THE STATE OF AUGMENTED & VIRTUAL REALITY Analyzing AR/VR investment trends in the first half of 2016
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ABOUT THE PRESENTER Nicholas Pappageorge Tech Industry Analyst, CB Insights Focuses on Internet of Things, AR/VR, Space, Drones, and Industrial IoT Published research and data analysis has been featured in Forbes, Fortune, Bloomberg, Wired, Quartz, Re/Code, and Business Insider, among other major media outlets @NpappaG Previously held research role at 3D printing company MakerBot Industries Graduate of Hamilton College npappageorge@cbinsights.com www.cbinsights.com 6
IN THE NEXT 20-25 MINUTES, WE LL COVER 1 2 3 4 5 Private market activity in AR and VR What we know about Magic Leap Corporations competing in AR/VR Where startups see opportunity Enterprise and industrial use cases www.cbinsights.com 7
STATE OF AR/VR: MACRO TRENDS IN THE GLOBAL LANDSCAPE www.cbinsights.com 8
Since 2012, AR/VR companies raised: $3.3 BILLION across 375 DEALS www.cbinsights.com 9
INVESTMENT INTO PRIVATE AR/VR COMPANIES SET FOR RECORD YEAR At the current run rate, both deals and dollars into AR/VR companies are set to reach record levels in 2016. Top Deals Since 2012 Magic Leap $794M // Series C Magic Leap $542 // Series B MindMaze $100M // Series A NextVR $80M // Series C Source: CB Insights. www.cbinsights.com 10
Q2 16 SEES DEALS AND DOLLARS FALLING After a massive Magic Leap deal, Q2 16 hardly compared (even to quarters before the mega-round). Magic Leap $542M Series B Magic Leap $794M Series C Top Deals Q2 16 Meta $50M // Series B OTOY $37M // Series D The Virtual Reality Company $23M // Series C Lumus $15M // Series B Within $13M // Series A Source: CB Insights www.cbinsights.com 11
AR/VR IS STILL DOMINATED BY EARLY STAGE DEALS Since 2012, early stage rounds (seed and Series A) have accounted for 69%-83% of deals to the space. Source: CB Insights www.cbinsights.com 12
GEOGRAPHY: U.S. LEADS, CHINA AND UK TRAIL The United States saw the bulk of deals, followed by China and the UK. Canada and France saw 4% and 3% of deals, respectively. Source: CB Insights, percentages are rounded up. www.cbinsights.com 13
MOST ACTIVE INVESTORS Interestingly, 4 of the top 8 AR/VR investors are corporate venture arms. Rothenberg Ventures tops lists, and also has a VR -specific accelerator. Presence Capital and GV tied for second most active. Source: CB Insights, ranked by number of unique companies invested. www.cbinsights.com 14
INVESTOR ECOSYSTEM Accelerators Vertical specific VCs Generalist VCs Corporate VCs Note: select investors not ranked or exhaustive. www.cbinsights.com 15
INVESTOR ECOSYSTEM CONTINUED Virtual Reality Venture Capital Alliance 38 investors, Headed by President of VR at Vive Source: VRVCA, TechCrunch www.cbinsights.com 16
WHAT IS AR / VR (AS WE DEFINE IT?) Augmented reality (AR): A hybrid reality tech that combines the real world with a rendered one. Magic Leap s headset, still in development, is an example in the category. (Mixedreality, a merging of real and virtual worlds, is used somewhat interchangeably and bucketed here) Virtual reality (VR): a virtual world that is completely rendered. Examples here would include Jaunt, which enables cinematic VR. Both/Other: technologies that enable both AR and VR. An example is Eyefluence, which offers eye-tracking technology that can be applied to both virtual and augmented reality systems. www.cbinsights.com 17
Over the next 10 years, the form factor's just going to keep on getting smaller and smaller, and eventually we're going to have what looks like normal-looking glasses that can do both virtual and augmented reality As a matter of fact, when we get to this world, a lot of things that we think about as physical objects today, like a TV for displaying an image, will actually just be $1 apps in an AR app store. Mark Zuckerberg CEO Facebook Source: The Verge Image Source: Facebook www.cbinsights.com 18
