VR & AR in Consumer Goods: Thematic Research: Technology

Thematic Research: Technology
VR & AR in Consumer Goods

21 September 2020 GDCG-TR-S012
VR & AR in Consumer Goods | 21 September 2020
| Contents
Executive summary ...................................................................................................................................................... 3
Players .......................................................................................................................................................................... 4
Trends .......................................................................................................................................................................... 6
Technology trends ............................................................................................................................................................ 6
Macroeconomic trends .................................................................................................................................................... 9
Regulatory trends .......................................................................................................................................................... 11
Consumer trends ............................................................................................................................................................ 12
Industry analysis ..........................................................................................................................................................14

Market size and growth forecasts ................................................................................................................................. 14
Impact of VR and AR on FMCG, retail, and foodservice ................................................................................................. 14
The impact of COVID-19 ................................................................................................................................................. 17
Use cases........................................................................................................................................................................ 24
Mergers and acquisitions ............................................................................................................................................... 28
Timeline.......................................................................................................................................................................... 29
Value chain ..................................................................................................................................................................30

Semiconductors .............................................................................................................................................................. 30
Devices ........................................................................................................................................................................... 33
Headsets ........................................................................................................................................................................ 35
Companies ...................................................................................................................................................................37
Public companies ........................................................................................................................................................... 37
Glossary .......................................................................................................................................................................40
Further reading............................................................................................................................................................41
References ...................................................................................................................................................................42
| Our thematic research methodology ........................................................................................................................44
| About GlobalData .....................................................................................................................................................46
| Contact Us ................................................................................................................................................................48
WWW.GLOBALDATA.COM © GlobalData Plc 2020 | 2

Executive summary
What are VR and AR? Inside
AR and VR technologies have the ability to transform numerous industries,  Players
including FMCG, retail, and foodservice, by creating new ways of marketing,  Trends
offering entertainment, and staff training, and by enhancing product
packaging to improve consumer experience. Augmented reality (AR) and  Industry analysis
virtual reality (VR) are forms of alternative reality. AR refers to a technology  Value chain
that overlays digital data on to the real world, whereas VR means the user is  Companies
completely immersed in an entirely artificial world.  Glossary
 Further reading
How can FMCG companies, retailers, and foodservice industry
 References
benefit from VR and AR?
FMCG companies, retailers, and foodservice outlets have mostly been using AR  Thematic methodology
and VR technology for marketing reasons. However, they also allow consumers to
try out products virtually before purchasing them, be it wall paint, make-up,
________________________________
glasses, or clothes. Other uses of AR and VR in these industries include
gamification, product demonstration, virtual tours, staff training, and enhanced
packaging.
During the coronavirus lockdown, some restaurants have used AR applications to Related reports
help consumers feel like they are enjoying a meal in the establishment, even  Thematic Research: Virtual &
though they are eating in their homes in reality. Augmented Reality in Retail and
FMCG
The leading technology players
The following companies will benefit from wide AR/VR adoption:  Thematic Research: Virtual Reality
(2019)
Platforms:  Thematic Research: Augmented
 Google, Magic Leap, Microsoft, Facebook, Sony, and Valve have first-mover Reality (2019)
advantage in VR/AR ecosystems.
Components:
 Key suppliers include Himax (display drivers), Largan (miniaturized Report type
lenses), Goertek (sensors), and AAC Tech (miniature audio)
 Single theme
Semiconductors:
 Multi-theme
 Leaders in high-end chips capable of immersive experiences include Nvidia,
 Sector Scorecard
Intel, Qualcomm, and AMD.
The leading FMCG players:
If VR/AR becomes mainstream, the following companies should benefit:
 L’Oréal, Ajinomoto, Anheuser-Busch InBev, Estee Lauder, Kellogg.
The leading retail players:
If AR/VR becomes mainstream, the following companies will benefit:
 IKEA, Amazon, Wayfair, Lowe’s, JD.com, Target, EBay, Best Buy
The leading foodservice & packaging players:
If AR/VR becomes mainstream, the following companies will benefit:
 McDonald’s, Starbucks, Sodexo, Stora Enso, Ball.

Players
VR technology immerses the user in an entirely artificial world and can be used for personal or professional use.
Special equipment is required, such as headsets and gloves, fitted with sensors to stimulate the user’s physical
presence in a 3D environment.
Technology companies are regularly working on expanding the VR ecosystem and on positioning it as the next major
computing platform, after smartphones. Market leaders and challengers in each segment of the VR value chain are
listed below:
Who are the leading players in the VR theme, and where do they sit in the value chain?
Source: GlobalData

AR is still developing but is beginning to move into the mainstream. The big tech companies are trying to develop
sustainable AR ecosystems to gain an early foothold in the potentially lucrative market, while specialist firms are
focusing on areas like content development. The market leaders and challengers in each segment of the AR value chain
are listed below:
Who are the leading players in the AR theme, and where do they sit in the value chain?
Source: GlobalData

Trends
The main trends shaping VR and AR over the next 12 to 24 months are shown below. We classify these trends into four
categories: technology trends, macroeconomic trends, regulatory trends, and consumer trends.
Technology trends
The table below highlights the key technology trends impacting VR and AR.
Trend What’s happening?

AR as the next big AR could be the next big computing platform. Ultimately, AR glasses of some sort may
computing platform replace the smartphone as the primary connected device that users carry around with
them. Users could eventually be wearing a pair of glasses with the computing power of a
smartphone, activated by their voice, which recognizes what they see, where they are,
and the context in which they are operating. While such a world is several years away
from reality, first-mover advantage in AR technology will be a game-changer. This is why
all the large technology companies are taking it so seriously. Apple, the world’s most
profitable smartphone maker, is potentially the most vulnerable in the longer term.
5G The bandwidth limitations of current telecom networks are a major factor restricting AR’s
growth. Non-AR gaming requires latency of under 100 milliseconds for an acceptable user
experience, while AR gaming requires latencies of less than 20 milliseconds. Thus 5G’s
expected latency of 1 millisecond should deliver excellent experiences for AR
applications, including gaming and streaming of live events. The first 5G devices are
starting to hit the shelves in some countries. Samsung’s Galaxy S10 5G smartphone,
launched in February 2019, promises graphic-rich AR with minimal latency issues.
Qualcomm, in collaboration with Acer, LG, and Sprint, has plans to bring phone-powered
AR headsets with 5G network capabilities to the market by the end of 2019. With telcos
eager to make the most of 5G, there has been a spike in partnerships between telcos and
AR companies. Niantic, for example, is collaborating with Deutsche Telekom to bring its
Real World AR gaming platform to the telco’s 5G network.
AI The growing pervasiveness of AI techniques – particularly machine learning, context-
aware computing, and natural language processing (NLP) – across the expanding breadth
of VR applications is enhancing the intelligence of virtual characters and delivering a rich
immersive environment. AI’s impact on VR can be gauged from recent developments. For
example, Google’s machine learning tools add 6DoF controller-tracking capabilities to any
standalone headset with a pair of cameras, while Facebook’s DeepFocus framework uses
AI to create focus effects in VR that mirror real life, and LG is using AI to minimize motion
sickness for VR users. Microsoft opened an AI and VR incubator in China in 2019, and
Nvidia launched a graphic design tool that uses AI to render 3D virtual worlds. Chinese
tech leaders Baidu and Tencent are also working on developing mobile solutions and
video games that combine AI and VR.
Machine learning Machine learning (ML) is an application of AI that gives computer systems the ability to
learn and improve from data without being explicitly programmed. AR apps can use ML
systems to improve their user experience (UX) by continually analyzing user activities.
Apple’s CoreML 3, which powers the ARKit 3, enables developers to run ML models on
iOS devices, improving object recognition in photos and gesture recognition. Like Apple,
Google also offers ML tools (such as MLKit and Tensorflow Lite, a deep learning
framework for on-device inference) to help developers create engaging AR content.
Eye tracking and facial recognition, which are fast becoming standard functions across all
AR hardware platforms, typically use ML systems to continually improve UX. As mobile
AR develops, there will be a greater demand for ML systems to be smaller, faster, and
more accurate, often being embedded into the device itself, rather than running on the
cloud.


Conversational Smartphones today typically come with virtual assistants integrated into the operating
platforms system. AR headsets and smart glasses are beginning to incorporate similar capabilities.
Microsoft’s Cortana in HoloLens 2, Amazon’s Alexa in Focals by North, and Google
Assistant in Bose AR smart glasses are just a few of the early iterations of voice capable
AR devices. AI-powered, voice-activated virtual assistants enable hands-free operation of
the device, which can be critical for some AR apps. In-game voice control is expected to
arrive for many AR apps over the next three years. Combined with gesture control,
conversational platforms will make the AR experience more seamless.
Despite being one of the hottest themes in consumer electronics, conversational

platforms have been largely ignored in the VR space. Facebook introduced Oculus Voice
in 2017, but the service was basic, with just four commands (cancel that, recenter, find,
and launch). The limited functionality meant Oculus Voice suffered in comparison to
popular virtual assistants like Amazon’s Alexa or Google’s Assistant. In April 2019,
Facebook announced plans for a new voice assistant on Oculus devices but did not give a
release date for this feature. Google has yet to integrate Google Assistant into Daydream
VR and Lenovo’s Mirage Solo, the first self-contained Daydream headset. The lack of
credible alternatives represents an opportunity for Amazon, which has incorporated Lex
(the technology behind Alexa) into its Sumerian VR/AR managed service.
AR cloud AR cloud refers to a real-time 3D virtual map overlaid onto the real world. It allows
multiple users and devices to share AR experiences. In the jargon, AR cloud promises to
enable persistent content (i.e., virtual content tagged to real-world objects or locations)
for use by multiple users, either individually or collectively.
For example, AR cloud technology can create an indoor navigation system for a retail
outlet, allowing a customer to be guided along a virtual path to all the vegan products on
a supermarket’s shelves, providing the customer nutritional data about each product and
saving the customer time by not having to scan the majority of products to find what she
wants.
This makes it attractive to social media platforms where real-world items can be tagged
once and shared many times. Brands will be able to use AR cloud to engage customers
with more immersive, interactive experiences. Retailers will be able to make it easier for
shoppers to find products.
Real-time tagging of virtual content to physical locations will propel AR beyond the
boundaries of devices, and make the AR experience more natural and intuitive. Google,
Apple, Microsoft, Facebook, Amazon, Magic Leap, Samsung, and Niantic are all heavy
investors in AR cloud. Following the release of Android 10 in September 2019, Google
introduced an update to ARCore that allows users to generate, share, and save persistent
AR content in public places for multi-user experiences.
AR cloud is a nascent technology and requires precise localization data and a low latency
internet connection. Access to 5G technology will, therefore, drive growth in AR cloud.
Integration of cloud and Cloud technologies promise scalability to VR vendors. As VR-generated data increases in
VR volume, cloud services will store apps, data, and memory in virtual servers and stream
them on-demand. This should enable VR designers to drive innovation and service
updates in an uninterrupted continuous cycle. Low latency, frictionless cloud-native apps
will improve customer satisfaction with fresh VR updates. Today’s cloud market leaders –
Amazon, Microsoft, Google, and IBM – are expected to benefit from the integration of
cloud and VR in the coming years as VR companies will increasingly subscribe to their
cloud services. In China, Alibaba, Huawei, Tencent, and Baidu will also grow as a result of
the association between cloud and VR.


