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19 Jan 2023

Extended Reality (XR) Industry Trends and Future

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2021 can be considered as one of the toughest years that brought us more lockdowns, traveling restrictions, supply chain disruptions all resulting in a significant economic impact. With all that it still managed to bring us quite a significant amount of remarkable and exciting news from the realm of technology and Extended Reality (XR) in particular.

For innovation standing at the frontline of many tech giants, SMEs, institutions, and industries agendas, we have witnessed a major leap towards XR, with companies utilizing its power to overcome many of the challenges we have faced. Requiring new ways of interactions, many trends have found rapid adaptation from the need of remote collaboration and creation of hybrid workplaces to advancement of remote education and hybrid events.

We tend to forget how entwined some of the technology can become in our everyday lives. With the six-hour October outage of Meta social media platforms, Facebook, Instagram and WhatsApp, both companies and individuals could have felt a social or economical impact. Connecting nearly 3 billion users worldwide, social media today serves as an essential pillar of our communication. Thinking forward, the social media outage, was a reminder of how important it is to be able to connect and how much we rely on technology.

The XR market will continue its rapid expansion, expected to reach USD 125.2 billion by 2026, accelerated by the surging adaptation of the technology in education, healthcare, military, industrial and entertainment sectors. The raising numbers of XR devices coming to the market are opening new opportunities for collaboration and content creation. This technology is capable of delivering a great number of advantages from cost reduction and rapid outcome improvement to completely reshaping education and collaboration.

Much more will be possible with the advancement of XR industry, where we have witnessed quite a number of remarkable milestones this year. Amongst which quite a few have served as the turning points that will be shaping the future of how we perceive reality and interact in it. Today, we would like to look back at these milestones that have made headlines in 2021 and are bound to shape the XR market, trends and industry of 2023 and beyond.

Microsoft Mesh & Hybrid Workspaces

This year has accelerated XR software advancement for future remote collaboration systems development, with tech giants setting the stage for more elaborate hybrid platforms, like Microsoft Mesh, launched in March 2021. A Hybrid platform will allow collaboration between users that are working on location and the ones working remotely with both parties feeling physically present, enabling immersive presence and photorealistic holoportation into a shared experience. As we continue to move towards remote existence, with both Gartner and Deloitte predicting a bigger fraction of workers becoming remote in the upcoming years, there are still a number of concerns that arise with remote work, like employees struggling with unplugging after work, loneliness and collaboration challenges, to name a few.

The potential lies in leveraging XR to solve them, as the technology behind Hybrid platforms advances, we will be able to step closer to tools that allow for equal presence be it physical or remote. Thus, more companies could give their employees the opportunity to select whether they wish to work on location or from home offices without having to undergo a number of disadvantages on working remotely. This could have a positive impact on the distributed workforce as XR could help enhance and make remote work more effective, economically reasonable, comfortable and safe for both the employer and employee, keeping peers connected.

Extended Reality Hardware

The XR hardware without doubt has to be one of the major milestone this year, with so many new devices launched throughout the year, Varjo Aero, Nreal Air, Pico Neo 3 and HTC VIVE Flow amongst the latest. Hardware producers constantly strive to increase the visual fidelity and field of view (FOV) amongst other functional capabilities to achieve an even better experience for the headset’s users. The market is providing more and more opportunities for developers to take the XR experiences to a completely new level, helping realize much more complex projects with advanced functionality and a great variety of immersive interaction and scenarios.

With that being said, we are promised even more advanced hardware to be launched in 2022 amongst which are Oculus Quest 3 Project Cambria, Magic Leap 2, Hololens 3, Apple MR and many more. We could soon be approaching a phase where the device mark will become oversaturated with hardware. We are already at the point where it is required to make the focus shift towards content creation. This will require a rapid increase in knowledge and technology stack for all developers working to expand the limits of XR possibilities, as well as the number of agile specialists capable of honing and utilizing new skills in a rapidly growing environment.

Next Generation Haptics

Haptics technology allows to extend the sense of presence for users in immersive environments, by enabling to transmit and comprehend information through touch. The technology enables to simulate tactile perception as well as serves to provide haptic feedback in order to communicate with the user. With the advancement of XR technology, haptics has accelerated its implementation by providing users with the possibility to have an even deeper immersion into an experience, providing them with what we would consider a sensation when touching someone or something.  

Quite a number of wearable haptic technologies have already been developed that allow to enhance XR experiences from haptic suits like Tesla, haptic gloves like Meta and HaptX, Touch haptic controller (for Healthcare or other solution which require high accuracy of movements), Ultraleap mid-air haptics technology or some that are one the way like haptic socks patented by Apple. Even though the technology itself is not new, its constant advancement enables users to experience a more realistic sense of touch, taking XR experience of any industry to a completely new level, enabling users to submerge and interact with virtual environments as if they were happening in real life. Looking ahead, haptics will be one of the technologies that will allow to create experiences that will help users explore and navigate through, sense and touch artificial environments on a completely new level.  

