Goldman Sachs report “Profiles in Innovation Virtual & Augmented Reality”, published on 13 January 2016, states following:
– Virtual reality has the potential to become the next big computing platform, same as PCs and smart phones were;
– Total addressable market revenue best case scenario might be 180 B USD by 2025, which is almost 3 times the tablet market in 2016;
– Top industries to be disrupted are video games, healthcare, engineering, live events, video entertainment, real estate, retail, military, and education.
Disruption can be defined as a replacement of values accepted by customers. The values that customers accepted previously are rejected and customers crave new values because their expectation changed.
Virtual reality essentially disrupts media which influences entertainment and educational content. To understand its disruption potential we can analyze other media:
– Television or any video streaming service;
– PCs which allow interaction with mouse and keyboard;
– Touchscreens which include smartphones and tablets.
These alternatives are not so clean cut: television is played on PCs and smartphones, and touchscreens are added to TVs and PCs, but all of them are using screens which are limited in visual and audio experience. The biggest change for customers when using virtual reality is that it completely controls the sight and sound experience and therefore has much higher control of the attention compared to TVs, PCs, and touchscreens. Therefore virtual reality offers much more information and does not allow any distractions. This creates almost as big disruption as television did to radio.
Conclusion can be that virtual reality unique values are:
– To users: enjoying media or learning with maximum focus and without distractions;
– To content publishers and advertisers: maximum control of the environment.
When evaluating virtual reality values it is important to differentiate between values offered by content and values offered by media, and we define virtual reality as media.
These values are impossible to copy by alternatives – even augmented reality – and are the essence of this disruption. Virtual reality will not substitute other forms of entertainment and educational media, but will position itself at the top of the market, attracting the top content in entertainment and education, and slowly gaining share.
How should brands approach virtual reality?
Virtual reality does not disrupt only products, but also how brands use media and content they must invest.
All Brands will need to produce much more detailed and overwhelming content to compete in virtual reality, just as they needed to produce more text, more images, more video each time there was media disruption. They will eventually need to invest in virtual reality content, either as part of their outbound or inbound strategy.
Brands in disrupted industries – like ones listed by Goldman Sachs – will need to redesign their products and processes to include virtual reality, which will place a strain on their brands if they are too connected to current media technology. For example: how will real estate sales work if it includes virtual reality?
Comment on Goldman Sachs report
Goldman Sachs list of industries to be disrupted by virtual reality can give an impression that most other industries might remain intact. It is most likely that all industries and businesses will need to adjust just as most businesses needed to be present in Yellow Pages before or Google Search today. For example: fitness industry which change how individual and group coaching and training will most likely change, and graphic design process will change as well.