AR VS. VR: DEALS FELL Q2 16 VR deals have been trailing downward in recent quarters. In Q2 16 there were 23, whereas before in Q4 15 VR deals hit a peak at 37. AR and Both/Other deals have remained relatively flat. Source: CB Insights www.cbinsights.com 19
AR VS. VR: BOTH ON TRACK FOR DEAL GROWTH VR comprises the bulk of deals currently, though all types are slated for year-over-year growth in 2016. Source: CB Insights www.cbinsights.com 20
ASIDE FROM Q1 16, MOST RECENT QUARTERS DOMINATED BY VR FUNDING Virtual reality startups saw more funding than AR startups in 4 of the past 6 quarters. The massive influx of investment Q1 1 6 can mostly be attributed to Magic Leap. Magic Leap $794M Series C Source: CB Insights www.cbinsights.com 21
AR VS. VR: REMOVING FROM MAGIC LEAP YEARS, VR TAKES MOST Dollar-wise, AR is has taken an enormous share, nearly all of which went to Magic Leap. Magic Leap $542M Series B Magic Leap $794M Series C Source: CB Insights www.cbinsights.com 22
WHAT DO WE KNOW ABOUT MAGIC LEAP? www.cbinsights.com 23
WELL NOT A TON Source: CB Inisghts www.cbinsights.com 24
THEY RE HIRING Source: CB Insights Help wanted: Principal Healthcare Systems Engineer www.cbinsights.com 25
THEY HAVE A WIDE WEB OF INVESTORS, INCLUDING MANY IN MEDIA Business Social Graph Source: CB Insights Business Social Graph www.cbinsights.com 26
USE CASE #1 Median early-stage fintech deals ere $4.6M in Q2 16, hitting a 5-quarter high and 53% increase over Q1 16. Source: CB Insights www.cbinsights.com 27
USE CASE #1 Median early-stage fintech deals ere $4.6M in Q2 16, hitting a 5-quarter high and 53% increase over Q1 16. Source: CB Insights www.cbinsights.com 28
GRAEME DEVINE, CHIEF CREATIVE OFFICER & VP OF GAMES, APPS, AND EXPERIENCES AT MAGIC LEAP [Devine] also describes successful products as things that pass the five mile rule: Things that you would go back for at home if you forgot them, but only realized five miles away. Smartphones he says, often pass this rule; Apple Watches do not. Magic Leap wants us to never feel like we should be separated from our augmented reality headsets. Source: CB Insights, Inverse www.cbinsights.com 29
THE CORPORATES SMELL OPPORTUNITY www.cbinsights.com 30
FACEBOOK-OCULUS KICKED OFF THE CONVERSATION Oculus - FB Acquisition March 2014 Source: CB Insights Trends www.cbinsights.com 31
MEDIA CORPORATES JUMPED IN Source: CB Insights www.cbinsights.com 32
M&A HAS SEEN AN UPTICK Source: CB Insights www.cbinsights.com 33
PATENT SNAPPED UP BY PUBLIC AND PRIVATE COMPANIES Microsoft has filed the most AR/VR patents in the past 6 years, applying for a total of 611. But Magic Leap made big moves last year, filing 164 patents in just 2015 alone. Source: Envision IP www.cbinsights.com 34
MAJOR COMPANIES MAKING HIGH-END HEADSETS SHIPPING HEADSETS ANNOUNCED PLANS WHO KNOWS? (BUT PROBABLY UP TO SOMETHING) www.cbinsights.com 35
Facebook acquired Oculus for $2B After developer versions, Oculus began shipping the consumer-grade Oculus Rift in late March Partnered with Samsung for Gear VR, powered by Samsung Galaxy smartphones as display Overall vision could be to create a metaverse (virtual world) Source: The Economist, Digital Trends, Vanity Fair @cbinsights #arvr
TECH NO LONGER HOLDS A MONOPOLY ON SELF-DRIVING DEVELOPMENT Other high-end headset available today (along with Rift) Headset employs laser sensors to traverse 15' x 15' space (a much larger area than others), giving a more room-scale sort of gameplay Strategic partnership with gaming house Valve may give it edge in content and hardware development (Valve also developing its own hardware) Recent survey found developers prefer working on the Vive platform, beating out Oculus Source: ExtremeTech, TechRadar, Wall Street Journal Source: CB Insights Trends @cbinsights #arvr 37
