Apple acquires VR startup focused on virtual avatars for videoconferencing

Dive Brief:

Apple acquired the virtual reality (VR) startup Spaces for an undisclosed sum, a company spokesperson confirmed to Protocol, which broke the news.
Initially part of DreamWorks Animation, Los Angeles-based Spaces became a separate business in 2016, creating location-based VR experiences like "Terminator Salvation: Fight for the Future." With the shuttering of its VR centers due to the coronavirus pandemic, the company shifted focus to developing integrations for videoconferencing services like Zoom and Skype, allowing users to create virtual avatars to use in video presentations.
Spaces announced it was shuttering its VR business last week, with a post on its website stating the company was heading in "a new direction," per Protocol. Apple has made several acquisitions in VR and augmented reality (AR) in recent months, including buying NextVR, a VR livestreaming startup, in May.

Dive Insight:

Apple is highly acquisitive and the full implications of snapping up Spaces, which seems small compared to some of the iPhone maker's other bets, is not immediately clear. However, the pandemic could key into why Apple decided to move on a company that otherwise appeared to be in dire straits after seeing its core location-based VR business upended by the health crisis. Along with shutting down its VR centers, Spaces recently went through a round of layoffs, Protocol said.

But studies indicate that virtual events and conferences conducted over platforms like Zoom are here to stay, as concerns over large indoor gatherings are likely to linger even after the pandemic's impact cools. Apple, already heavily invested in AR and VR — the company has a highly anticipated AR headset in the works — could be looking to carve out a bigger piece of an emerging market, where event organizers and businesses will pay for more robust ways to connect people online. Virtual avatars represent the type of add-on that could unlock that type of engagement, even if their applications remain fairly rudimentary.

Apple at the same time continues to search for ways to diversify revenue beyond its core iPhone business, with services in the spotlight. Buying NextVR and Spaces follows Apple's acquisition last year of U.K. special effects studio iKinema and, in 2018, of Akonia Holographics, a startup with more than 200 patents related to holographic systems.

The expectation that industry confabs will remain in the digital realm in the near term is particularly high among marketers. Seventy-one percent of surveyed media and marketing professionals believe virtual gatherings and conferences will be the only option for businesses through next year, a study by The 614 Group revealed. Most respondents agreed that virtual elements will continue to play an important role in conferences even after live events return.

Conferences have grown to be an important way for technology firms like Apple, Google and Facebook get buy-in from developers, who create the types of services and apps that lead consumers to stick with those platforms. Apple conducted its annual Worldwide Developers Conference remotely for the first time this year, drawing an estimated 22 million viewers, according to AppleInsider.

Some of advertising's most important industry gatherings, including Advertising Week New York, are also virtual this year. CES, which has climbed higher on marketers' agendas as technology plays a more significant role in engaging consumers, announced late last month that the 2021 show will be conducted online. Apple made a surprise appearance at CES this year after nearly three decades of absence from what it is broadly viewed as one of the most significant stages in the consumer electronics realm.

Apple is among a number of Big Tech firms staying active in their dealmaking during the pandemic, which has resulted in an economic downturn that presents an existential threat for many small businesses and startups, but an opportunity for larger players to shore up their strengths. Apple earlier this summer acquired Mobeewave, a startup whose technology could turn iPhones into mobile payment terminals, Bloomberg reported. Contactless and mobile payments, which struggled for years to take off in the U.S., have found newfound traction as people look to avoid handling cash.