Brief:

• Apple bought U.K. special effects studio iKinema, a sign that the iPhone may be making a bigger push into augmented and virtual reality (AR/VR) technologies, the Financial Times reported. Apple confirmed the acquisition, but declined to comment on its plans.
• iKinema developed technology to capture movements of people to create more realistic animated characters in video games and virtual settings at a lower cost, according to a company description. 
• iKinema's RunTime software was integrated into game-development engines like Epic Games' Unreal Engine, and was used to create the "Star Wars: Secrets of the Empire" VR experience at Disney resorts, among other applications, TechCrunch reported.

Insight:

While a number of brands and games have created apps on Apple ARKit, Apple also faces significant competition from other AR platforms, including Google ARCore, Facebook Spark AR, Snapchat Lens Studio and Amazon Sumerian. Tech giants clearly see AR as playing an important role for connected experiences going forward, which means it will be critical for the major platforms to continue to try to enhance the experience for both developers and users. Apple's acquisition of iKinema appears to fit the bill by potentially making it easier for users to shoot video and create animated characters from it. 

The deal is the latest indication that the tech giant is more intent about creating software tools to help develop AR/VR experiences, including marketing applications like immersive advertising, retail showcasing and virtual samples of products ranging from clothing to cars. Apple two years ago introduced ARKit to spur the development of AR experiences in apps, and Apple CEO Tim Cook has predicted that people one day will have "have AR experiences every day, almost like eating three meals a day." 

Apple has made several acquisitions that indicate the company may be developing a hands-free AR headset that could replace smartphones for many people, as Bloomberg News reported in 2017. Last year, Apple acquired Akonia Holographics, a startup with more than 200 patents related to holographic systems and materials, including a "HoloMirror" technology that allows for "thin, transparent smart glass lenses that display vibrant, full-color, wide field-of-view images."

The consumer market for AR headsets has expanded in fits and starts over the years. Apple's main competitor in mobile operating systems, Google, ended its Glass Explorer program in 2015, but later relaunched the product as Glass Enterprise Edition for workplace uses. Microsoft and Magic Leap have touted the capabilities of their latest AR headsets, although their high-priced models are aimed at enterprises and developers. Consumer versions of AR headsets also are in development as the prototypes of Project Aurora and Nreal Light demonstrated at CES 2019. Focals by North went on sale last year.