Data visualization Data visualization is an emerging enterprise use case for AR. IBM, in 2019, introduced
Immersive Data for iOS, an AR visualization tool that allows scientists and executives to
visualize data in interactive 3D formats. It aids in the identification and extraction of
trends and patterns, empowering decision-makers with more granular and insightful
details.
Virtualitics is working on 3D multi-user visualization, where users can see, interact with,
compare, and manipulate data collectively.
Contact lenses AR-capable contact lenses are being developed and could turn AR into a more natural,
intuitive, and accessible utility. A combination of voice control and eye movements would
enable the user to view weather and traffic updates or walking directions right in their
line of sight without any visible eyewear. Samsung gained an AR contact lens patent in
2016, with Sony moving into the same area in 2017. Microsoft is also reportedly investing
$2m in this technology, while start-up firm Mojo Vision has raised more than $100m in
funding for microdisplay technology that could potentially be used in contact lenses.
While activities in this field are gathering pace, concerns remain over standalone
operability, safety, the ethical implications of this kind of invisible technology, and
consumer’s willingness to adopt.
Occlusion AR technology allows users to see the real world overlaid with a layer of digital content.
Occlusion – which refers to the effect of one object in a 3D space blocking another object
from view – is therefore a major issue for AR developers, as virtual objects can become
hidden behind real things.
Most AR systems currently lack depth-sensing capabilities that would allow the devices’
cameras to accurately locate the position of a real object in 3D space and ensure that
virtual objects were placed in plain sight. However, several initiatives are underway to
tackle the occlusion issue. Apple, for instance, introduced People Occlusion in ARKit 3,
which allows virtual objects to appear in front of or behind people. Niantic has acquired
Matrix Mill, which has developed software that allows smartphones, even those with
only one camera lens, to more accurately measure depth. Overcoming occlusions will
become increasingly important as AR companies look to provide more realistic,
immersive experiences.
AR payments AR is entering the fintech sector by enabling frictionless payments. Start-up Curve is
working on an AR-based payment system that identifies the point-of-sale (POS) terminal
using a smartphone camera and allows users to pay for items using a virtually imposed
credit card. PayPal is working on smart glass-based AR payments, while Ant Financial’s
Alipay mobile payments app already has AR functionality.
VR app development VR apps are proving increasingly popular. In 2019, VRChat – with four million registered
accounts – boasted more than 10,000 daily peak concurrent users, while at the time of
writing Astro Bot Rescue Mission had over 58,000 watch hours on Steam. Beat Saber
became the first VR game to record sales of over a million copies, while Google Earth and
BigScreen VR became popular non-game VR apps. Facebook accounts for the most
premium apps on VR at the time of writing, while HTC is the only VR company with an
app store subscription service, introduced in early 2019. Google has not moved as quickly
and its Daydream VR is losing out to Oculus and HTC Vive on the app front. Facebook
offers more than 1,000 apps on Oculus Go, and HTC Viveport Infinity has more than 600
VR apps and games available on a subscription basis. In contrast, Google has
approximately 250 Daydream apps. Although VR apps are mostly gaming-oriented,
enterprise use cases for VR are creating new opportunities for VR app developers. App
development is taking place across communication, mobility solutions, employee
efficiency, and customer engagement. Due to the increase in interest, companies such as
Unity, Amazon, Qualcomm, and MindMaze are also offering application programming
interfaces (APIs) and SDKs for developers.


3D audio VR display technologies have improved over the years, but audio has generally been
overlooked. The growing demand for untethered headsets, along with the inherent
limitations of human eyes, have necessitated the synchronization of visuals with 3D audio
for a truly immersive experience. Digital signal processors (DSPs), which improve audio
quality and also make devices more powerful at the edge by reducing dependency on
network connections, are becoming standard requirements in the VR market. Established
players in the 3D audio business, such as Dolby Labs, Panasonic, and 3D Sound Labs
(acquired by Mimi Hearing Technologies in April 2019), are exploring new growth
opportunities in the VR market. Goertek and AAC Technologies already have dedicated
teams involved in the development of audio DSP algorithms for VR headsets. Start-ups
such as Dysonics and G’Audio also offer audio solutions for VR.
Source: GlobalData
Macroeconomic trends
The table below highlights the key macroeconomic trends impacting VR and AR.

Hype AR is in its infancy but has already been touted as the next major computing platform by
tech leaders like Apple CEO Tim Cook. This has inflated market expectations to levels which
the technology has so far failed to match. Magic Leap raised $2.6bn in funding over five years
by advertising unmatched AR experiences, including games and live shows, but its first
hardware offering (the Magic Leap One) proved to be underwhelming, both in terms of
content and sales. Niantic has repeatedly promised to develop unique AR games but
delivered familiar, Pokémon Go-type experiences each time. Well-funded, promising start-
ups like Meta, Osterhout Design Group, Blippar, and Daqri have all exited the market, having
failed to cope with growing competition and live up to self-created hype.
Untethered VR headsets and more compelling content – including films, video, and games –
are driving the adoption of VR across consumer markets. In March 2019, Sony announced
that it had sold more than four million PSVR systems worldwide since it was released in
October 2016. One long-standing barrier for VR adoption – price – is also coming down. At
the time of writing, the HTC Vive is available for less than $500, Facebook’s Oculus Rift for
under $400, and the PSVR at sub-$300.
Consumer adoption Whilst the enterprise AR market is likely to be more lucrative, many players – like North,
Snap, Oakley, and Bose – are targeting the consumer AR market. Epson and Vuzix target both
the enterprise and consumer markets. Microsoft, the leader in enterprise AR, is rumored to
be planning a consumer device too.
Most consumer-focused apps are free for users and developers are paid by distributors like
Apple and Google, whereas enterprise-focused software is either bundled alongside
hardware or bought separately. As the technology matures, subscriptions, location-based
entertainment (including arcades), and in-app purchases will become more prominent, with
some already emerging. PokéBalls and PokéCoins, for instance, are available for in-app
purchase in Pokémon Go, while the Google ARCore-based Mind Map AR is free
downloadable content, but payment is required to unlock premium features.


Content The dearth of AR content is one of the biggest obstacles to mass adoption of AR platforms.
Launched in 2016, mobile game Pokémon Go remains the most recognizable content app for
AR, with several imitators failing to match its appeal. In social media and ecommerce, AR is
restricted to basic photo filters, virtual try-on services, and indoor furniture placement
applications, primarily due to the technology’s immaturity. A longstanding factor holding
back the development of effective AR content is high speed broadband infrastructure. As 5G
telecom networks are rolled out across the world, more AR content will emerge.
While VR hardware is improving, the industry still lacks a significant amount of content.
Unlike the over-saturated mobile apps space, VR is still a largely untapped market. With
adoption increasing, VR content creators should utilize the opportunity to build a brand
name before the industry hits the mainstream. The video games industry offers abundant
proof that consumers are willing to pay for effective and compelling content. Gaming
headset Oculus Quest sold content worth approximately $5m in the two weeks after its
launch in May 2019. Over the next three years, consumers will be looking for an accessible
array of content choices. VR content creators should focus on areas such as films, video,
ecommerce, healthcare, gaming, and social media. Taking a pragmatic approach will foster
sustainable growth.
Enterprise adoption Several enterprises are using VR for specific tasks. For example, Air France offers passengers
VR headsets, while Walmart, Airbus, and Verizon use VR as part of employee training
programs. That said, VR’s position in the enterprise market is under threat from AR. VR
headsets are solo, occasional, and training-oriented devices, meaning they lose out in
comparison to more efficient, collaborative, continuously serviceable AR solutions in the long
run. The likes of Microsoft HoloLens, Vuzix smart glasses, and Google Glass Enterprise Edition
are already established in several vertical markets. Challenging them from a VR perspective
are Facebook’s Oculus for Business and HTC’s Vive Enterprise Edition.
Enterprises are starting to recognize the benefits of AR in training, maintenance and repair,
customer support, and product design. Healthcare, logistics, manufacturing, and the military
are early adopters of AR, while Microsoft (with HoloLens 2), Vuzix (with Blade smart glasses),
Lenovo (with New Glass C200), Magic Leap (with Magic Leap One), and Google (with Google
Glass Enterprise Edition 2) are all targeting the enterprise market.
Nonetheless, large-scale enterprise adoption of AR is still some way away. DHL, Boeing,
Porsche, Verizon, Coco-Cola, and Zara are all using AR, but the technology’s high cost,
relative immaturity, and lack of effective infrastructure are restricting growth and this is
likely to remain the case for at least the next three years.
Source: GlobalData

Regulatory trends
VR remains unregulated, but standard fair use policies, copyright acts, trademark acts, and anti-dilution acts are being
applied in the wake of disputes related to content ownership, IP theft, etc. Regulators are mostly concerned about the
protection of personal data and users’ privacy. Given the maturity level of VR, any vigorous attempt to regulate runs
the risk of stifling the evolution of the technology. As a result, most regulators are taking a wait-and-see approach.
The table below highlights the key regulatory trends impacting VR and AR.

Legal challenges Intellectual property (IP) infringement is seen as a prime legal risk by nearly 30% of
companies developing immersive technologies, according to a 2019 survey by Perkins Coie
and the XR Association. AR’s ability to replicate a wide range of images, properties, and other
content in virtual spaces creates the potential for IP disputes around trademark, copyright,
and patents. While patents are largely held by big firms, many of the cutting edge technology
trademarks and copyrights are owned by start-ups. Unauthorized access to these
technologies increases the possibility of IP infringement.
Geo-tagging in outdoor AR games has legal implications as well, mostly concerning the
privacy of non-participating individuals. Given the current maturity level of AR, vigorous
attempts to regulate it could stifle innovation. However, standard fair use policies, copyright
acts, trademark acts, and anti-dilution acts are being applied in the wake of disputes related
to content ownership and IP theft. Consumer and public safety regulations are also being
expanded to accommodate AR-related concerns.
Data privacy The growing awareness of the need to protect user data stems from a raft of data privacy
regulation including the EU’s General Data Protection Regulation (GDPR), Japan’s Act on the
Protection of Personal Information (APPI), and California’s Consumer Privacy Act (CPA).
Adopting an extraterritorial approach, GDPR and APPI require companies to process locally
generated data, especially biometrics, within the region itself, irrespective of their base
stations. The regulations also mandate companies to have transparent privacy policies in
place, stipulating the purpose and use of user-generated data. Companies must also equip
users with features to request, access, correct, and suspend their personal data from privacy
centers. We expect the policies to be further refined based on applications and companies
will have to adhere to new mandates.
Self-regulation US-based VR companies have created their own ethical guidelines to protect their businesses
from outside interference. The XR Association, previously known as the Global Virtual Reality
Association (GVRA), includes Google, HTC, Oculus, Samsung, Sony and Acer and promotes
the growth of immersive technologies through the development and sharing of best
practices for the immersive tech industry.
Source: GlobalData

Consumer trends
The table below highlights the key consumer trends impacting VR and AR.

