The Drive for XR Adoption

# 1170



In The Stinger Report #1170 – This issue covers in detail:

1. [TRENDING NEWS]

The latest Stinger Report charts the #XR arms-race, as the big releases from @Meta (#Quest3) and @Apple (#VisionPro) square off to dominate the ecosystem; meanwhile, industry professionals gathered at #AWE2023 – all new #VR and #MR developments are charted in this report.

2. [BREAKING NEWS]

Meta uses the XR event to reveal the latest in its Quest series of headsets, staking all hopes on a slim formfactor and updated features, along with a roster of new VR game apps that will hopefully ignite sales.

3. [BREAKING NEWS]

Apple throws its hat into the ring, with the Apple Vision Pro being one of the most anticipated technology launches. Apple is offering its vision of the AR scene and looking to plant a flag in the business with a platform that has a lot to prove.

….and much, much more!

- The Stinger Report, published by Spider Entertainment and its co-founder, Kevin Williams, is the leading interactive Out-of-Home Entertainment news-and-views resource, covering the immersive frontier and beyond.

The “XR” (extreme/extended reality) phase of development in the sector took center stage during May and June. XR is being seen as the natural progression of the immersive tech scene – being championed against that of VR. XR has the ability to offer both a complete virtual environment, and one that superimposes virtual elements over real-world imagery. This is achieved with either optical “See-Through” via glasses, or video “Pass-Through” via cameras – this encapsulates the aspirations of both VR and AR. While many also use the term MR (Mixed Reality) to describe the application, the overarching term of XR seems to have become the new popular descriptor.

- The Battleground for XR

The Augmented World Expo (AWE) USA 2023 took place at the end of May, entering June at the Santa Clara convention center in California. The event was celebrating its 13th year, gathering some 5,000 professionals in the augmented and virtual world business, to see some 300 exhibitors. The expo was fully embracing the XR ecosystem – beginning the starting pistol to a momentous couple of weeks, that would make or break this tech sector.

During the conference portion of the AWE’23 event, LBE VR was given a platform, including a session called “Opportunities in the growing LBE Market”. The panel included members of the sector such as VRstudios, Chicken Waffle, and SPREE Interactive – and the latter also used AWE to launch their latest game ‘CyberMosh Mayhem’, running demonstrations of the new multi-player VR game on the ‘SPREE VR Arena’ during the event.

The importance of LBE and commercial entertainment was underlined at AWE’23, with some 17-exhibitors from this sector, making their voice heard in this important business. Aspects included LBE VR represented from Talon Simulation, with their ‘Vortex’ VR motion simulator used in entertainment centers on display. But the company also promoted their commercial training with their ‘Strike’ XR platform, incorporating haptics along with the motion-platform.

Presented to the public for the first time was ‘Laser Limbo’ – a free-roam AR immersive battle game, which uses pass-through headsets to enable players to take part in a lasertag-style experience, including real and virtual elements. It was developed by FreeRoam.AR - marrying social interaction with immersive reality, in partnership with Enklu – known for their holographic theater work, developing experiences for entertainment centers and museums, such as with their ‘Unreal Garden’ augmented playscape (first opened in San Francisco). The ‘Laser Limbo’ demonstration mixed physical obstacles with virtual elements, and a fast-paced PVP game-style, with players wearing Meta Quest Pros.

New headsets abounded for the MR market, seen from Lenovo, Pimax, and PICO at the event, as well as from Varjo and Lynx, along with the award-winning HTC XR Elite. Qualcomm showed, during their presentation, a new MR headset using their latest ‘Snapdragon Space’ XR platform – from manufacturer Oppo, this was a development edition using the new processor. Qualcomm is becoming the de facto standard chipset provider for most of the XR standalone platforms, establishing their XR consortium, supporting 65 devices. All this is hoping to ignite a new arms race, ahead of the much-anticipated Apple XR entry. Meanwhile, on the AR side of business, there was the usual perfusion of hopeful systems, including from XREAL (formally Nreal) with the announcement their new ‘XREAL Beam’ AR glasses.

