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Hollywood is embracing augmented reality, virtual reality, and mixed reality (a blend of both) in a big way. The Venture Reality Fund, a venture capital fund that tracks investments in the sector, reported tonight that the number of investments in the entertainment sector in the second half of 2017 is up 79 percent compared to the same period a year ago.
The VR Fund’s latest report highlights more than 450 companies developing infrastructure, tools, platforms, and applications for the VR/AR ecosystem. So far this year, global investment in AR and VR is more than $2.3 billion, higher than in any previous year.
“Global investment in VR and AR is tracking higher than any previous period, and at a more accelerated pace,” said Tipatat Chennavasin, cofounder and general partner at The VR Fund, in a statement. “The VR industry is healthy and growing steadily, and we are seeing increased investor interest from traditional venture funds and new VR and AR-focused funds alike.”
The number of investments in VR/AR entertainment was up 79 percent in the second half of 2017 (granted, it’s not quite over yet) compared to the second half of 2016. Enterprise investments are up 69 percent. Tools and platforms for next-generation reality capture are up 56 percent, and investments in infrastructure for tethered head-mounted displays are up 47 percent.
The VR Fund evaluated more than 3,000 companies for the VR landscape (the image at the top) and those selected met a certain criteria of funding, revenue, mainstream coverage, and/or major partnerships. Since the firm released its Q1 2017 Global VR Landscape, the number of qualified companies has increased by 30 percent.
Among the insights: Major Hollywood players, including AMC, Disney, DreamWorks Animation, HBO, Netflix, Sony Pictures, and Viacom, drove growth in the entertainment category. New experiences for AAA properties, like Star Wars, will help drive consumer interest in VR over the coming quarters.
The report also showed that the games category grew by 40 percent during this period, consistent with the success reported by Oculus, Steam VR, and PlayStation VR combined. The VR Fund estimates more than 35 VR game titles have generated $1 million or more in revenues, signaling a healthy early-stage ecosystem for VR game studios. These numbers are positioned for continued growth as headset prices drop.
The VR Fund said that global companies like Cisco, HP, and Accenture entered the enterprise VR space during this period, but a majority of the category’s growth was driven by startups building revenue-generating businesses for specific industry sectors. This trend will likely continue over the coming quarters as enterprises embrace the new Microsoft Windows Mixed Reality headsets, which offer lower prices and easier setup.
Major investments in the next-generation reality capture space indicate that the broader market is shifting away from 360-degree video to true VR. Advancements in display technology are largely responsible for the 47 percent growth seen in the tethered head-mounted display category. The report also noted the announcement of new all-in-one, standalone devices, such as the Oculus Go and HTC Vive Focus. That bodes well for VR in 2018.
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