Product placement AR can prove useful for combining views of customers’ surroundings or on their bodies and
and style advisor apps products that are virtually projected in so that customers can check if they fit well in terms of
color, shape, style, and measurements, and thus make better purchasing decisions. One
example is furniture and home décor purchases, which can be showcased virtually
beforehand without the need to offer expensive showrooms. Another example is virtual try-
on features for beauty and grooming products: consumers can try out various eye shadows,
lipsticks, hair colors, or foundation shades from the comfort of their home, just by taking a
selfie and uploading it on an AR-equipped app, or can experience the new look in real-time,
by live-recording themselves.
Smart mirrors or smart AR can be used for trying on products such as apparel and cosmetics virtually, eliminating
fitting rooms the need to get changed. In smart fitting rooms or through smart mirrors in stores,
customers can view themselves with their desired products in a combined view to check if
they fit well.
Product VR and AR technology can be used by FMCG companies and retailers alike to show how to
demonstration use various products such as DIY tools or electricals, or to promote clothing lines or beauty
products. Restaurants and food companies can use VR to visually demonstrate how the food
is cooked and demonstrate recipe suggestions.
Training FMCG companies, retailers, and restaurants alike are increasingly looking to train their staff
virtually, to cut down on costs and the environmental impact. This is especially relevant in
2020, due to the ongoing coronavirus pandemic.
Enhanced packaging Consumer goods companies are equipping product packaging with AR features for a more
interactive and fun experience and to offer more product information or additional details
(about the brand, the product, a historical figure, and so on) beyond the limitations of
physical packaging.
Virtual tours Companies are using VR technology to allow consumers to virtually experience deeper parts
of a brand’s identity through virtual tours. For example, alcoholic beverage companies are
using VR to offer consumers virtual brewery tours to communicate their authentic
production processes better and build consumer trust through greater consumer
engagement. Furthermore, restaurants can offer virtual tours of their establishments prior to
visiting them in person, to enhance customer knowledge and improve decision making.
Retailers can take a similar approach. This technology is also being used by FMCG companies
to highlight their support for ethical causes and sustainability initiatives.
Augmented AR and VR can augment the sensory experiences by altering the appearance of food or
consumption drinks. Furthermore, AR can also be used to relay digital information on physical content,
such as cookbooks, in order to help with recipe preparation and cooking processes.
Product design and VR and AR can be used by companies to improve their supply chain, as the technology allows
development designers to model and test virtual prototypes without physical construction. This eliminates
the costs associated with trial and error. It also enables developers to have a better
understanding of the product earlier on the production process, which can reduce
development time and production costs.
Gamification AR or VR-based interactive games or gamified tools are exceptional ways to interact with
consumers, boost sales in the long run, and attract new audiences. VR-based games can be
offered in stores to engage and entertain visitors, and teach them about the products or the
companies. AR-based games can be offered on packaging, restaurant menus or tables, or via
a mobile app.


AR advertising AR gives advertisers the ability to provide more inventive, eye-catching, and interactive
experiences, and move beyond non-interactive media like print and TV. Brands like Pepsi and
Lacoste have run campaigns in which smartphone cameras overlay virtual objects (and try-on
services) onto the real world. Likewise, Timberland, Sephora, L’Oréal, and Michael Kors have
produced AR adverts for social media channels (mostly allowing virtual try-ons). Following
Michael Kors’ AR campaign (which launched on Facebook in June 2018), the company
experienced a 14% increase in sales for its Lon Aviators sunglasses. Nike also benefited from
a similar campaign on the Facebook Messenger platform in 2018, when its Kyrie 4 sneakers
sold out within an hour of the campaign’s launch. WebAR-based advertising campaigns are
also emerging. In 2018, Saban’s Power Rangers campaign (launched on web browsers across
Android and iOS smartphones) recorded a click-through rate of 2.1%, outpacing the then
industry benchmark of 0.08%, according to the campaign developer Vertebrae.
Source: GlobalData

Industry analysis
AR and VR technologies are evolving, with notable improvements in both the hardware and software, and this is
reflected in the growing number of use cases. There are, however, a few hurdles that impede both technologies to
evolve faster. In consumer goods industry, one can notice an ambivalence towards AR smart glasses, and a need for
improvements for designing quality AR-based mobile applications. Privacy and security issues also need to be taken
into consideration. In the VR space, problems such as latency, nausea, high prices, and underdeveloped ecosystems are
stopping the technology to be adopted more widely. In this section, the size and impact of the AR and VR themes are
showcased, along with GlobalData’s market prediction for the following ten years.
Market size and growth forecasts

Worth around $5.6bn in 2019, the global AR market will reach $76.4bn in 2030, according to GlobalData’s estimates.
Worth around $8.2bn in 2019, the global VR market is expected to reach $28.4bn in 2030, according to GlobalData’s
forecasts.
AR and VR to grow solidly over this decade

AR market will reach over $76bn by 2030. VR market is forecast to reach $28.4bn by 2030.
Source: GlobalData
Impact of VR and AR on FMCG, retail, and foodservice

Consumer goods and packaging
The consumer goods industry is saturated by the variety of items present on the supermarket shelves. Competition is
fierce among brands, and thus they need to find ways to stand out. One way would be to leverage solutions that can
grab consumers’ attention, and offer them immersive, stimulating experiences. Therefore, the FMCG sector has a huge
potential to benefit from AR and VR integration. Indeed, according to GlobalData’s 2018 Q3 global consumer survey,
consumers are often influenced by how digitally advanced, or smart, the product is when deciding to buy it. They pay
particular attention to the digital advancements in household and laundry, beauty and grooming, and non-alcoholic
beverage FMCG sectors, as seen from the below chart.

Global: Consumers who are always or often influenced by how digitally-advanced, or smart, the products
from the following sectors are when choosing them
Source: GlobalData’s 2018 Q3 global consumer survey
AR and VR solutions can be incorporated at every step of the customer journey (during research process, in store, and
during product usage). Therefore, they can be applied online, when consumers browse and research products to
purchase. One way of integrating AR and VR in the online space is by offering virtual try-on solutions, so that
consumers can make better purchasing decisions. 360-degree visualization of the products could also help in that
respect. Another way brands can leverage AR and VR online is by designing immersive marketing campaigns via
promotional videos.
They can also be applied in store, via interactive packaging. AR-equipped products can add value to customers’
experience by providing supportive content when scanning the packaging with their mobile phones. Examples of
additional information includes nutrition facts, innovative ways to use the product, recipes and so on. Interactive
marketing campaigns could also prove valuable in stores.
AR and VR technology can also be used for brand engagement through contents. Gamification, contents for best selfie
taken with the product or most innovative product design could help brands reach a wider audience and a different
customer base.
In conclusion, FMCG companies are capitalizing on VR and AR technologies to offer innovative marketing solutions that
enrich customer experiences and drive sales. VR and AR help brands inform customers about important product
information (health guidelines, promotions, serving or usage suggestions, sourcing locations), or they can offer various
entertaining solutions via interactive packaging.
Retail
Retailers are investing in AR and VR to provide their customers with an enhanced experience when visiting their stores,
or when shopping online, by offering them the chance to try out products virtually. Consumers are used to the latest
technologies from eCommerce, media, or gaming, and they increasingly expect to see similar concepts in store. Fitting
rooms can be equipped with AR mirrors to boost the experience, while the functions of digital signage can be
extended.

Foodservice
Foodservice industry can leverage AR and VR by offering consumers a menu that comes to life when scanned by mobile
phones with AR-based apps installed. A 3D, true-to-scale, visual representation of their food will give visitors the ability
to be more discerning when it comes to choosing the desired food.
Another application for AR that can be applied to retail and FMCG sectors too is offering an AR-equipped app that can
offer product/menu information in the desired language when pointing the mobile camera at the
menu/packaging/item.
Restaurants can also keep customers entertained by offering AR-based games when visiting the restaurant and while
they wait at their tables.
Last but not least, restaurants can invest in AR/VR-based marketing campaign, which has enormous potential to attract
a new customer base.
Finally, all companies can leverage VR and AR tools to increase staff safety and add value and make training new
employees easier and more interactive. VR and AR can help decrease human error during the manufacturing process,
as staff can be equipped with AR glasses that offer them detailed instructions at every step of the product making. It
can also help brands decrease manufacturing costs by offering virtual training to their staff, and thus there is no need
for product wastage, or for renting a space for offering lessons. It can ultimately decrease carbon emissions; as new
employees do not have to travel to training centers.
Using VR and AR to attract millennials and Gen Z

Millennials and Gen Z can especially be attracted by AR and VR, as they are usually tech-savvy and represent social
generations who like to cooperate and make the world better, while also having fun. Consumers from this
demographic want more than consuming a product, visiting a store, or eating a dish when going out, they want quality
ingredients, sustainable businesses, and innovative experiences that can later be shared on social media/online. Many
will therefore look for brands that are investing in technology so that they can offer them exceptional experiences.
Indeed, according to GlobalData’s 2018 Q3 global consumer survey, over a quarter of Gen Z consumers see a product
that uses VR/AR as “smart”, whereas 23% of millennials agree with this.
Global: In your opinion, which of the following aspects of a product makes a product smart? Uses VR or AR

Furthermore, according to GlobalData’s 2018 Q4 global consumer survey, over half of global millennial respondents
said that they were often or always influenced by how digitally-advanced/”smart” the product or service was when
choosing it, followed by 46% of Gen Z respondents, representing the highest percentages of all consumer groups.
Global: Consumers who are often or always influenced by how digitally-advanced/”smart” the product or
service is when choosing it
Nevertheless, older generations should not be disregarded either, especially during the COVID-19 pandemic and in the
“new normal” world, when the need for technological solutions is paramount. Brands should invest in AR/VR tools to
reach old age groups who might be vulnerable and might be confined or isolated in their own homes, to avoid catching
the virus.
The impact of COVID-19

Social distancing rules imposed to contain the spread of coronavirus has led to a great need for innovative solutions
from FMCG, retail, and foodservice companies to reach consumers, keep them and the staff safe, without
compromising on the quality of their products and services offered. Technological solutions have therefore seen a
spike during this period. AR enables digital information and visuals to be superimposed and integrated into users’
physical environment.
With the coronavirus pandemic forcing many people to stay at home, AR technology can boost their surroundings and
transform them into try-on space, fitting rooms, a virtual restaurant interior, or a learning space. According to
GlobalData’s COVID-19 Recovery Tracker Survey 2020 – Week 4, almost half (47%) of global respondents said that they
will buy more products online rather than visiting a store in the “new normal” world after the coronavirus pandemic
period.
Furthermore, half of global respondents said that they will continue to dine at home instead of restaurants. These two
results can present opportunities for FMCG companies and foodservice outlets to invest in AR tools to help consumers
make better online purchasing decisions, and to offer AR and VR tools that can provide users with the impression that
they are dining in the restaurant, without them actually visiting the physical establishment.