AR’s impact into the LBE scene has been seen in many examples, and the latest one was on display at AWE’23 with the launch of ‘Puttscape’ – a physical mini-golf course that has been augmented using virtual game elements which interact with the physical game. The players wear an AR headset while they play the golf game, with the added element of avoiding the digital features. This is a major development for mini-golf, which is seeing a growing popularity in the Competitive Socializing scene.

Another AR entertainment platform for LBE deployment was presented from ONTOP Studios – the company is releasing an AR arena game called ‘New Fantasy’, with up-to-six players using AR-enabled smartphones within a special arena, to compete in a fast-paced game, running, jumping, and dodging, while battling the arena’s central deities, to collect treasure and score points. The system has already been installed in several European venues, and is looking to roll out internationally, making its first trip Stateside. The frantic action was just one exhibit in AWE’s “Playground” area of the show floor.

Crowded AWE 2023 show floor [AWE]

AR has still proven to be a difficult tech to establish, and many hoping to see its mainstream adoption have only seen it faulter. This was evident from event sponsor and once poster child for the sector, Magic Leap, who’s current CEO spoke at the conference on the continued issues shaping the sector. The company has pivoted hard into enterprise, including healthcare, to try and survive and regain its eyewatering $2b valuation (the company recently saw a majority share taken in it by a Saudi fund, for $450m). Likewise, REK, the developer behind the ambitious LBE AR/VR experience ‘REKfitness’, revealed they had shut down the game and refunded 80-percent of the investment capital - blaming the cancellation on the game being "too early, the timing was off". This followed paid pilots at Two Bit Circus in Los Angeles.

There was a reveal during AWE’23 from Niantic, the AR specialists famous for ‘Pokemon Go!’, with their concept for a new AI agent called ‘Wol’ – an AR-based owl character developed in partnership with 8th Wall and Inworld AI. The AI character will be supporting users on their soon-to-be launched AR headset – at AWE’23 it was being demonstrated on a Meta Quest Pro during the event. The company had a prominent place at the event to promote its AR initiative.

As seen with ‘Pokemon Go!’, location-specific entertainment has found a strong home in the sector, using guests’ smartphones to view pass-through AR experiences. One such exhibitor with a background in these kinds of applications for marketing and heritage deployment was Imvizar – demonstrating at AWE their streaming platform for storytelling AR content, deployable at any location.

Regarding one of the game development studios which has worked in the AR and VR scene, part of a well-known movie studio development team underwent changes. Industrial Light & Magics’ development team, ILMxLAB, announced its restructuring under a new brand – now known as ILM Immersive. Originally brought together in 2015, the operation has worked on consumer VR with Meta, and AR with Magic Leap, as well as Location-Based entertainment with the likes of TheVOID. Now the new operation will be rebranded just as the ILM, and the LucasFilm division will undergo changes under the Walt Disney restructuring.

The AWE’23 show floor was more abuzz regarding what was not on display than what was. Speculation was rife about the Apple launch scheduled for a few days after the show. This development and the positive show-buzz hope to cement the event, which represents what Artillery Intelligence calculates to be a $38b XR market. Little did the eager attendees know that their high expectations were about to be sorely tested!

- Meta Doubles Down on MR

The first days of June saw a clamour of manufacturer events focused on promoting individual concepts to redefine what had been the VR landscape and attempts towards a new land grab of the XR horizon. During AWE’23, Meta decided to jump their original plans forward and announce, early, their ‘Meta Quest 3’ platform. The successor to the Quest 2 now offers smaller form factor, with a better display, faster Qualcomm XR2 processor, and new controllers. But all this comes for a higher $499 price point for the 128GB unit, compared to their previous headset.

Scheduled for a fall release, the announcement claimed some 500+ game and apps available, all backwards compatible with the previous system. The fact that Meta felt they needed to try and steal the headlines and crash ahead with the launch over AWE and, more importantly, ahead of Apple’s launch in the following week, told how cutthroat this phase of the VR scene has become. The ability of the new system to do pass-through and support MR seemed key to their strategy going forward.

