Telecom operators worldwide are evaluating use cases to monetize their 5G investments. XR, a term used for Augmented Reality (AR), Virtual Reality (VR) or Mixed Reality (MR), is one of the services that operators are evaluating.
Multiple operators are currently running pilots and testing different use cases of XR. XR does seems to tick most of the boxes required for a successful adoption:
- Technology has come a long way and is now quite user friendly,
- The connectivity infrastructure is already there in-house and will be soon available outdoor with 5G and
- COVID-19 pandemic has created the burning platform by forcing people to work, play and entertain remotely.
And with limited physical contact nowadays with others, there is an even higher desire to share our experiences digitally.
So what’s holding it back: VR devices shipment is merely a fraction of the smartphone market. The most important answer can be found in the fact that currently VR and AR devices have been marketed towards sexy B2C use cases and operators have not sufficiently targeted the more pragmatic B2B segment. The uses cases for B2C segment have been (until recently) quite limited and paying 300 to 400 Euros for a device is still a considerable barrier in the B2C segment.
Another reason could be seen in the lack of good content. AR and VR market is still lacking a good content platform. Again, here COVID-19 is helping to accelerate the creation of new content, like fitness, art and entertainment. However it’s unlikely that there will be an overnight shift and mass adoption of VR/AR in B2C market. It will eventually come, but not in the next two to three years.
B2B segment is a completely different ball game. We firmly believe that we will see much higher rate of adoption within B2B segment then what we see today. Reasons are quite obvious, remote/distance working to be one, but also the fact that AR/VR will help us work more efficiently by e.g. providing training/support to un-skilled workforce, decreasing operational cost.
We are already seeing early signs in the adoption of VR/AR in B2B segment, e.g. in US and UK health workers are being trained to cope with the increased workload due to COVIT-19 pandemic.
Operators need to use the momentum that is created by COVID-19 in promoting AR/VR applications to their B2B customers. According to everis research we believe that the XR market will almost triple by 2025 powered predominantly by entertainment, healthcare, engineering and live events sectors.
Being able to support multiple industries supported by sector-specific use cases, will be a key factor in winning and retaining B2B customers in this segment. Partnering with content providers and content aggregators would be essential in this respect.
Now coming back to the original question, will XR be the killer service to monetize 5G investment? Well, it will definitely help to monetize the big 5G investments, but XR adoption rate has been low until now, but expected to grow fast, especially in B2B as a starter. Especially for non-stationary use cases requiring high bandwidth, 5G will be a prerequisite. For in-house B2C use cases, WiFi will suffice.
Monetization will also depend on the underlying business models: subscription, pay-per-use, etc.. But what we know for sure is that in the next 5 years the (virtual) reality will look much different than today...
...the COVID-19 crisis will accelerate the adoption of AR and VR quite dramatically...