Retail industry and high street shops have been hit hard by the pandemic, as they were forced to close to contain the
virus. The same was the case for many restaurants, cafes, and pubs. Food and drinks companies, along with hygiene
firms have not suffered as much, as people concentrated on buying essentials and cleaning products and toiletries that
can offer them a sense of security. However, other FMCG sectors such as beauty and grooming, suffered major losses,
as people did not pay as much attention to their appearance, as they did not leave the house as much as before.
Therefore, companies had to find quick ways to keep their audiences loyal and informed during these uncertain times.
One example of FMCG company that has accelerated the investment in VR or AR technology is Nestlé. The company
has decided to expand the use of AR technology to offer remote support to production and R&D sites amid coronavirus
travel restrictions. The manufacturing global head at Nestlé, noted: “Protecting our people is a top priority for Nestlé,
something that has been clearly demonstrated time and time again during the COVID-19 crisis. The remote support
approach isn’t just a response to COVID-19 though. Going forward, remote assistance will become a new way of
working. It will increase speed and efficiency in facilities and reduce travel to Nestlé sites, helping us reduce CO2
emissions across our operations.”
COVID-19 is also accelerating the adoption of Augmented Reality by global beauty companies, as they are harnessing
the technology to boost consumer engagement and loyalty. AR offers consumers the chance to try out beauty products
virtually, without the need to visit a store. AR can also potentially help consumers save money, as it can eliminate the
trial and error aspect of buying products online blindly without trying them out first.
One example of beauty company to jump the AR wagon during the pandemic to save profits and keep ahead of the
competition is MAC Cosmetics. MAC expanded its AR try-on for e-commerce. The beauty firm has been working with
YouCam to roll out AR smart mirrors in its stores since the end of 2017, and in August 2019, it introduced an AR try-on
tool via a website tab. However, since March 2020, it has rolled-out the online AR tool in multiple regions such as UK,
Brazil, UAE, Saudi Arabia, France, Mexico, Germany, Italy, and Australia.
Furthermore, the Chinese beauty company Meitu, launched a free AR tool developed to help beauty companies boost
make-up sales during the pandemic. Meitu mentioned that the tool is supported by social media platforms such as
YouTube and Instagram, which can attract consumers who are spending more time browsing social media during the
coronavirus crisis.
Trying out high-risk products such as sunglasses during this period can prove challenging and anxiety-inducing.
Therefore, sports and urban equipment manufacturer Bollé introduced an AR Sunglass experience, which offers
shoppers the chance to try-out Bollé’s flagship Phantom lens technology without ever having to physically touch the
glasses. The company collaborated with privately-held company QReal (formerly kabaq.io) offering AR solutions to a
variety of industries, and tech consultancy M7 Innovations, to design the AR solution, a first-of-its kind in the sunglass
industry. Within Instagram, the demonstration invites users to try out Bolle’s Phantom lens through one of the brand’s
iconic models, i.e. the Chronoshield. After virtually checking out how they would look wearing the sunglasses, users
can simply flip their cameras from selfie-view to front-facing and the lenses are superimposed on their actual
surroundings. Then, consumers can try out various shade effects such as anti-fog, light-adaptive, or high-contrast, into
their real surroundings.

Consumers can flip their camera around to try out the protective glasses
Source: Bollé Official Website
The hospitality sector has been forced to adopt digital solutions at an unprecedented step due to the COVID-19 crisis.
Restaurants have started using various tech tools such as mobile applications, online delivery, or have relied on social
media platforms such as Instagram to receive additional support via gift card or sticker ordering features to pay their
struggling staff.
Foodservice can also capitalize on AR technology during these uncertain times to create for example alternative, more
sustainable menus that replace the paper, disposable ones. By offering AR-powered menus, consumers do not have to
worry about touching physical menus, and therefore the risk of virus spreading is smaller. They can also offer better
visual representation of the food for people who would prefer to order online during these unprecedented times.
Indeed, according to GlobalData’s COVID-19 Recovery Tracker Survey 2020 – Week 7, over a third of global consumers
agreed that they will order meal deliveries from restaurants more often than before the COVID-19 pandemic,
emphasizing the need for more accurate representation of the dishes.

Almost half of global millennial respondents agreed* that they will order meal deliveries (from
restaurants) more often than before the COVID-19 pandemic
Source: GlobalData’s COVID-19 Recovery Tracker Survey 2020 – Week 7 (fieldwork period: 2-6 Sept 2020); *somewhat/strongly agreed
One example of company trying to solve this issue is QReal. The start-up company that worked with Subway and
Domino’s among others, offers 3D and AR technologies to present better the food consumers would like to order
online. By offering 3D online visual stimulation, the company is trying to help out restaurants provide a more accurate
representation of their food, and consequently help their customers make better decisions, and subsequently increase
sales.
QReal worked with the University of New South Wales Business School, King’s Business School, Maastricht University
and the University of Sussex1 and found out that the “AR-enabled frontline improves decision comfort, motivates word
of mouth, and facilitates choice of higher value products”.

Magnolia Bakery customers can preview their cake order online via AR, true-to-size 3D visuals
Source: QReal Official Website
Retailers can use AR to offer virtual try-ons. Also, companies from all industries can use AR to train employees from a
distance, with as little physical contact as possible. They can also use AR visuals to offer customer service and explain
better the product instructions, without the need for customers to bring the products back to the physical stores or the
repair shop.
Moreover, AR can enhance marketing campaigns during this period. One example of a company that capitalized on VR
capabilities to launch new products in a big style despite the pandemic is Asics2. The sports equipment company
partnered with Solarflare to create the VR content for the promotion of its Metaracer, Metasprint, and Metarise shoes.
Originally Asics planned to announce the new shoes at an ASICS Innovation Summit in Tokyo, but then because of the
COVID-19 pandemic, it decided to turn to VR to preview the products. The company had to ship Oculus Quest headsets
to journalists to watch the launch.
According to GlobalData’s COVID-19 Recovery Tracker Survey – Week 7, over 30% of global consumers are still always
or often influenced by how smart or digitally-advanced the product is when they choose to purchase it, highlighting
that the need for technological innovations from companies is desirable despite the pandemic.

Global: Consumers who are influenced* by how digitally-advanced/”smart” the product/service is during
the coronavirus crisis
Source: GlobalData’s COVID-19 Recovery Tracker Survey 2020 – Week 7 (fieldwork 2-6 September 2020); *always/often influences my product
choices
Almost half of global consumers agreed that they will shop for clothing & footwear products online more often than
before the pandemic. The percentage is highest for millennials (55%), Gen X (49%), and Gen Z (48%), highlighting the
need for clothing & footwear companies to invest in online solutions.
Over half of global millennial respondents agreed* that they will shop for clothing & footwear products
online more often than before the pandemic
Source: GlobalData’s COVID-19 Recovery Tracker Survey 2020 – Week 7 (fieldwork 2-6 September 2020); *somewhat/strongly agree

Furthermore, 23% of global consumers intend to spend significantly or slightly more time shopping online for clothes
and shoes in the foreseeable future. Thus, firms need to make sure they offer consumers tools to help them take
better decisions when shopping online. Developing strong AR-powered try-on solutions could prove fruitful during the
pandemic.
Global: How do you think the outbreak of coronavirus (COVID-19) will impact your routine
activities/lifestyles in the foreseeable future? Shopping for clothing & footwear online
Source: GlobalData’s COVID-19 Recovery Tracker Survey 2020 – Week 7 (fieldwork 2-6 September 2020)

Use cases
Consumer goods
Rekorderlig uses mixed-reality tech to stand out from the crowd3
Rekorderlig collaborated with the London-based media company Havas and its agency Cake to create a TV campaign
called “Rekorder-land” which used CGI films to showcase the brand’s drinks in a visual form. Then in the summer of
2019, the Molson Coors-owned beverages company continued the campaign by offering AR headsets that consumers
can try out for an immersive, multisensory experience at the Underbelly Festival in London. Users could virtually touch
the fruits the cider was made of, which reacted in various ways. The experience is further augmented by Snapchat
lenses that created animations and enables consumers to take a “fruit crown” selfie in celebration of Swedish
midsummer.
L’Oréal’s makeup app

In 2019, L’Oréal started expanding its AR and AI technology after it noticed that the trials increased its sales. The
company rolled out a service that lets US consumers use their mobile phone’s camera to virtually try out hair color
shades before buying them. They need to install Google Lens image-recognition mobile application, which lets them
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use the virtual try-on service, designed by ModiFace, when they point their phone cameras at the hair color products.
Also, in 2020, the beauty company launched AR lenses for Snap’s desktop application, offering US users the ability to
virtually test out hair colors and various other makeup. In the summer of 2020, the company also started collaborating
with Amazon5 to provide Canadian consumers with the chance to virtually test lipstick, eyeliner, and eye shadow just
by using their mobile phones’ cameras. The AI and AR-based service is powered by ModiFace. Consumers often choose
products and services that can help them save time and effort when shopping. According to GlobalData’s 2019 Q3
global consumer survey, 61% of global consumers are interested and are actively buying products that help them save
time and effort. Therefore, applying makeup and seeing the results virtually, without the need to go to a brick-and-
mortar shop can sound attractive.
These types of services are especially relevant during the COVID-19 pandemic, as it allows people to try out beauty and
grooming products from the comfort of their own home, without the need to visit a physical store.
L’Oréal’s virtual try-on tool lets customers try out makeup online.
Source: L’Oréal Official Website

