be freely shared

Now if you want to read more about Pokemon Go and my recent analysis of its global phenomenon especially its metrics, go here.

If you want to read more about the first 7 mass media, read my book about it called.. Mobile as 7th of the Mass Media

And if you want to see all the data about mobile media today, including AR, then read the TomiAhonen Almanac 2017

Comments

[Tomi T Ahonen]

Hi Wayne

And very good thoughts indeed...

We had this debate all those years ago with Raimo van der Klein when he first argued that AR will be the 8th mass media. I then said that AR is a 'media format' on mobile like a ringing tone or downloadable logo or game or app etc. And if AR was limited only to mobile as its platform, then it would only contribute to mobile's media portfolio much like how say 'music TV' music video is a native format for TV (later of course also deployed on internet and mobile). But you can't show music videos on radio or in a newspaper. And while technically you could show a video in a cinema, that is utterly commercially impractical to bring an audience in for 3 minutes for this song, then the next audience in for the next song haha...

But yeah. The argument that Raimo used to win me over (That AR is its own media channel and not only a format on mobile) is that AR can be enjoyed WITHOUT a mobile phone or device. Typically a Playstation Portable or a tablet today but also various AR goggles/glasses (like Google Glass was briefly) and AR can also be enjoyed via sound - again which does not require a mobile phone or 'mobile device' but can be enjoyed via another sound device. Also while AR often is triggered from the cellular network inputs like location (Pokemon Go, iButterfly, Layar) then there are tons of AR uses that are triggered with other ways such as a QR code or image (Ikea catalog for example).

To the degree 'which should we count it in' - that is a separate argument and also a valid one. If you show music on TV, is that counted as music industry (recording industry) or TV industry. A music video? Is that still in the recording industry or only TV industry. And are we double-counting that when we count the sizes of the global music recording industry and the global TV broadcast industry haha. Same will be true of AR, we can count at least most of AR early revenue directly as 'mobile content' revenues, and most of it will be delivered through an app, likely could be counted as 'app revenue' and many AR solutions will be games - could be counted as 'mobile games' and then again we have double/triple counting problems.

Here is where AR becomes its own mass media - if it has a mass audience (is not a niche market like say airplane seat TV screens). And if it has a unique delivery system and/or business system. So take TV and radio. Both are broadcast media. Both work technically on a similar way (old analog broadcast TV, to simplify things) but obviously TV transmits pictures. Now your home radio receiver will not display the TV signal and your TV receiver will not play the radio sounds (unless you had a special TV that included a radio tuner - those did exist but then the FM radio part was its own separate unit latched onto the device). So for AR... At the moment we are still too small by reach that it is not a mass market - but its getting awefully close. It will be a mass market by size by 2020 easily.

Then does it have its own delivery system/tech. Yeah. But you can use a mobile phone for many/most AR cases to consume it - but you can also use other gadgets. And does it have its own tech that is needed where the AR content is not visible on the 'non AR' mobile media - think of black-and-white TV vs color TV. The older b/w TVs could still play the newer color broadcasts but obviously they'd see it in b/w. But on AR, you won't see anything if you just point your phone at the AR content (Pokemon Go character) if you don't have the right equipment & app etc...

So going again with Pokemon Go. If you think of TV or say print - outdoor billboard advertising - you CAN have a QR code or bluetooth or whatever interactivity on your billboard and get consumers to interact with that media (use AR as an enhancement to existing media, ie a billboard poster). BUT what of the Pokemon who is floating over the lake? There is No OTHER media there! It is not enhancing any other media... but it can be discoverable by AR. And again, don't limit to cellular. Take the Audi driver's handbook. It is based on camera recognition. So it doesn't have any cellullar connectivity, the AR app recognizes the image - that is the engine - and then tells us how to change the oil. So this is going where no other media EXISTS which means... it has to be a unique media by itself. It cannot be 'only' an enhancement of an existing media, even if much of the current content is...

Howzat for a start?

All you other readers? Come join in. Lets talk AR...

Tomi Ahonen :-)

[jp]

First a short introduction that I have been following up this blog silently for a six years, so you are providing good value Tomi. Thanks about it! (I have even read most of the bond stories..)

About AR. Previous medias have been also overlapping (movies, tv, internet, mobile, etc) and so will those that will come later. I think that it is a good point what Raimo had used there: is its own media channel if it can used without the limitations of the previous media. Like AR can be enjoyed WITHOUT a mobile phone. But alone it is not enough. Will it be the 7th mass media, or just 'feature enhancement' ? That will the future tell. If it will stay small, then I guess that we should call it rather as a enhancement, but now there are already strong signs that it will be huge. I will expect that AR will take up very much in cockpits (cars, planes), and glasses (what google already) demonstrated. There is so much information that can be used to enrich reality. e.g. Who is that person, what that will cost in next store, how this is used, etc.

For Tomi I would have also one question, that is bit related to this. I haven't noticed that you would have commented too much about those voice assistants that are coming up here and there (Alexa, Google Now, Siri, Cortana, Samsung Viv, and many others.. even opensource mycroft). They are very much related to mobiles, but also working alos. Where you put those, and what you think about their future ? Would they be 7th mass media and AR the 8th?

[Andy]

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