In the gaming industry, change is constant as gamers are always seeking newer ways to interact, personalize, and make choices. From Pinball and Solitaire to immersive computing, we are at the cusp of a major shift. Now we have AI, Cloud Gaming, Virtual Reality, and Augmented Reality tools upending technologies and the gaming experience altogether.
AR and VR Revolutionising the Industry
Today’s AR and VR technology is tailor-made for the gaming and business world. Augmented Reality and Virtual Reality tools provide an immersive customer experience with simulations of real or imagined environments using three-dimensional graphics and audio. Headsets like the Oculus Rift, HTC Vive, Oculus Go/Gear VR, PlayStation VR, and Google Daydream have become increasingly popular.
Consumers are eager for more immersive virtual environments, which presents an opportunity for technology and media companies to retain players’ engagement across various experiences such as live virtual events, e-sports, and socializing. These virtual environments are not only immersive but overlap with the physical world, and are also persistent. When a player logs off, they continue to exist. This enables personalization and customization, which allows the user to thrive in a fantasy locale. They also allow anonymity, hence having characteristics that make them well-suited to become a platform for new experiences.
According to reports, the global market for AR & VR technologies is expected to reach a size of $137 billion by 2027, growing at a CAGR of 25.3% during the forecast period of 2022-27. Since 2019, over $240 billion has been invested in the industry from VCs, PEs, and M&A, primarily from technology and media giants as well as traditional gaming companies. The M&A activity alone has nearly doubled from 2021 to 2022 as competitors recognize the need for a global scale.
This growth is fueled in part by teenage engagement, who spend more time on video games than any other form of media. For adults 18-34 years of age, it is the second most popular form of media after social media. Online and mobile gaming lead the expansion of the gaming industry, thanks to their widespread availability and the integration of Augmented and Virtual Reality technology, which adds to the heightened engagement, and immersive experience. Virtual and augmented reality technologies are now delivering experiences that live up to the hype and at more competitive prices. Today, more Meta Quest 2 headsets have been sold than Xbox Series X and S combined.
New development tools are enabling more developers to create realistic virtual worlds, leveling the competition. In the future, the key to success in virtual worlds will be in the design and gameplay, rather than just impressive graphics. The most successful virtual worlds will be those that are engaging, social, have innovative gameplay, and offer unique monetization models. CNET places games such as Beat Sabre, Cloudlands VR Minigolf, Moss, Firewall Zero Hour, etc… in the top categories for best VR games.
Pioneering the Metaverse
Virtual and augmented reality is spearheading immersive technology in the metaverse. Young gamers aged 13-17 are becoming increasingly accustomed to virtual worlds, with 53% of them expressing a preference for inheriting a vacation home in the metaverse over an exotic island.
The report finds half of the younger gamers who don’t even currently play online games have expressed interest in the metaverse. Social interactions that occur in gaming spaces provide the basis for other online activities, including concerts, sports events, and even work and commerce. The increasing demand for community experiences is driving the growth of a more expansive metaverse.
However, building large virtual-reality games is a challenging and costly endeavor, with development costs ranging from $80 million to $300 million and projected to reach $1 billion by 2027. To recoup these expenses, game developers need large player bases and must establish relationships and partnerships across markets to ensure access to distribution channels.
The global video game market size is expected to reach $196.5 billion by 2025 and is expected to expand at a CAGR of 12.9%. With the introduction of new, cutting-edge equipment from manufacturers, the experience of VR and AR gaming is now beyond what was previously imaginable. Metaverse is now further intensifying the gaming world’s integration with the physical world. As advancements in the front continue, it will be interesting to see what’s more in store for the industry.
Authored by Shloka. N
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