Magnum & Benefit Pop up6

In June 2019, ice cream brand Magnum partnered with Benefit Cosmetics to offer experiential activities at a temporary
pop-up beauty store in Shanghai in order to promote a new premium flavor. Consumers could taste the new ice cream
flavor while professional makeup artists glammed them up. With the use of AR technology, Magnum brought its
“Release your Beast” advertising theme to life, via 3D animals such as lions, polar bears, and tigers. Consumers could
take pictures and share on social media afterwards.
Embrazen Chardonnay and 19 Crimes wine – Using AR Labeling to Build Interactive Brand Stories in the
Wine Market7
Embrazen is the new wine brand from Treasury Wine Estates in the UK that features products "inspired from the
success stories of 20th century women." Chardonnay Wine is one such product (other being Red Blend, a red wine
#1014385) in the range that is said to be inspired by Amy Johnson, an aviator from the UK. The 750ml bottle of this
13% ABV wine has a picture of Amy Johnson along with her quote. The picture on the bottle is an AR label that
consumers can scan from their smartphones to know information about the women through the company's Living
Wine Labels app. Positioned to "create excitement and engagement with 18-35-year-old consumers," the wine could
stand out on the shelves with its label design and could entice informed shoppers who tend to get inspired from the
stories of successful people and want their surroundings and even purchases to remind them of such stories. The
augmented reality-based picture of the women on the packaging could interest shoppers such as those 30% of
consumers in the UK who feel interactive packaging as an essential, exciting, and nice to have packaging feature
(GlobalData's 2017 Q1 global consumer survey). Offering a wine range that is also inspired from the success stories of
20th century women is different from standard products in the category in the UK.
19 Crimes, another brand from Treasury Wine Estates, offers a range of wine varieties with labels featuring each of the
19 crimes punishable by ‘transportation’ to the colony of Australia. Each label can be viewed with an augmented
reality (AR) app that animates the individual stories of the featured real convicts. There is a definite appeal associated
with character-driven labels and brand narratives. They can provide a product a degree of authenticity, even when the
story is not intrinsically connected to the product in a historic sense. AR allows for labels to become more than a
means of identification on the shelf.
A free iOS and Android app, called Living Wine Labels, allows the consumer to access an augmented reality (AR)
experience. By holding a device up to the label, the image animates and the pictured convict gets to tell their individual
story (from John O’Reilly on the Red Blend bottle, who found love in Australia, to thief Jane Castings on the white
variety).
Nestlé’s partnership with AutoLogic Systems for the design and testing of a smart distribution center
Nestlé partnered with AutoLogic Systems, to create a custom-designed distribution center which opened in May 2020.
The center features sorting systems and robotics and state-of-the-art automation. AutoLogic Systems have used Sim3D
software, designed by Rockwell Automation, to design and test the layout of the new center. The software is able to
create 3D digital twins of the automation solution. Thanks to AutoLogic’s models, Nestlé can run various operational
scenarios to view, test, and design the most efficient layout and processes, and the VR view enables the company to
experience the new operations in fine details.
Foodservice
AR and VR technologies can help the foodservice industries in various ways:
- It can make training new employees easier, more enjoyable, and possibly cheaper (by eliminating food waste
or other expenditure coming from human error)
- Assembly line workers equipped with AR headsets can have all necessary details required to fulfill their tasks
in a correct and timely manner in front of their eyes at all times. This can subsequently decrease food
products recalls and errors in food processing, and increase food safety.
- AR technology can help chefs prepare food more smoothly, especially dishes that require extra care (e.g.,
meals containing ingredients, such as various fish or mushrooms, that claim special attention when prepared
to be fit for consumption)

- AR and VR can increase employee and customer safety.

- Manufacturers of restaurant equipment can design AR-based apps that restaurant owners can use to imagine
the equipment inside their outlets, thus making better purchasing decisions. One case example is found
below.
Phononic offers AR app for foodservice professionals8
In 2019, Phononic, a company offering refrigeration solutions for retail and foodservice sectors, collaborated with
Extality, a developer of mobile VR and AR tools, to design an AR app. It offered store owners and brands the ability to
project a virtual image of Phononic’s F200 Merchandising Freezer into the retail or restaurant environment by using
the mobile phone camera. The mobile app, called Imagine, is fully photo-realistic and scaled to size. It contains an
interactive functionality that offers users the chance to see how various products would look inside the freezer.
Onirix to provide AR menus for restaurants

Onirix Studio offers restaurants a tool to provide their menu in AR9, as a technological alternative to disposable
menus. The company can also generate the 3D models of the restaurants’ dishes if the outlets do not have them
available.
Packaging
VERYX Food Sorting (VR)10
The manufacturer and designer of food processing systems Key Technology partnered with advertising and marketing
agency Stein IAS to design a VR demo that allowed visitors to the 2015 Pack Expo food packaging trade show to
experience an immersive introduction of the company’s VERYX Food Sorting tool.
Dixie Everyday Paper Cups7

In 2019, Dixie Everyday Paper Cups were launched in the US, cups that are presented with interactive packaging
designs. Consumers need to download Blippar app and then scan the image on the cup to watch riddles such as "why
did the astronaut volunteer for a mission to Mars," come to life through augmented reality. Promoted as
"Download.Scan.Smile," these riddles are "brain teasers that challenge your IQ while you enjoy your snack or drink," as
the company says. The launch could add excitement to otherwise mundane paper cups category where there is usually
little scope for innovation. The release could interest individuals who look for sophisticated features in their purchases
such as those 13% of shoppers in the USA who consider a product as smart if it uses virtual reality/augmented reality
(GlobalData's 2018 Q3 global consumer survey).
Zappar AR platform
Zappar is an AR platform and a creative studio. With Zappar, the user can turn anything into an interactive delivery
serving video, like animation, games, competition, additional information, data capture mechanics, social share and
many more. Focusing on AR tech Zappar has transformed packaging11, illuminated events, and elevated marketing
campaigns with innovative and engaging content. The company has partnered with Asda and other firms to create AR
experiences. In 2014, Zappar has signed a partnership with Asda for the Easter Adventure Hunt, an AR store event.
Retail
IKEA Place app – allows users to place true-to-scale 3D models of furniture in their homes
IKEA offers customers an AR-equipped mobile application, which lets them virtually place true-to-scale 3D models of
furniture in their own surroundings. According to the company, the app automatically scales products, based on room
dimensions, with 98% accuracy.

IKEA’s AR application
Source: Inter IKEA Systems
Nike launches new shoe with AR-powered coloring book via AKQA
In an advertising campaign in Japan in 2020, to promote the new Nike Air Max 2090 and create an immersive branded
13
experience, the company designed “Create with Air Max”, an AR-based coloring book . Nike collaborated with the
digital agency AKQA to create the interactive catalog. The Japanese customers who visit the Nike stores where the
1,000 copies of the coloring book have been distributed can use their mobile phones to scan the blank shoes, and they
will then see a floating AR model. As consumers color the shoe on the page, the 3D model changes to reflect the
customers’ creation. The final design can be shared on social media.
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Also, back in May 2019, Nike introduced Nike Fit , a scanning solution using computer vision, data science, machine
learning, artificial intelligence, and recommendation algorithms to help consumer choose the right shoe size, shape
and style. Using consumer’s smartphone camera, Nike Fit scans consumers’ feet, collecting 13 data points mapping
their foot morphology in a matter of seconds. The technology can be used in a Nike store too, via a specially developed
Nike Fit mat.

Mergers and acquisitions

The key M&A transactions associated with the VR/AR theme in the last two years are listed in the table below.
Date Acquirer Target Value Target company description

announced ($m)
Dec 2019 Hasbro Entertainment 4,105 The company acquired, eOne, bought
One (eOne) Secret Location in 2016, a specialist in VR
and AR experiences.
Oct 2019 Apple iKinema - 3D motion capture
Sep 2019 Verizon Jaunt XR - 3D volumetric video capturing
Sep 2019 Facebook CTRL-Labs 1,000 Neural interface technology
Jun 2019 PTC TWNKLS - Enterprise AR solutions
May 2019 Ultrahaptics Leap Motion 30 Hand-tracking systems for VR/AR headsets
Apr 2019 Mimi Hearing 3D Sound Labs - HRTF personalization services

Technologies
Mar 2019 Alibaba Infinity - AR software platform
Aug 2018 Ulta Beauty Glamst - Glamst offers customized virtual makeover
solution for mobile, web, and in-store
combining AR, AI and MI technologies.
Mar 2018 L’Oreal ModiFace - Company that builds the technology behind
virtual cosmetic testing apps of Sephora and
Estee Lauder.
Source: GlobalData

Timeline
The major milestones in the journey of VR and AR are set out in the timeline below.
The VR & AR story

…and predictions of the key milestones in the future.
1957 Sensorama, considered to be one of the earliest VR systems, was invented.

1968 The first VR head mounted display, known as The Sword of Damocles, was created.
1982 The first movie to depict VR, "Tron", was released.
1987 Jaron Lanier coined the term "virtual reality".
1990 Former Boeing researcher Thomas P Caudell coined the term "augmented reality".
1991 The first VR arcade machine, Virtuality, was introduced.
1992 Louis Rosenberg created the first fully immersive AR system, called Virtual Fixtures, at the US Air Force Research
Laboratory.
1992 Steven Feiner, Blair MacIntyre, and Doree Seligmann presented the first major paper on an AR system prototype.
1994 The first AR theater production, Dancing in Cyberspace, was created.
1998 AR was first used for navigation in NASA's X-38 spacecraft.
2000 The first outdoor AR game, AR Quake, was launched.
2005 Nokia introduced the AR-based two-player game AR Tennis.
2008 BMW ran AR-based print advertisements.
2009 ARToolkit, a web-based design tool, was made available in Adobe Flash.
2013 Google started selling a prototype of Google Glass.
2016 Sony introduced PlayStation VR (PSVR).
2016 Niantic and Nintendo launched Pokemon Go.
2018 L'Oreal buys ModiFace, a company that creates apps to allow users to virtually try out makeup.
2019 Sony announced that it had sold more than 4 million PSVR headsets.
2030 Global AR market value is forecast to reach $76.4bn, according to GlobalData
2030 Global VR market value is forecast to reach $28.4bn, according to GlobalData.
Source: GlobalData

Value chain
The AR value chain is split into five segments: semiconductors, components, devices, platforms, and applications &
content.
The augmented reality value chain

An overview
Hardware Middleware Software
Semiconductors Components Devices Platforms Apps & content
Central processing units

Motion tracking Smart glasses APIs & SDKs Engineering apps
(CPUs)
Graphics processing units

Healthcare apps
(GPUs) Batteries Smartphones AR engines - games
Vision processing units

Ecommerce apps
(VPUs)
Displays AR headsets AR engines - enterprises
Image processors Social apps
Cameras & 3D lenses AI

Communication chips Military apps
Content delivery
Audio components
MEMS networks Video games
Application delivery
Memory chips Machine vision Films
networks
Source: GlobalData
In the following sections, we will look more closely at the semiconductors and devices segments of the AR value chain.
Semiconductors
Semiconductors are one of the key battlegrounds in AR today. Up until 2018, AR companies largely relied on powerful
smartphone and PC chips, but Qualcomm’s introduction of the XR1 AR and VR-specific chipset changed all that.
Although no new AR-specific silicon has arrived on the market following the launch of the XR1, chipmakers are striving
to improve their existing capabilities to suit the evolving requirements of AR, mostly around screen resolution, frame
rates, processing speed, and connectivity.
CPUs
Qualcomm is the leading player in the AR central processing unit (CPU) space, attributable in large part to its strong
position in the smartphone market. At Mobile World Congress 2019, Qualcomm announced the XR-optimized
certification program, which will enable smartphones running on the Snapdragon 855 processor to access 5G-powered
AR content. It has also introduced the Snapdragon 855 Plus, which is specifically designed to boost smartphone AR
gaming. Qualcomm’s powerful CPUs are being used in AR headsets and smart glasses from a number of vendors. For
example, Microsoft’s HoloLens 2 is powered by the Qualcomm Snapdragon 850 processor and Google Glass Enterprise
Edition 2 features the XR1 chip.
Apple is also in a strong position thanks to its A-series processors, made by TSMC. MediaTek, Huawei, AMD, Samsung,
Texas Instruments, and ARM (Softbank) are also working on AR-compatible chipsets. Most of their efforts are focused
around efficient battery and power management with longer standby times, improved frame rates, high projection
displays, high fidelity audio, and enhanced haptics.

