There is good news and bad news for the immersive reality industry, which consists of businesses that provide augmented reality (AR), mixed reality (MR), and virtual reality (VR) products. First the good news:
- According to analytics firm Digi-Capital, start-ups in the augmented reality and virtual reality space raised a record $3 billion in 2017, with more than $1.5 billion coming in the fourth quarter.
- These investments occurred across 28 categories ranging from education to music, suggesting how wide-ranging immersive reality is.
Now the bad news:
- More than half the investment came from just four major players: Improbable, Magic Leap, Niantic, and Unity. As Lucas Mateny of Tech Crunch noted, the actual deal flow for smaller immersive reality start-ups is getting smaller.
The largest category of investment was gaming, partly because of the $200 million received by Niantic, creator of AR sensation Pokémon GO the forthcoming Harry Potter AR game. The popularity of gaming apps underscores how immersive reality continues to be perceived as an entertainment phenomenon on the consumer side. But gaming accounted for only one tenth of the total investment into immersive reality for 2017, with hardware devices (such as smart glasses) and applications across many other fields accounting for the lion’s share.