Enterprise Use Of Extended Reality

Enterprise and tech giants often dictate the direction entire industries will stir in, 2021 was no exception. With Microsoft winning an estimated $21.88 billion contract to supply the US Army with 120,000 Hololens-based headsets or ByteDance, Tiktok parent company, acquisition of Pico Interactive, the Chinese VR headset producer. Magic Leap change of focus towards enterprise, rebranding and $500 million investment round announcement. As Saleseforce closed the $28 billion Slack purchase deal with the ambition to turn this software into the next generation collaboration platform and Accenture purchase of 60,000 Oculus headsets with the aim to train new recruits, we can see an amplified interest towards XR technology from different industries. 

At the same time there is clear evidence that Meta, former Facebook, has shifted its focus towards XR for consumers as it has taken the decision to discontinue the Oculus for Business production by January 1, 2022.  

The ongoing pandemic has had its impact on the adaptation of XR technology, mostly due to its capability to connect users worldwide and provide opportunities for much needed remote collaboration. We are bound to see more large-scale purchases and adaptations in the upcoming years, with growing number of users worldwide. This could only mean that XR technology will become increasingly relied on as part of our everyday business and private activities.  

Image Source: Magic Leap

The Coming of The Metaverse

In October 2021 Meta, former Facebook, in their founder’s letter has shared Mark Zuckerberg's announcement of the next chapter of the internet and their ambition to bring the Metaverse to the general public. Now rebranded as Meta, to reflect the strategic direction of their portfolio, the company is moving forward with building a fully integrated collaboration universe where people can work, meet, play, interact and much more.

The one question at that point was whether Meta will be the one to bring this dream to life and create an ultimate space that will provide an unprecedent feeling of presence in a virtual universe or will the ambition be ultimately picked up by another tech giant. This announcement without doubt has caused a major uproar for many worldwide, with many tech companies having to rapidly comprehend and adjust to this key milestone. Following the Meta news, some major technology players like Niantic with Lightship AR, Qualcomm with Spaces XR Platform and Microsoft with Teams, announced their coming into the Metaverse race. And let's not forget Google, one of the pioneers in AR technology, that is now also attempting to gain a foothold in the creation of the Metaverse. 

On another note, when speaking about the Metaverse we cannot miss to mention the hottest buzzwords of 2021, the NFTs and the Web3. Non-fungible tokens, referred to as NFTs are unique units of data stored on a blockchain that serve as proof of asset possession and ownership. Web3 which is sometimes called WEB 3.0 is the next version or generation of the internet, the decentralized web based on blockchain tech and digital tokens idea. With that being said we can already see the acceleration in these two directions, with companies outside of the tech realm starting to invest into NFTs and Web3, like Nike’s recent acquisition of the NFT collectables studio RTFKT. We are bound to see more non-tech companies from FMCG, fashion, media, real estate and more domains, investing into NFT software, assets and creators to be competitive in the upcoming Metaverse.

Even though the Metaverse is an exciting concept that can grant its users ultimate access to a completely different level of existence and collaboration, there are still quite a few challenges that will need to be solved before it can become a part of our everyday reality.

Future Extended Reality Trends 

While thinking about the past year, it is always good to think of what lies ahead, which trends will be shaping the present of 2023 XR. With all the milestones we can definitely see the tendency of brands to adopt more of immersive technology. While industries from fashion to retail and real estate will be heavily investing into Web3 and NFTs, that have taken the market by the storm, more and more companies will explore the possibilities of the Metaverse.

In the following year, 5G, will at last be able to showcase its practical implementation, the benefits high speed internet can deliver while operating in the Metaverse, raising the need for consumers to switch, and creating opportunities for telecom operators. However, we are still bound to see more network outages as the infrastructure is not quite ready.

XR hardware giants like Apple will start to have an even bigger impact. With the launch of the Apple MR glasses, users will be able to get a new device in their own iOS ecosystem and finally Meta will get a strong competitor on XR for consumers market, which will accelerate the digital transformation even more. Thus, resulting in the need for more content development, leading to content creators’ shortage. This will ultimately bring us to the point where the fight for tech talent will become more obvious.  

Last but not least is the further acceleration of XR technology in healthcare which remains to be a pioneer and early adopter of immersive technology, continuing to hold its leading position.

Image Source: Antonio De Rosa

In Conclusion

As we are looking back and lifting the curtain to 2023, it is becoming more evident that XR is bound to entwine itself more into both enterprise and consumer activities. The pace at which companies manage to adapt to it, will dictate and impact which businesses will be able to have in the XR future of operations.

For more information on how Extended Reality can be integrated and advance both business and user experiences see our portfolio or contact us.

Authors: Alex Dzyuba, Lucid Reality Labs Founder & CEO | Anna Rohi, Lucid Reality Labs Senior Marketing & Communications Manager

Article Last Edited 10 May 2023.

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