GPUs
In the graphics processing unit (GPU) space, Nvidia is the leading player with AMD in second position. Other chip
makers looking to challenge in this market include Intel, which acquired Ineda Systems in 2019 and is banking on its
fabrication capabilities to undercut the fabless Nvidia and AMD on price. Qualcomm is integrating the Adreno 630
GPUs on its Snapdragon SoCs to strengthen its smartphone portfolio. Samsung, on the other hand, licensed AMD’s
Radeon GPU architecture to support its Exynos SoCs, which will boost the graphics on its upcoming smartphones. ARM,
with the Mali-G77 GPU (launched in 2019), is targeting the smartphone-based AR market, promising high-end graphics
support for gaming.
The intensifying competition in the GPU space is likely to have a positive impact on AR. GPUs are set to become faster
(in terms of processing speed), sharper (in terms of display quality), and more robust (in terms of load handling), all of
which will lead to more effective power management and improved experiences.
VPUs
Vision processing units (VPUs) – an emerging class of microprocessor that is designed to accelerate machine vision
tasks – is responsible for anchoring virtual objects in the real-world in an AR headset.
Intel (with the Movidius Myriad X) and Nvidia (with Programmable Vision Accelerators) are strong in this field, while
Qualcomm, Toshiba, Renesas, OnSemi, Synopsys, MediaTek, and Omnivision are improving their VPU competencies.
Google’s adoption of the Qualcomm XR1 chipset for the Google Glass Enterprise Edition 2 is largely attributed to its
vision processing capabilities, which support visual-inertial odometry (VIO), a technique used to create a correlation
between real and virtual spaces.
As competition in the VPU market intensifies, vendors are increasingly focusing on innovation. OmniVision, for
instance, has introduced OP02220, the first liquid crystal on silicon (LCOS) microdisplay with integrated driver functions
and memory, which aims to aid the development of lighter and more comfortable devices. Apple is known to be
working with TSMC on the development of light-emitting diode (LED) microdisplays that will improve image quality on
the Apple Watch and the company’s long-rumored smart glasses. Synopsys, meanwhile, has partnered with Kudan to
optimize the EV6x Embedded Vision Processor with the latter’s simultaneous localization and mapping (SLAM)
software. The partnership intends to deliver efficient machine vision for AI, automotive, and IoT applications, including
AR and VR. We expect robust investment in VPUs over the next three years, driven by growing demand for AR
technology.
Image processors
Growth in the image processing field is being driven by demand for real-time and high-quality images. Image signal
processors (ISPs) are vital for two AR-related functions: noise reduction (where digital artifacts that can tarnish images
are removed), and image sharpening (enhancing the depth and clarity of images). Qualcomm, Ambarella, and ARM are
leaders in this field. Qualcomm’s Spectra 380 (launched in 2018) has been positioned as the industry’s first AI ISP and is
now available as an integrated element in Snapdragon SoCs. Subsequently, in 2019, ARM launched the Mali-C52 and
Mali-C32 ISPs, which offer high-quality images (at 600 megapixels per second) at premium smartphone level frame
rates (60 frames per second). The aforementioned vendors compete against Infineon and STMicroelectronics in the AR
space.
Communication chips
AR devices are mostly reliant on Bluetooth, 4G LTE, and Wi-Fi – all integrated on SoCs – while 5G connections are also
becoming available. Qualcomm is integrating 5G modems on its Snapdragon 855 SoC, while Qorvo (with more than 100
million shipments of its 5G radio frequency (RF) components between January 2018 and February 2019) has
strengthened its market position. Murata, Skyworks, and Qualcomm are also competing around 5G RF. Qualcomm is
improving its XR1 platform to take advantage of 5G’s low latency and high bandwidth. Broadcom, Unisoc (Tsinghua
Unigroup), and ARM are also actively developing 5G chipsets.

MEMS
Due to the intensifying miniaturization drive in the semiconductors sector, MEMS manufacturers are seeing rising
demand. The emergence of 5G chipsets will only increase the pressure on MEMS vendors to deliver further
miniaturization. A significant amount of the storage and processing power will be handled at the network level,
resulting in smaller SoCs. Thus, designers will race to integrate more sensors and expand the operational capabilities of
their devices. This should also have a positive impact on user experience, particularly in terms of weight, movement
accuracy, and battery life, all of which are essential for AR’s success in the consumer market.
InvenSense (TDK), STMicroelectronics, Bosch, NXP Semiconductors, Infineon, and Analog Devices are all strong players
in the MEMS field. In January 2019, TDK announced a collaboration with Qualcomm to make inside-out six degrees of
freedom (6DoF) controller tracking available to mobile AR and VR head-mounted displays (HMDs) powered by
Snapdragon Mobile XR platforms. This development aims to offer high-precision, low-latency 6DoF tracking in AR
headsets, with low power consumption and real-time computation capabilities. To address issues such as motion
sickness and latency, a significant share of MEMS investment is being directed towards the improvement of inertial
measurement units (IMUs), accelerometers, and gyroscopes.
Memory chips
Memory-based CPU architecture, which locates faster, denser memory closer to processing units, is a developing
investment theme in the critical memory chips sector. The in-memory chips – powered by AI –promise storage-level
computation of data, thus allowing faster results. In the race to develop such chips, the leading integrated memory
chip makers – Samsung, SK Hynix, Micron, Western Digital, and Toshiba – are facing a significant challenge from Intel.
With its Optane chips, developed using 3D XPoint technology, Intel is aiming to tighten its grip on the PC market. The
chip is expected to improve PC-based AR applications, especially 4K streaming, HD images, and multi-player gameplay.
Amidst these developments, China is strengthening its grip on the semiconductor sector, starting with memory chips.
The state-backed Yangtze Memory Technologies (part of Tsinghua Unigroup) is planning to mass-produce its first
homegrown 64-layer 3D NAND flash chips, which will compete against Samsung and Micron’s products in the
international market. This could result in significant changes in the global chips market, as the Chinese have the
potential to oversupply their products and undermine the market command of established global players.
The AR value chain

Semiconductors

Semiconductors Leaders Challengers
MediaTek Huawei
CPUs Qualcomm Apple Samsung ARM (Softbank)
AMD Texas Instruments
GPUs Nvidia AMD ARM (Softbank) Samsung

Intel Qualcomm
Renesas OnSemi
VPUs Intel Nvidia Toshiba Omnivision
Qualcomm Synopsys
Ambarella ARM (Softbank) Infineon STMicroelectronics

Image processors
Qualcomm
Qorvo Broadcom MediaTek Murata

Communication chips
Qualcomm ARM (Softbank) Unisoc Technologies Skyworks
STMicroelectronics Bosch Goertek TSMC

MEMS InvenSense (TDK) Analog Devices Qorvo Sensata
NXP Semiconductors Infineon
SK Hynix Western Digital Intel Nanya Tech

Memory chips Micron Toshiba Yangtze Memory
Samsung
Source: GlobalData
Devices
AR-enabling hardware comes in various forms, including smartphones, eyewear (smart glasses), and AR headsets. For
consumer AR applications, smartphones are the most commonly-used platform, while enterprises typically prefer AR
headsets and smart glasses, which offer a broader range of functions.
The hype around smart glasses, which peaked in 2013 when Google started selling prototypes of its first-generation
Glass, may have dissipated, but the launch of new devices such as Bose Frames in 2019 suggests there is still interest in
the technology. These devices are mostly targeted at early adopters to build brand recognition and demonstrate the
technology’s capabilities.
Mainstream adoption, if it happens, will only come when the technology is more mature. Before then, device makers
will have to focus on addressing major issues such as high prices, limited use cases, privacy and safety concerns, and a
general lack of content.
The AR headset space is significantly less crowded compared to the smart glasses segment. Microsoft and Magic Leap
are de facto leaders in the field, following the collapse of rivals Daqri and Meta. In 2019, Microsoft partnered with
Trimble to build a hard hat-compatible gear for HoloLens, intending to make the headsets more appealing to
enterprises, especially in sectors like mining, construction, and oil and gas. Lenovo’s ThinkReality A6 headset, launched
in November 2019, is likely to contest the Microsoft HoloLens 2 and Magic Leap One.
While all of these headsets are largely enterprise-focused, companies like Skully, Sena, and Jarvish are producing
consumer-focused AR helmets, mostly targeted at motorbike enthusiasts.

The AR value chain

Devices
AR devices Leaders Challengers
Rokid Epson
Snap Bose
nReal North
Google Vuzix Xloong Oakley
Smart glasses
Lenovo Atheer ThirdEye
Realmax LLVision
Toshiba
Apple Huawei Xiaomi Oppo

Smartphones
Samsung Google Vivo LG
Lenovo Sony
Jarvish Shoei
AR headsets Microsoft Magic Leap Skully Helmets Sena
Forcite Bell Helmets
Lenovo
Source: GlobalData
The below graphic presents the value chain for VR. It is split into five segments: semiconductors, components,
headsets, platforms, and applications and content.
The virtual reality value chain

An overview
Hardware Middleware Software
Semiconductors Components Headsets Platforms Apps & content
Central processing units

Motion tracking Console-tethered APIs & SDKs Engineering apps
(CPUs)
Graphics processing units

Batteries PC-tethered VR engines - games Healthcare apps
(GPUs)
Vision processing units

Displays Smartphone-tethered VR engines - enterprises Ecommerce apps
(VPUs)
Image processors Cameras & 3D lenses Untethered AI Social apps
Content delivery
Communication chips Audio components Military apps
networks
MEMS Application delivery Video games

Machine vision
networks
Memory chips Films
Source: GlobalData

In the following sections, we will look more closely at the headsets segment of the VR value chain.
Headsets
VR required HMDs –also referred to as headsets or goggles –that completely cover the eyes for an immersive
experience. VR headsets are available in four different forms: console-tethered headsets like Sony’s PSVR; PC-tethered
headsets like Oculus Rift and HTC Vive; smartphone-tethered headsets like the Samsung Gear VR; and untethered
headsets such as Oculus Go, Oculus Quest, HTC Vive Focus, and Lenovo Mirage Solo.
The VR value chain

