AR Workers Confident in Profitability

From Facebook’s Oculus Rift to Snapchat Lenses, the immersive media space has certainly become a headline grabber. But the big question is: How profitable could virtual and augmented reality (VR and AR) activities be in the near future? According to July 2016 research, fewer than half of VR professionals in the Americas anticipate gains from this work over the next 12 months.

In July, Greenlight Insights (formerly Greenlight VR) and Road to VR surveyed 514 VR professionals in the US, Canada and Mexico about their expectations on profitability of both VR and AR activities.

According to the data, 45.2% of respondents felt that their VR and AR activities will be cost-effective to their organization in the next 12 months. In contrast, 22.4% said they do not anticipate being profitable in that timefrome.

Of those that are expecting profits, 35.7% of VR professionals anticipate hitting VR- and AR-related revenues of $250K or less, according to the same study. But even more promising, another 38.4% are forecasting between $250K to $5 million-plus in revenues.

Devices that power home-based video viewing showed high US penetration rates in separate studies published in September 2016. Nielsen noted that 24% of US households had smart TVs in Q2 2016, while 76% had DVD or Blu-ray players, 53% subscribed to a subscription video-on-demand (SVOD) service and 44% had game consoles. The study also noted that 94% of households had HDTVs.

A study by Verto Analytics found that in addition to the 90% of US internet users who had desktops or laptops, 31% had smart TVs, 29% had game consoles and 21% had streaming media devices. Since consumers need only one such device to enable connected TV viewing, the combined penetration rates—coupled with the likelihood that other household members might be using the same devices—amount to mainstream adoption of home-based video streaming technologies.

Research from Ericsson, a communications technology company specializing in mobility, broadband and the cloud surveyed more than 30,000 internet users worldwide ages 16 to 69 who have a broadband internet connection at home and watch TV and view video on a weekly basis. Generally, the study found that more respondents are conducting digital activities via a smartphone or tablet, while at the same time watching TV, than they did in 2014.

For example, two years ago, less than a quarter of TV and video viewers said they browse the internet, related to the content they were currently watching. Fast forward to 2016, and nearly a third of respondents said they were doing so.

Helps Grow US Connected TV Audience

 

1US connected TV users will grow by 20.6% in 2016 to reach 181.8 million. Starting next year, growth will level off to single digits but continue in positive territory through at least 2020, when the number of users will reach 202.1 million, as explored in a new eMarketer report, “Connected TV and Over-the-Top Video: The Living Room’s Place in the US Digital Video Ecosystem” (eMarketer PRO customers only).

By 2020, connected TV users will represent 71.2% of internet users and 60.4% of the US population, up from 68.0% and 56.1%, respectively, in 2016.

Smart TV viewers will make up an increasing number of the connected TV user base during eMarketer’s forecast period. By 2020, 34.4% of connected TV users in the US will watch on smart TVs, up from 26.9% in 2016.

Smart TVs won’t be the only growth category within the group of devices that make up the connected TV universe. Amazon’s and Google’s streaming devices will enjoy the most growth from 2016 through 2020, followed by Roku players and smart TVs. Apple TV and game consoles will grow more moderately, while Blu-ray players will remain essentially flat.

Connected TV users as a whole will increase by a compound annual growth rate (CAGR) of 2.68% from 2016–2020—a lower growth rate than that of every device listed separately except Blu-ray players. This suggests people will increasingly use multiple devices, driving up the growth rates of individual devices more than the category as a whole.

As is typical with connected TV data, the number of households closely follows the number of users, with an average of 2.06 users per US household during the forecast period. By 2020, there will be 97.7 million US connected TV households, up from 88.7 million in 2016. Much like the user figures, growth will top 20% this year and recede into the single digits next year and for the rest of the forecast.

A GfK study titled “Over-the-Top TV 2016: A Complete Video Landscape” found that 36% of US internet users owned connected TV devices in 2016, nearly double the 19% who did in 2014. This particular stat was limited to set-top boxes and streaming sticks, and did not include smart TVs, game consoles, or Blu-ray and DVD players, though the full study looked at all of the above.

Connected TV accounted for 20% of US weekly time spent viewing digital video in August 2016, according to a Frank N. Magid Associates study. Mobile devices made up a combined 33%, while the largest share, 46%, went to computers. Even though connected TV had the smallest share of the three major device platforms, it grew by a factor of 2.5 in the two years leading up to the study, according to Magid.

