Augmented Reality Growth Fueled by Chinese Investments

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One of the new realities of augmented reality is this: the technology is attracting more investment from China than from sources in North America. This trend happens as activity around AR heats up, with major players in the digital economy apparently positioning themselves to profit as the retail-friendly tech move every closer to mainstream popularity.

According Digi-Capital, which tracks AR investments, China-based funding for augmented reality and computer vision technologies hit $3.9 billion over the last 12 months, surging ahead of North American investment.

There was no immediate apples-to-apples comparison for North America, but the company’s managing director, Tim Merel, wrote that “North American augmented and virtual reality investment fell from nearly $1.5 billion in the fourth quarter of 2017 to less than $120 million in the third quarter of 2018. At the same time, VC sentiment on virtual reality softened significantly.”

Investment Shift

The numbers describing those investments came about 10 months after Digi-Capital identified what Merel called “a fundamental shift from early stage North American (virtual reality) investment to later-stage Chinese computer vision/AR investment.

The AR appeal is dependent on consumers using the technology on their mobile devices, and Merel said that it won’t be until 2019 until mobile AR revenue “really takes off.” For now, “computer vision and visual machine learning is more advanced than mobile AR, and could see dominant companies in the near term.” Writing in TechCrunch, he added, “Firms are investing in more than 20 different mobile augmented reality and computer vision and visual machine learning sectors, but there is the potential for overfunding during the earliest stages of the market.”

A PYMNTS story from earlier this week considered what the upcoming deployment of the 5G mobile connectivity standard might mean for augmented reality, and found reasons for both optimism and caution about those prospects, at least the short term. But such apparent uncertainty is not holding back major players when it comes to AR.

AR Bets

Late this summer, for instance, Apple made a new bet on augmented reality, buying Akonia Holographics, which makes lenses for the technology. Apple bought the Colorado-based company for an undisclosed sum and, as is typical, did not details its plans for its newest acquisition.

Akonia’s HoloMirror technology enables “headsets that are thin, transparent and light-weight, while achieving high [field of view (FOV)] with low manufacturing cost,” Akonia said on its website. It holds 140 patents associated with “holographic systems and materials,” and employs many of the people behind those inventions. The company said that its “thin, transparent smart glass lenses … display vibrant, full-color, wide field of view images.”

PayPal, too, has made an AR splash earlier this year — and did so while also revealing little about its deeper vision for the technology within its payments ecosystem. It revived an old patent that focuses on augmented reality shopping in which virtual information would appear over real products in stores. One possibility? That PayPal wants to use the idea for payment-enabled glasses in the near term rather than down the road.

Goldman Sachs has estimated that augmented reality will drive $1.6 billion of retail annually by 2025, fueled by the shopping habits of some 32 million consumers. If so, it seems likely that Chinese investors will play an increasingly vital role in spreading the technology.

According to Merel, from Digi-Capital, “Chinese VCs have been focused on the long-term potential of the intersection between computer vision and augmented reality, with later-stage Series C and Series D rounds raising hundreds of millions of dollars. This trend increased dramatically in the last 12 months.”

Going by that, it seems as though the money will keep flowing, and it would be little surprise to see more companies make more bets on AR as it matures as a concept.

Source: PYMNTS

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