Headsets
Headsets Leaders Challengers
Facebook Samsung AntVR Pico

Headsets Google Sony Lenovo Valve
HTC Deepoon iQiyi (Baidu)
3Glasses (Digital Domain) Acer
Pimax Shadow VR
HP
Source: GlobalData
While PC and console-tethered devices offer the highest quality experience, smartphone-tethered headsets are more
affordable. Untethered headsets are a combination of PC-tethered and smartphone-tethered headsets that offer the
superior immersion of PC-tethered headsets – albeit with less power and functionality – supplemented with the
mobility of smartphone-tethered headsets. Untethered headsets are being heralded by tech firms as having the
potential to drive VR’s mass adoption in the consumer market.
Despite recent improvements in the capabilities of VR hardware, there is potential for further development of a
number of technical aspects. Three emerging areas of focus for headset manufacturers are:
- FOV: The extent of the environment that is observable at a specific time is a critical element in VR. Start-ups
such as Pimax and StarVR are developing headsets with FOV greater than 200 degrees, while most of the
leading players are yet to move beyond 95 to 110-degree FOV. Facebook announced the Half Dome
prototype, a Rift-like headset with a 140-degree FOV, in 2018.
- Superior resolution: Eye tracking technology is a game-changer in this area. Eye tracking systems reduce
dependency on powerful GPUs, thus lowering the overall cost of devices, and enhance display resolution
through foveated rendering, a process that uses eye tracking to reduce the quality of images in the user’s
peripheral vision and instead focus on objects in their central field of vision. HTC is using this technology in the
Vive Pro Eye, while Facebook has patented an eye tracking technique which uses light field cameras inside the
headset.
- Better frame rates: Improving frame rates with lower-power GPUs is a key area of innovation in the VR
industry. While a minimum of 90 FPS is required for a good VR experience, technological developments to
address this area have been slow to emerge. However, with recent progress in 5G networks and Oculus’s
introduction of Asynchronous Space Warp 2.0, which aims to improve visuals even on lower-end hardware,
we expect imminent progress.
From a competition perspective, Sony’s PS4-dependent PSVR is significantly ahead of other players in the market, due
to the company’s strong portfolio of VR content and lower price points compared to other entry-level headsets. On the
other hand, the smartphone-powered Samsung Gear VR headsets are in stasis. Despite no significant tech upgrade
since 2017, the device remains strong in the market, almost entirely because of its low price point. However, with
Samsung’s shifting its focus to AR and MR, the Gear VR is under pressure due to a small audience share, the emergence
of low-cost untethered headsets such as the Oculus Quest, and a general lack of compelling content. Google too is on
the back foot because of its scaled-down VR activities, which restrict the ability of its Daydream View headset to

compete with Facebook’s Oculus, HTC’s Vive and Shadow VR. However, Google Cardboard is popular among new
users, largely due to its relative cheapness.
The newly launched Valve Index and HP’s Reverb will gain market share in the coming years, as they are largely
application-specific. Valve Index is specifically designed for VR gaming while HP Reverb is more enterprise-focused.
iQiyi’s 4K VR headsets have significant potential for growth, driven by iQiyi’s 100 million-plus subscribers in China.
Other Chinese players such as Deepoon, Pico, AntVR, Pimax, and 3Glasses (acquired by Digital Domain in 2018) are also
aggressively striving to develop their position in fast-growing markets such as China, South Korea, and Japan.

Companies
In this section, GlobalData highlights publicly-listed FMCG, foodservice, and packaging companies that are making their
mark within the VR and AR themes.
Public companies
The table below lists some of the leading listed players associated with these themes and summarizes their
competitive position.
Company Country Competitive position in the VR and AR themes

Ajinomoto Japan A food products company that focuses on foods, bioscience fine chemicals and
pharmaceuticals and health. It is also involved in wellness, packaging, logistics, and
other services. To increase employees’ effectiveness, the group’s companies in Japan
explored the use of virtual reality in training to avoid accidents caused by forklifts and
getting trapped in machinery. Furthermore, Ajinomoto Foods North America (AFNA)
enlisted 1WorldSync, provider of trusted content, and with the company’s help, it
implemented 1WorldSync’s Image Capture solution, to use web-ready product images
including 360 degrees spin imagery, to offer consumers the “in-store” experience
15
while shopping online.
Anheuser- US In Jan 2020, the Swedish software company XMReality announced that Anheuser-
Busch InBev Busch InBev is equipping three of its Zone Brewery Support locations with XMReality’s
16
Remote Guidance . Remote Guidance is an AR-enabled knowledge sharing tool that
lets users communicate with gestures, speech, chat, and pointers with someone. It
includes hands-overlay technology that lets users guide someone else’s hands, a web
portal to manage teams and users, and integration through client-side API’s.
Ball US The packaging company developed a solution to customize packaging without making
any visible design changes. Any logo or “on can” object can trigger a virtual world.
Thanks to AR, virtual objects, premises, and effects can be added to consumers’ live
17
environment, enhancing their reality.
Estée US In 2017, Estée Lauder has partnered with Cyberlink which provided the company with
32
Lauder YouCam, a tool that offered AR training to its over 17,000 global beauty advisors .
In 2019, the company launched iMatch Virtual Shade Expert, powered by Smart
Detection and AR technology, which can help customers choose the ideal foundation
33
shade directly from their mobile device .
Also, in 2020, Estée Lauder, along with other brands such as bareMinerals, YSL, and
NYX, started selling products Pinterest users can try out beforehand via an AR feature.
The “Try On” feature works with Lens, Pinterest’s visual search tool that offers
34
consumers the possibility to overlay a digital image of makeup on a selfie .
Kellogg US Kellogg has partnered with Accenture and Qualcomm to test the use of VR technology
to work out the best place to display its new products in store. The pilot program used
eye-tracking technology incorporated in a VR headset (it used Accenture Extended
Reality XR software and Qualcomm VR headsets) to track and learn about consumer
behavior and how consumers react to product placement in shops. Consumers who
took part in the trial wore a headset, which allowed them to be fully immersed in a
virtual store environment, and Kellogg tracked their eye movement, gathering details
about which products they looked at and for how long. The pilot’s results showed that
placing Pop Tart Bites on lower shelves was optimal, and this adjustment concluded
18
with an 18% increase in brand sales during the pilot.


19
L’Oréal France The beauty and personal care company L’Oréal bought ModiFace , a Canadian AR
and AI brand for cosmetics in 2018. With its help, L’Oréal rolled-out a virtual makeup
try-on functionality on Amazon in 2019, to help customers make more informed
decisions. Consumers need to queue up a lipstick on the Amazon app or website and
choose the “Try now” option under the product’s picture. Then consumers can choose
between using Live Mode (a live video try-on using their personal camera), or
uploading a new photo. Then using AR technology, the customers can swipe between
various lipstick colors.
Garnier, one of L’Oréal’s brands, also started using the AR technology back in 2018,
20
offering the Virtual Shade Selector , an online tool created by ModiFace. The tech
solution offered user the possibility to trying on various colors suggested by the
algorithm after answering a few questions.
McDonald’s US The American fast-food chain has been using AR and VR technology for a number of
years in various ways. For example, back in 2013, McDonald’s partnered with
21
marketing and advertising group DDB Australia to design the TrackMyMacca app,
which allowed Australian users to find out where the ingredients of their food came
from, including information about the farmer.
Then, in 2014, the mixed reality agency Trigger Global, collaborating with DDB and
McDonald’s, to create an AR mobile app featuring DreamWorks animated characters.
Targeted at children, kids can use the app to notice the surface around their physical
happy Meal box come to life as a garden filled with fruits and vegetables. Then, they
22
can use the veggies and fruits to play a game called “How To Train Your Dragon 2” .
In 2017, McDonald’s even used AR technology to educate consumers about
sustainability issues. In Germany, the company launched McMission app,
encompassing of four interactive and informational games (e.g., “Eco-spinning”,
23
“Waste-dunking”) that can be played in-store to enhance the experience .
The McDonald’s AR adventure continued in 2019. McDonald’s Canada partnered with
Snapchat to provide a special lens during August which transforms the iconic fries
arches into a rainbow, in honor of the Pride Month. These examples are just a few of
McDonald’s use of AR.
The company has also used VR for showcasing what is like to eat in a McDonald’s
25 26
outlet or to train their employees among other purposes.
Sodexo France The French foodservice and facilities management firm uses VR, AR, and robotics to
improve its services. The company works with Lenovo and HTC to offer immersive VR
health and safety training to its employees. The program shows employees the
locations they will be working and stimulates scenarios so that they are better
27
prepared for any hazardous situation . In Australia, the company uses AR technology
to support remote and isolated sites from central locations. Sodexo’s team uses AR-
equipped glasses to see through the eyes of on-site field workers, thus gaining insight
into how assets are performing and the team can then offer timely support when
28
needed .


Starbucks US Starbucks Reserve Roastery in Shanghai offers visitors the chance to learn more about
the brewing coffee process by holding their AR-enhanced mobile phones (customers
need to download the Roastery’s app first) up to the copper vessels in the outlet. On
their phone screens, the visitors are then able to watch an animated version of freshly
roasted beans dropping into the cask, and read more information about the whole
29
coffee-making process .
Furthermore, in 2019, the company has launched its first Instagram filter called
Holijoy, consisting of four seasonal lenses. Users who want to activate the lenses need
to buy the limited edition cup and have a mobile device. Once they go to Starbucks’
Instagram page, they need to click on the effect gallery, and then click on the “Try It”
30
option to launch the AR camera experience, consisting of AR overlays .
Stora Enso Finland The Finnish manufacturer of paper products such as disposable coffee cups, has
partnered with the Swedish multinational telecom company Telia to deploy AR and 5G
technology, which were first tested at Stora Enso’s Oulu mill. The 5G technology helps
deploy applications that require fast and powerful wireless connections such as AR/VR
and 360° camera solutions. The 5G technology implemented at the mill was awarded
second place in the Industry of Things World Award 2019, in the “Best
31
implementation of IIoT technology on the shop floor” category .
Source: GlobalData