The Living Room Place in the US Digital

Connected TV and over-the-top (OTT) video viewing are growing on the strength of streaming technologies and premium content aimed at living room screens. The advertising market will follow as connected TV amasses more scale.

US connected TV users and households will increase by over 20% in 2016 and are on track to continue growing through 2020, albeit at single-digit rates starting next year. The trend is led primarily by the popularity of smart TVs and streaming devices from Amazon, Google and Roku.
OTT video viewership is also increasing, particularly on subscription services such as Netflix, Amazon and Hulu. Ad-supported YouTube is nearly saturated, so its growth has slowed.
Worldwide, and aside from the VR professionals themselves, it’s also encouraging that investment in VR and AR companies has been on the rise. According to CB Insights, a venture capital research firm, since early 2014, more than $2.5 billion has been invested in VR and AR companies across more than 200

Worldwide, and aside from the VR professionals themselves, it’s also encouraging that investment in VR and AR companies has been on the rise. According to CB Insights, a venture capital research firm, since early 2014, more than $2.5 billion has been invested in VR and AR companies across more than 200 deals.

Devices that power home-based video viewing showed high US penetration rates in separate studies published in September 2016. Nielsen noted that 24% of US households had smart TVs in Q2 2016, while 76% had DVD or Blu-ray players, 53% subscribed to a subscription video-on-demand (SVOD) service and 44% had game consoles. The study also noted that 94% of households had HDTVs.

A study by Verto Analytics found that in addition to the 90% of US internet users who had desktops or laptops, 31% had smart TVs, 29% had game consoles and 21% had streaming media devices. Since consumers need only one such device to enable connected TV viewing, the combined penetration rates—coupled with the likelihood that other household members might be using the same devices—amount to mainstream adoption of home-based video streaming technologies.

Cutter Attention For New Entries Vies

AT&T made a play for the growing streaming TV market, announcing the launch of DirecTV Now, a cable-like over-the-top (OTT) live streaming service which will offer DirecTV’s satellite channels to subscribers.

AT&T’s move into streaming TV makes sense as more and more consumers are watching digital content on their TVs, laptops and mobile devices through OTT services. eMarketer estimates that there will be 188.1 million OTT video service users in 2016, rising to 206.1 million in 2020. YouTube is included in eMarketer’s estimates. Because its audience is so large and well-established, it makes the growth of the entire category appear to be less dramatic.

Many OTT viewers have increased their digital TV and video content consumption after cutting the cord to cable TV. eMarketer expects the number of cord-cutters (and cord-nevers—those who never have had pay TV) to rise substantially over the next few years, growing from 17.8% to 22.6% of the US adult population between 2016 and 2019. AT&T’s move into the live-TV streaming space is a new way to offer potential viewers access to traditional live TV content that they would typically view via cable subscription.

AT&T is looking to attract subscribers with a variety of deals, including an introductory pricing option of $35 a month for a package of more than 100 channels. AT&T is also including a fourth-generation Apple TV to customers who sign up for 3 months of pre-paid DirecTV Now service, and an Amazon Fire TV Stick with 1 month of pre-paid service. Additionally, AT&T mobile customers will be able to stream the content via the DirecTV Now app without worrying about monthly data limits.

While these offers may be tempting for some customers, it may not be a deal-driver for many, said eMarketer analyst Paul Verna. “Price is one of the factors people take into account when choosing a pay TV service, whether a cable- or satellite-delivered one or a digital streaming package,” he said. “However, consumers are also picky about what shows, movies, sports, live TV, and local channels they watch. In that regard, they tend to select services based on how closely they match their wish lists, as opposed to simply choosing on the basis of cost.”

DirecTV Now’s content does come with some caveats. It reportedly does not offer consumers a DVR option, excludes CBS (which offers its own live streaming service) and does not offer local networks not owned by ABC, NBC or Fox.

AT&T also faces competition with other existing cable-like streaming services such as Sling TV and Sony PlayStation Vue. The market is expected to become even more competitive in 2017 with Hulu’s expected move into live TV, which will include channels such as ESPN, ABC and Fox, as well as YouTube’s new “Unplugged” service, which will offer a bundle of not-yet-announced cable TV channels.