Hololens headset became available to developers (for $3000) in March, consumer release TBD Targets enterprise applications, has commercial partnership with Volvo (seeing applications in product development and for selling cars) Partnered with Autodesk for facilitating industrial design Partnered with Intel on Project Alloy, Intel s mixed-reality headset Source: UploadVR, Wall Street Journal, IB Times @cbinsights #arvr
CEO Tim Cook: "AR can be really great. We have been and continue to invest a lot in this. We are high on AR for the long run, we think there's great things for customers and a great commercial opportunity. So we're investing. Acquisitions suggest mobile-focused AR: bought facial recognition company Faceshift and smartphone AR company Metaio, and Flyby Media, which provided the imagerecognition in Google's tablet-based mixedreality initiative Project Tango Apple is also said to be prototyping VR headsets Recently hired a leading VR researcher. Sources: Apple Insider, UploadVR, Wall Street Journal, Financial Times @cbinsights #arvr
Releasing PlayStation VR, high-end gaming headset that will compete with likes of Vive and Rift Lower price-point ($399 atop $299 PS4 console) Huge gaming footprint, the best selling major video game console (40M PS4s sold) Beefing up specs on PlayStation 4 Source: The Verge, Wall Street Journal, Engadget @cbinsights #arvr
Recently unveiled Project Alloy, untethered VR headset with built-in gesture control for merged reality experience Does not require high-end gaming PC Partnered with Microsoft for Windows Holographic OS and Project Alloy s hardware Intel is open-sourcing its Alloy hardware so that anyone can combine the Project Alloy hardware with Windows Holographic platform. Image Source: The Verge Acquired Movidius (9/6/2016), a computer vision company with many AR applications Source: Wall Street Journal, VentureBeat, TechCrunch @cbinsights #arvr
MAJOR TECH COMPANIES IN MOBILE AR/VR RELEASED ANNOUNCED PLANS WHO KNOWS? (BUT PROBABLY UP TO SOMETHING) www.cbinsights.com 42
Pioneering Google Glass project was ultimately unloved by consumers Moved into low-end mobile VR with Cardboard Auto Reported in May that 5M Cardboards were in hands of consumers (distributed widely via partnership with NY Times); Cardboard App has hit 50M downloads in Play store Soon announcing plans for mobile VR platform Daydream Investor in well-funded AR startup Magic Leap Source: Wall Street Journal, TechCrunch, Fortune, Wall Street Journal In addition to its low-end mobile VR initiative (and retooling Android OS to handle VR), Google is reportedly working on a standalone headset that would not require a tether to a PC or game console @cbinsights @cbinsights #arvr #autotech 43
Partnered with Oculus shortly after FB acquisition in deal that granted them early access to Oculus software platform Gave away Gear VR headsets with Galaxy preorders Poised to be among the most-owned mobile VR headsets. In May, reported more than 1M had used the Gear VR Source: UploadVR, Wall Street Journal, IB Times @cbinsights #arvr
THE STARTUP ECOSYSTEM www.cbinsights.com 45
ONE VISION OF AR/VR INVESTMENT The majority of AR/VR s use case in 2025 may still be for gaming and entertainment, but enterprise use cases still could repr esent nearly half of the market. Source: Goldman Sachs www.cbinsights.com 46
DEALS ALREADY LEAN TO BUILDING BLOCKS & INDUSTRIAL APPS CB Insights data breakdown on deals says 55% is already going to infrastructure tools (building blocks like dev tools, gaming engines, gesture & motion tracking) along with Commercial/Industrial use cases. Source: Mark Linao, Technicolor Ventures, includes all AR/VR deals through Feb 2016 www.cbinsights.com 47