Glossary
Term Definition
5G 5G refers to the fifth generation of cellular technology standards, that will be based
on IMT2020 standards, under development by the 3GPP. The term ‘5G’ does not
explicitly refer to any particular technology or standard and is therefore a loose term
that can be used and interpreted in multiple different ways, typically for marketing
purposes.
Application programming A set of defined methods of communication between programs so that information
interface (API) can be exchanged without the need to access the core of either program.
AR cloud A persistent 3D digital copy of the real world.
Artificial Intelligence (AI) Refers to software-based systems that use data inputs to make decisions on their
own.
Augmented Reality (AR) Technology that allows the user to see the real world overlaid with a layer of digital
content. This digital content layer can include sensor-based data, sound, video,
graphics, or other datasets.
Computer-generated The use of computer graphics to create or contribute to images in art, television, ads
imagery (CGI) and others.
Digital signal processor A specialized microprocessor with its architecture optimized for the operational needs
(DSP) of digital signal processing. The goal of a DSP is usually to measure, filter, or compress
continuous real-world analog signals.
Fintech Originally used to describe a wave of start-ups that were founded to deliver
technology-based financial services (with examples ranging from online payment
services to insurance comparison sites), the term has evolved into a catch-all phrase
for the digital transformation of financial services.
General Data Protection EU legislation that came into force across the EU in May 2018, giving consumers
Regulation (GDPR) certain rights and protections over the data that organizations hold on them,
including the right to data portability.
Head mounted display A type of computer display device or monitor that is worn on the head or is built in as
(HMD) part of a helmet.
Head-related transfer A response that characterizes how an ear receives a sound from a point in space. Also
function (HRTF) sometimes known as the anatomical transfer function (ATF).
Industrial Internet of Things Refers to the use of connected sensors and actuators to control and monitor the
(IIoT) industrial machinery environment, to help detect faults early and predict
maintenance requirements.
Machine Learning An application of AI that gives computer systems the ability to learn and improve from
data without being explicitly programmed.
Occlusion The effect of one object in a 3D space blocking another object from view.
Software development kit A collection of software used to develop applications for a specific device or operating
(SDK) system.
Virtual reality (VR) Technology that aims to immerse the user in an entirely artificial world, which has the
illusion of reality. It uses special equipment such as a headsets or gloves fitted with
sensors to simulate a user's physical presence in a 3D environment.
Source: GlobalData

Further reading
GlobalData reports
Publication date Report title
June 2020 Analyst Briefing: COVID-19 is accelerating the adoption of Augmented Reality by
global beauty giants
May 2020 Coronavirus (COVID-19) Case Study: Technology Solutions
December 2019 Success Case Study: 19 Crimes Wine
28 November 2019 Thematic Research: Augmented Reality
8 October 2019 Thematic Research: Virtual Reality
October 2019 Tech Innovator Profile - Zappar
13 June 2018 Thematic Research: Virtual & Augmented Reality in Retail and FMCG
21 May 2018 Thematic Research: Virtual & Augmented Reality in Retail
3 July 2017 Thematic Research: Alternative Reality
Source: GlobalData

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| Our thematic research methodology

Companies that invest in the right themes become success stories. Those that miss the important themes in their
industry end up as failures.
Viewing the world’s data by themes makes it easier to make important decisions
We define a theme as any issue that keeps a CEO awake at night. GlobalData’s thematic research ecosystem is a single,
integrated global research platform that provides an easy-to-use framework for tracking all themes across all
companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to
make the right investments ahead of the competition, and secure that all-important competitive advantage.
Traditional research does a poor job of picking winners and losers

The difficulty in picking tomorrow’s winners and losers in any industry arises from the sheer number of technology
cycles – and other themes – that are in full swing right now. Companies are impacted by multiple themes that
frequently conflict with one another. What is needed is an effective methodology that reflects, understands, and
reconciles these conflicts.
That is why we developed our “thematic engine”

At GlobalData, we have developed a unique thematic methodology for ranking all companies in all sectors based on
their relative strength in the big investment themes that are impacting their industries. Our thematic engine identifies
which companies are best placed to succeed in a future filled with multiple disruptive threats.
To do this, we rate the performance of the top 1,000 companies against the 50 most important themes impacting
those companies, generating 50,000 thematic scores. The algorithms in GlobalData’s thematic engine help to identify
the long-term winners and losers within each sector.
How do we create our sector scorecards?

First, we split each industry into its component sectors, because each sector is driven by a different set of themes.
Taking the TMT (technology, media and telecom) industry as an example, we split this industry into the 18 sectors
shown in the graphic below.
Our five-step approach for generating a sector scorecard

Here we use the tech, media and telecom sector as an example sector, for illustration purposes
Sectors Themes Research Thematic screen Sector scorecard
1. Split the global TMT 2. Identify and rank the 3. Identify and score tech 4. Calculate overall 5. Determine leading companies
sector into 18 subsectors. top 10 themes driving leaders and challengers thematic rankings for in each sector using our three
earnings for each sector. for each theme. all companies in a sector. screens.
Hardware
Semiconductors 1. Voice
Servers, storage, networking
Telecom equipment Consumer
electronics Sector Scorecard =
Component makers
Industrial automation
Software 2. Cloud Thematic screen
Application software
Infrastructure software +
Security software Valuation screen
Video games software
IT services +
Internet & Media 3. Blockchain
E-commerce
Risk Screen
Social media
Advertising
Music, film and television
Publishing
Telecoms 10. Internet of
Telecom operators
Cable operators Things
Source: GlobalData

Second, we identify and rank the top 10 themes for each sector (these can be technology themes, macroeconomic
themes, or industry-specific themes). Third, we publish in-depth research on specific themes, identifying the winners
and losers within each theme. The problem is that companies are exposed to multiple investment themes and the
relative importance of specific themes can fluctuate. So, our fourth step is to create a thematic screen for each sector
to calculate overall thematic leadership rankings after taking account of all themes impacting that sector. Finally, to
give a crystal-clear picture, we combine this thematic screen with our valuation and risk screens to generate a sector
scorecard used to help assess overall winners and losers.
What is in our sector scorecards?

Our sector scorecards help us determine which companies are best positioned for a future filled with disruptive
threats. Each sector scorecard has three screens:
 The thematic screen tells us who are the overall technology leaders in the 10 themes that matter most, based
on our thematic engine;
 The valuation screen tells us whether publicly listed players appear cheap or expensive relative to their peers,
based on consensus forecasts from investment analysts; and
 The risk screen tells us who the riskiest players in each industry are, based on our assessment of four risk
categories: corporate governance risk, accounting risk, technology risk, and political risk.
How do we score companies in our thematic screen?

Our thematic screen ranks companies within a sector based on overall technology leadership in the 10 themes that
matter most to their industry, generating a leading indicator of future earnings growth.
Thematic scores predict the future, not the past.
Our thematic scores are based on our analysts’ assessment of their competitive position in relation to a theme, on a
scale of 1 to 5:
The company’s activity with regards to this theme will be highly detrimental to its future
1 Vulnerable
performance.
The company’s activity with regards to this theme will be detrimental to its future
2 Follower
performance.
The company’s activity with regards to this theme will have a negligible impact on the
3 Neutral
company’s future performance, or this theme is not currently relevant for this company.
The company is a market leader in this theme. The company’s activity with regards to this
4 Leader
theme will improve its future performance.
The company is a dominant player in this theme. The company’s activity with regards to this
5 Dominant
theme will significantly improve its future performance.
How our research reports fit into our overall thematic research ecosystem?
Our thematic research ecosystem is designed to assess the impact of all major themes on the leading companies in a
sector. To do this, we produce three tiers of thematic reports:
 Single Theme: These reports offer in-depth research into a specific theme (e.g. artificial intelligence). They
identify winners and losers based on technology leadership, market position, and other factors.
 Multi-Theme: These reports cover all themes impacting a sector and the implications for the key players in
that sector.
 Sector Scorecard: These reports identify those companies most likely to succeed in a world filled with
disruptive threats. They incorporate our thematic screen to show how conflicting themes interact with one
another, as well as our valuation and risk screens.

| About GlobalData

GlobalData is a leading provider of data, analytics, and insights on the world's

largest industries.
In an increasingly fast-moving, complex, and uncertain world, it has never been harder for organizations and decision
makers to predict and navigate the future. This is why GlobalData’s mission is to help our clients to decode the future
and profit from faster, more informed decisions. As a leading information services company, thousands of clients rely
on GlobalData for trusted, timely, and actionable intelligence. Our solutions are designed to provide a daily edge to
professionals within corporations, financial institutions, professional services, and government agencies.
Unique Data
We continuously update and enrich 50+ terabytes of unique data to provide an unbiased, authoritative view of the
sectors, markets, and companies offering growth opportunities across the world's largest industries.
Expert Analysis
We leverage the collective expertise of over 2,000 in-house industry analysts, data scientists, and journalists, as well as
a global community of industry professionals, to provide decision-makers with timely, actionable insight.
Innovative Solutions
We help you work smarter and faster by giving you access to powerful analytics and customizable workflow tools
tailored to your role, alongside direct access to our expert community of analysts.
One Platform
We have a single taxonomy across all of our data assets and integrate our capabilities into a single platform – giving
you easy access to a complete, dynamic, and comparable view of the world’s largest industries.
Disclaimer: All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or
transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior
permission of the publisher, GlobalData. The facts of this report are believed to be correct at the time of publication
but cannot be guaranteed. Please note that the findings, conclusions and recommendations that GlobalData delivers
will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are
not always in a position to guarantee. As such, GlobalData can accept no liability whatsoever for actions taken based
on any information that may subsequently prove to be incorrect.

| Contact Us
If you have any more questions regarding our thematic research services, please
get in touch.
Head of Thematic Research Customer Success

Cyrus Mewawalla
0B Understand how to use our Themes product
2B
cyrus.mewawalla@globaldata.com customersuccess.thematic@globaldata.com
3B
+44 (0) 207 936 6522

1B +44 (0) 207 406 6764
4B

VR & AR in Consumer Goods: Thematic Research: Technology

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Thematic Research: Technology

VR & AR in Consumer Goods

Industry analysis ..........................................................................................................................................................14

Value chain ..................................................................................................................................................................30

| Our thematic research methodology ........................................................................................................................44

| About GlobalData .....................................................................................................................................................46

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Trend What’s happening?

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Trend What’s happening?

Despite being one of the hottest themes in consumer electronics, conversational

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Trend What’s happening?

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Trend What’s happening?

Trend What’s happening?

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Trend What’s happening?

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Trend What’s happening?

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Trend What’s happening?

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Market size and growth forecasts

AR and VR to grow solidly over this decade

Impact of VR and AR on FMCG, retail, and foodservice

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Source: GlobalData’s 2018 Q3 global consumer survey

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Using VR and AR to attract millennials and Gen Z

Source: GlobalData’s 2018 Q3 global consumer survey

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Source: GlobalData’s 2018 Q4 global consumer survey

The impact of COVID-19

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Source: Bollé Official Website

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Source: QReal Official Website

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L’Oréal’s makeup app

Source: L’Oréal Official Website

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Magnum & Benefit Pop up6

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- AR and VR can increase employee and customer safety.

Onirix to provide AR menus for restaurants

Dixie Everyday Paper Cups7

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Source: Inter IKEA Systems

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Mergers and acquisitions

Date Acquirer Target Value Target company description

Sep 2019 Verizon Jaunt XR - 3D volumetric video capturing

Sep 2019 Facebook CTRL-Labs 1,000 Neural interface technology