Mixed reality apps will quintuple ad revenue to $11B by 2024, study says

Brief:

Mixed reality apps — or apps that have augmented or virtual reality (AR/VR) features — will more than quintuple their advertising revenue to $11 billion by 2024 from $2 billion this year as they reach audiences with more engaging mobile experiences, according to a new Juniper Research forecast shared with Mobile Marketer. Mixed reality apps will also triple their downloads to 10 billion by 2024 from 3 billion this year.
Social media apps like Facebook and Snapchat, which use AR/VR, and gaming apps like Niantic's "Pokémon Go" and "Harry Potter: Wizards Unite" will drive much of the growth in mixed reality downloads and ad spending. Social media and gaming apps that use the technology will make up more than half of the mixed reality's worldwide market value by 2024, per Juniper.
Three-fourths (75%) of the consumer market value of mixed reality will be attributable to in-app purchases in five years as app developers charge for premium content. App developers will need to continually update their apps to avoid losing users, Juniper said, as seen in the abandonment rate among the wider app market.

Insight:

Juniper's forecast suggests that mobile marketers will embrace mixed reality technology amid a confluence of advancements in higher-speed mobile networks, budding hardware categories like AR headsets and the popularity of social media and gaming apps. Already, app developers like Niantic are piloting location-based AR advertising in apps, giving small businesses a chance to sponsor locations that appear in games like "Pokémon Go" as consumers use smartphones and AR headsets to explore their surroundings.

As Juniper notes, social media companies like Facebook and Snapchat parent Snap have been at the forefront of creating sponsorship opportunities with AR. In the past week, retailers like Kohl's and Toys 'R' Us Canada have released AR experiences on Snapchat that aim to drive direct sales at their websites. Advertisers also can sponsor AR lenses that people use to decorate their selfies and pictures, supporting viral growth as Snapchat users share those images in the app. Ikea, Lowe's, Overstock and Wayfair are among the retailers that have incorporated AR technology into their own apps.

Smartphones currently are the main platform for AR technology, while VR often requires specialized equipment to provide a more immersive experience. As more tech companies release AR headsets that show computer-generated imagery overlaid on a wearer's surroundings, AR experiences can become more seamless than what smartphones offer on a small screen. Apple is forecast to release its first AR headset in 2022, followed by AR glasses in 2023, The Information reported this week, citing internal sources at the iPhone maker. Facebook in September also reportedly partnered with Ray-Ban parent company Luxottica to develop AR glasses that aim to replace smartphones.

Improvements to AR headsets may help to overcome consumer indifference that has led some tech companies to shift their target audiences to more niche audiences. Google ended its Glass Explorer program in 2015 but later relaunched the product as Glass Enterprise Edition for workplace uses. Microsoft's HoloLens 2 headset also is mostly intended for the enterprise market.