USE CASE #1 - GAMING Driving most of the category currently, gaming headsets are currently hitting the mainstream with the fall release of PlayStationVR. The Vive and the Rift are mainly being adopted by gamers. Niantic Total raised: $25M Mobile AR games studio (most famous for Pokemon Go title). Survios Total raised: $4.25M VR-based gaming content maker and immersive hardware/software developer. CCP Games Total raised: $50M Icleand-based VR gaming studio focused on massively multiplayer games. Usens Total raised: $25.6M Mobile-based positional tracking for AR and VR gaming experiences. Resolution Games Total raised: $6M VR game studio. AltspaceVR Total raised: $15.5M Social-focused VR platform that enables gaming and communication between users. www.cbinsights.com 48
USE CASE #2 - RETAIL VR and AR technologies could transform retail from both the supplier and the consumer. Examples here could be visualizing fur niture in a home, or virtualizing walkthroughs of shopping floor plans. Augment Total raised: $1.8M Mobile AR-based enterprise platform for marketing and sales. InContext Solutions Total raised: $19.9M VR shopping and retail solutions for store simulations. VividWorks Total raised: $1.6M Mobile and tablet-based AR tool for designers and manufacturers to help customers visualize interiors. SpaceView Total raised: $19.9M Mobile AR sales enablement platform. Image Source: Barco www.cbinsights.com 49
USE CASE #3 LIVE EVENTS Live event streaming enabled by VR will make for a more immersive watching experience. NextVR Total raised: $110.5M VR-based content capture and broadcast platform. Jaunt Total raised: $100.5M Content platform focused on cinematic VR experiences. Voke Total raised: $24.45M Live event VR platform. LiveLike Total raised: $5.1M VR platform for sports broadcasters. Image Source: NextVR www.cbinsights.com 50
MOST WELL-FUNDED AR/VR STARTUPS Magic Leap tops the list by a longshot, but VR motion capture and content platforms are among the most well-funded. Company Disclosed Funding $1.4B Description Stealth AR headset maker $118.5M Swiss AR and VR motion capture developer $110.5 Live events experiences in VR $100.5 Cinematic VR content platform $99M Mobile AR visual search app Source: CB Insights www.cbinsights.com 51
WHERE AR/VR GROWS WITHIN INDUSTRY AND ENTERPRISE www.cbinsights.com 52
INDUSTRIAL USE CASE #1-3D DESIGN AR and VR will enable faster and more collaborative industrial design, and allow different departments and clients to visualize sketches. Autodesk, which is gearing its design engine for AR/VR capabilities, is working with clients like Volvo for design process an d for consumer visualization. Image Source: Daqri www.cbinsights.com 53
USE CASE #2 - FIELD SERVICE & DOCUMENTATION Being able to see workflows, take video to connect with experts, and review compliance documents or technical drawings all while handsfree will be a big value to industry. Meta Total raised: $73.3M Enterprise collaborationfocused AR headset developer Atheer Total raised: $20.5M Enterprise-focused smart eyeware. Daqri Total raised: $15M Helmet-embedded industrial AR headset. Lumus Total raised: $15M Enterprise-focused smart eyeware. Image Source: Microsoft Hololens www.cbinsights.com 54
USE CASE #3 - MEDICINE TRAINING AND THERAPY AR and VR could revolutionize the visualizing of medical imaging, help with surgical simulations, and be used directly for therapy (such as virtual exposure to alleviate phobias). Surgical Theater Total raised: $4.25M VR-based surgical simulation and education. Psious Total raised: $1.2M Exposure therapy for patients suffering from phobias. Mindmaze Total raised: $118.5M Gesture/motion tracking for major gaming applications, as well as immersive VR for early motor rehab post-stroke. Innovative Imaging Technologies (dba Reacts) Total raised: $4M Medicine-focused video collaboration platform. Source: Surgical Theater www.cbinsights.com 55
WELL-FUNDED COMPANIES IN ENTERPRISE / INDUSTRIAL AR Company Disclosed Funding $73.3M Description AR headset maker for enterprise $20.5M Enterprise-focused smart eyeware $15M Enterprise-focused smart eyeware $15M Helmet-embedded AR headset $2M Tablet and glasses-based AR solutions Source: CB Insights www.cbinsights.com 56
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