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.

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.

Games Player

Facebook’s launch of a new set of games, called Instant Games, available for play both on the core Facebook platform and its spun-off Messenger app, is a new step but also a bit of a throwback for the social network.

Facebook beta-launched 17 games, including old school titles like Pac-Man and Space Invaders, which can be played in app, whether the user is on a desktop, laptop or, more likely, a mobile device.

While Facebook’s sharing and communications utilities are what made it the cultural juggernaut that it is, gaming has played an outsized part in its history, contributing a significant amount of its revenue in the early days, when it was still experimenting with ways to unlock the advertising potential of the platform.

A survey by AYTM suggests that game-playing is still a widespread activity on Facebook. AYTM found that almost half of social network users said they played games on social platforms at least occasionally, and half of those said they did so regularly. While the survey didn’t ask about gaming on specific platforms, Facebook users predominated the survey group—92% of those who said they used social networks were on Facebook.

The AYTM survey suggests that, at least at the moment, user interest in playing games on a social platform is not likely to change much. When asked if they were likely to play a social game in the next year, 38.7% said they probably wouldn’t —almost the same number who said they had never played a social game.

Some 15% of the time users spend on Facebook is devoted to games, according to a report in the Wall Street Journal, and games generate $45 million in monthly revenue, down from $65 million in December 2011, according to a Piper Jaffray estimate.

At that level, games make up only small slice of Facebook’s overall revenue. Most gaming revenues are accounted for in Facebook’s financials as “payments and other.” eMarketer estimates that such revenues will make up less than 3% of the company’s total this year. That revenue mix is not projected to change much over the next two years.