Later, during the Meta Game Showcase, the focus was not on MR, but wholly on VR and games to be launched over the next 12-months for both Quest 2 and 3. Titles of interest revealed include ‘Samba de Amigo VR’ – the 1999 arcade property ported into an online VR experience by SEGA Corporation. Sony Pictures Virtual Reality and nDreams revealed more about their coming Ghostbusters VR experience for the Meta Quest family. The sequel to the popular ‘Arizona Sunshine’ property from Vertigo Games was shown with “not actual footage” of the game – even though the title has already been announced for PC and Sony PSVR2 release.

New look for Quest [Meta]

A VR game of the Netflix series ‘Stranger Things’ was revealed for the VR platform, and confirmation of the Ubisoft ‘Assassins Creed’ consumer VR release, even though the property has been available in VR for LBE for some years already. Some observers questioned the lack of titles showcased, with some missing properties previously promised (such as ‘GTA San Andreas’ from Rock Star), or any major defection by AAA studios to the Meta VR cause.

The Quest 3 announcement promoted “Meta Reality” (MR), attempting to highjack the MR term as their own, and building a wall against the overarching use of the XR term by the industry – all while seeming to relegate the term VR to the backwoods. Meta’s MR was supported by the Quest 3’s full-color pass-through technology, such as was released with the ill-fated Quest Pro earlier in the year. This was also reflected in the announcement that the original Quest 2 will see a price drop – as the system will continue to be sold alongside the new Quest 3.

Meta was working hard to try and deflect negative coverage after announcing a third round of layoffs of an additional 5,000-staffers. This sees a grand total of some 20,000 Meta employees having been laid-off during this massive round of axing. It was revealed that these latest layoffs directly impacted the operation’s VR and AR divisions. Many of those executives who had shaped Meta Reality Labs’ previous initiative in VR were now removed, as this high-stakes strategy became set on the reveal of the new headset, both ahead of Apple’s reveal and ahead of numerous leaks. Meta’s plans for a reveal later in September were abandoned to get their message out first.

One interesting aspect regarding developments at Meta, was the revealing of the reasoning behind the last-minute removal of the Depth Sensor from the recently-released Meta Quest Pro headset. Aimed at a commercial and prosumer market, it was revealed through various sources that the Depth Sensor camera had been removed from the hardware’s fabrication at the very last minute. It was now revealed, having been added instead to the Quest 3 hardware, that the reason for the Quest Pro change was regarding concerns that the system allowed “X-Ray Vision”, seeing through clothing of those looked at. Whether this issue has been addressed with the latest hardware has yet to be revealed.

- Apple Enters the XR Ring

The real hotness in the market has been the speculation on the deployment and release of Apple’s entry into immersive technology. The industry is expecting their focus to be on the “XR” market, and the corporation has been working for over four-years on its own headset. This is a project championed by the corporation’s CEO and was finally revealed to the public at an eagerly anticipated Apple Worldwide Developers Conference (WWDC) 2023 – only a matter of days since AWE’23 and Meta’s Quest 3 announcements, the speculation of Apple’s entry into the sector threw a shadow over those events.

What Apple revealed was, however, not what many had anticipated, or the hype-train promoted. In the famous “just one more thing” part of the presentation, heavily drawing from previous founder’s famous catchphrase, the corporation’s CEO revealed the ‘Apple Vision Pro’ – looking like skiing goggles, the system proffered a cornucopia of expensive technologies, from the per-eye 4K micro-OLED displays, with face/eye-tracking, to the carbon fibre frame, and M2 chipset processing, supported by a R1 chip for the pass-through AR sensors (LiDAR, IR and camera), all linked to wi-fi.

