Back

Virtual reality on your doorstep

New York, 25 Feb 2016

How close is a new tech world order and who comes out on top?


In early 2014, Facebook founder Mark Zuckerberg offered to pay $US2 billion for a virtual reality gaming headset design.

A little over a year later Google, Alibaba and others invested millions in South Florida-based company Magic Leap, which is yet to publicly produce evidence its system - that reportedly projects virtual images directly onto a person’s retina - even works.

By 2020, revenue from virtual reality and augmented reality is expected to reach billions.

The market has significant investment potential.

Zuckerberg has repeatedly stated that virtual reality and augmented reality are the next big leap in technology.

Analysts are predicting the evolution of a new computing paradigm.

"There’s three main things to know," Macquarie Securities Technology Analyst Ben Schachter says.

"Just as smart phones and apps revolutionised how we interact and transact with each other, virtual reality is going to change the entire world over the long term," says Schachter.

"The amount of investment that will happen over the next five years will be surprising to many people."

Facebook’s Oculus Rift platform will be released next month, and at $US1500 for a headset and a virtual reality compatible computer, represents the first significant virtual reality platform at relatively affordable prices.

Just as smart phones and apps revolutionised how we interact and transact with each other, virtual reality is going to change the entire world over the long term.

After the Oculus Rift, HTC will release its virtual reality headset, Vive, in April, and Sony is expecting to release one for the PlayStation before July.

Schachter believes the PlayStation virtual reality will be the first "mass market hit" and that across the virtual reality platforms, consumer and enterprise responses will be overwhelmingly positive over the long term. In the short term, there will be challenges and opportunities.

On 25 February 2016, Macquarie Group will gather representatives from across various sectors in the United States to demonstrate the potential for virtual reality and augmented reality in industry.

"Everyone can somewhat intuitively understand how virtual reality can be used for video games, and even certain entertainment. But we think virtual reality and augmented reality will change almost every industry on the planet over the long term.

"One of the companies we have attending the conference has software that uses virtual reality technology to virtually walk you through a property development and find faults before the first brick is laid," Schachter says.

Zuckerberg has said he expects the technology to be transformative for social networking and communications.

Schachter expects that in the beginning, entertainment uses for gaming, movies and media will lead the charge for technological change. Over time though, its uses in other enterprise verticals will far outweigh the scale of what it will be for video games and entertainment.

For investors, the opportunities are wide ranging, but Schachter points towards the direction of the tool makers and platform holders.

"It’s much more difficult to bet on one or two key pieces of content. You don’t necessarily want to be a hit maker, or have to figure out which is going to be a hit, you want to own the platform so that whoever makes the hit, you can make money on it."

Learn more about Macquarie's Research capabilities

For a full copy of the Virtual Reality: Apple Building VR/AR Capabilities please contact your Macquarie representative