This shape of things to come! [Apple]

All this comes with an inevitably-high price tag, starting at $3,500, available for sale at the beginning of 2024. This is some $500 more than online speculation had suggested. But the other big surprise was what all this expensive tech offered. Not the XR utopia that had again been speculated, but an AR-focused approach – not with the ability to mix VR and AR, but just to offer a standard 2D AR experience of overlayed Mac OS apps now presented spatially. Spatial computing was the focus of this presentation, with no live applications shown, but a selection of slick Apple-style pitch video sequences. Later, selected journalists would be given a short un-filmed demonstration that underlined the wholly AR-focused nature of the system.

The whole ecosystem is supported by Apple’s new ‘visionOS’ spatial operating system – shown on workplace apps, allowing floating displays, and the ability to view photos spatially (the Vision Pro is envisaged as a replacement for displays and, eventually, MacBooks and tablets). While no games were shown, the consumption of entertainment was represented by the “big screen” style viewing of movies, seeing Apple partnering with Disney to have access to their library of Disney+ movies and ESPN sports content. All achieved through a finger-tracking interface, the Vision Pro does not include controllers, and only supports a short two-hour battery life – an interesting approach for productivity. Most surprising, the form factor goggles do not allow for glasses (although there will be some special Zeiss optical inserts available for an additional fee). This is a first-generation platform, something not seen from Apple for a long time. The last major launch was some 15-years ago, with the Apple Watch.

On news of the launch, Apple stock prices reacted to the announcement – while much of the reaction from the VR and XR community was consternation and surprise. That Apple had doubled down on AR rather than an MR or XR environment, seemed characteristic in ploughing their own furrow. Some are feeling that, rather than being Apple’s iPhone moment for XR, this was Apple’s GoogleGlass moment, from 2013 – redrawing customer expectations for this technology. It was more than obvious this hardware was not for general consumption, with the high price, and the exotic technology will limit production plans – internal sources say they only expect to sell a million units in the first 12-months’ sales of this “prosumer” device. As with the ill-received QuestPro, this was seen as a devkit – a pathfinder that will lead towards a future ‘Apple Vision Lite’ release, if the initial experiment is successful.

Overall, this felt like a strategy of “dipping a toe in the water”, evaluating the thirst from the consumer base for this AR platform, and then supporting it with a wider product lineup – reasoning the developer conference revealed. The natural progression for “Spatial Computing”, but avoiding any association with the VR, MR or XR landscape, is a body blow for those in VR hoping to see Apple’s entry validate their efforts or offer a lifeline to poor retention of users (as has been seen with the drop off on the Quest 2). It felt more like Apple hit the reset button on expectations about wearable computing and has cut adrift the VR standalone market to find their own path. Live demonstrations of the ‘Apple Vision Pro’ will validate if the hype for the hardware was warranted, or if this is AR’s second GoogleGlass moment!

That urgent need to grow the VR/AR market is reflected in the NPD Group market estimates that claim, during 2022, only 9.2m headsets were sold globally, adding to the $1.1b market worth in sales of the VR sector. This is far less than had been speculated back in 2014, when major investments came, such as the Meta (then Facebook) founder acquiring Oculus VR and making their $100b gamble on growing the VR landscape. At which time, the Meta founder claimed they would achieve 1-billion users on their VR platform by this point. These are speculations that seem to have fallen well short, especially as internal reports at Meta see users becoming bored of their headset purchases and moving on, as retention falls.

For Apple, they do not want to enter the consumer VR sector, that has become mired partly in the toxicity of certain manufacturers’ behaviors, focusing on what they envisage to be the untainted AR landscape. In what some had wrongly called before the launch, the “iPhone moment for XR”, Apple turned the clock back to 2013 and released their interpretation of what AR should offer – side-stepping completely VR and gaming for the time being, and focusing on productivity and even a more nuanced enterprise approach.  

Now the dust settles, and the combatants have revealed their hands – it is now up to the devs and consumers to bite. It is essential that sales accelerate in hardware adoption, to avoid the limbo that VR and AR in the consumer sector has experienced, unable to achieve the grandiose promised adoption rates. But also, a serious need for user retention – a failure of these XR platforms to grow the market will have major repercussions.

This concludes our latest Stinger Report, we thank all our subscribers and advertisers for their support, and the next report will follow shortly.