XR Industry Experts Decode Trends and Challenges for 2024

by Sonya Naboka on Mar 25, 2024

AREYES has gathered a group of industry experts for insightful interviews, diving into the swiftly changing world of visual communication technologies. Zuza Śliwińska, Co-Founder of Lenslist & XR Bazaar; Casie Milhouse, Ex-Meta, Founder and Managing Director at Sashiyu; and Rob McCarty, Co-Founder of illust, will lend their expertise to discuss the opportunities and challenges that emerged in 2023, as well as provide insights into what we can anticipate in 2024.

Hardware is making significant strides!

Zuza from Lenslist highlights that the most significant advancements in XR in 2023 occurred in hardware rather than software. Meta’s Quest 3, for instance, introduced a new and greatly improved passthrough feature compared to their previous devices. The mixed reality experience was noticeably more realistic and smoother than with other headsets she tried in previous years. Additionally, the announcement of Apple Vision Pro brought excitement, offering a similar experience to the latest Meta Quest but with three key differences: no controllers, a unique UX and UI based on eye tracking and hand gestures, and a much-improved product presentation from the end-user perspective. Rob from illust agrees that hardware developments will inject new life into the industry, anticipating a surge in demand for visual products for these technologies, similar to what occurred with the earlier release of previous Oculus models. Bridging the content gap is crucial, presenting an opportunity for creators to seize. Casie highlights the importance of hardware advancements, recognizing the collaborative efforts of various suppliers and governments in facilitating technological development and compliance throughout the supply chain. Additionally, telecom companies deserve recognition for their connectivity solutions.

How XR Developers and Companies Overcame Hurdles in 2023

Zuza: I think the key challenges faced by XR developers and companies in 2023 were connected to monetization, marketing their services and then finding clients and especially long-term client partnerships, which would enable stable growth in the community. The XR market is still volatile. There’s not many mid-sized companies on the market, but several huge companies like Meta, Google, or Apple and then hundreds of small companies and thousands of individual developers and creators, which generates high dependency on the “big guys” and low profit capabilities for most “little guys”. There’s also a big knowledge gap when it comes to AR and other immersive technologies – most marketers and business owners don’t see or understand the practical, functional or monetary potential of XR, but rather treat it as an innovative add-on, budgeting XR projects as “experimental”. On the other hand most developers don’t speak the marketing language and have a hard time pitching their projects in the marketing or business context. I think addressing these issues must start with a top-to-bottom approach, with those big platforms leading the way in terms of education and popularization of these technologies and then with developers and companies looking for practical use cases for solutions they offer and marketing them more as real problem solvers, not techy PR stunts. 

Casie: I don’t have a full range of understanding of the ecosystem and learning everyday, however from my time at Meta I can highlight those that I came across personally working with developers on projects and programs. Due to the fast movement and product development with Meta AR Ads coupled with the communications policies in such a large organization, there was limited information shared publicly to developers. Giving developers new updated information is key to helping them sell more services to clients with a monetization product and is also an advantage to the company to drive Ad revenue. Our team of AR specialists offered expertise, held weekly office hours, and collected feedback to help others develop educational content and programs in APAC & India.

Another challenge I’ve seen with many companies was funding and keeping the lights on when projects were scarce. Offering a service only company is a challenge for anyone. Some of the agencies and developers have found ways to productise their services for recurring revenue or developed niche products serving a specific industry.

One final big challenge for developers and companies in countries that do not get access to hardware or software due to where they are was heartbreaking. I saw some smart moves from developers and companies incorporating in US, UK and Singapore which offer incentives like being invited into programs, taking advantage of grants not to mention piggybacking on having an address reflecting the trust of having a company leveraging a country's reputation while operating a remote team.

XR Industry's Evolution in 2023: Community Collaboration Shapes Development and Direction

Zuza: In my opinion, 2023 showed us that there’s still a significant disconnect between what we can call the XR industry, the XR community and the end users. The XR industry is now focused on innovating their products (both hardware and software) and setting up their bets for the future, with big tech companies competing for the leader position that will be established probably within 5-10 years. They have enough capital to suffer momentary losses in the name of future gains. But with AR and especially mobile AR being so accessible to developers and creators, there is a need for solutions matching their needs today, not tomorrow. Then, there are the end users, most of whom are not YET interested in XR per se, the best proof being the stable yet slow-growing number of VR users, yet based on many reports users are interested in AR both as a vehicle for content creation and utilitarian applications like e.g. makeup or fashion try-on. User bases for VR (~180 million) vs AR (~1.4 billion) are not even comparable, even though AR was introduced for mass use later than VR. So I think it is not easy for the XR industry to integrate the feedback of their key audiences, and there is room for improvement, but it’s definitely doable with new monetization models, better integrating XR and especially AR on user-facing platforms, better educational content and practices, and active community support.

Rob: In 2024, the XR community, particularly creators, drove advancements in AR and Web 3, developing frameworks for monetization and reshaping the ecosystem dynamics. Amidst this progress, challenges arose regarding maintaining a healthy balance between monetization efforts and the nurturing of a supportive community environment. There was a recognized need to ensure that the pursuit of profit did not overshadow the collaborative and inclusive spirit that had initially propelled the XR community forward.

Casie: I’ve seen some great things with The DevHouse where they do play testing over a stream to their audience of players. It allows a behind the curtain to how games are built but also a great way for them to build up a pipeline of potential users/customers for their future launches. It’s great when we see playtesting out in the open. Playtesting was one of my favorite perks about working at Meta. Giving feedback, hunting for bugs all to help developers build something better. Smaller companies and startups struggle to have the resources or time to roll out complex feedback loops to build. I see this as an opportunity for solving these challenges and hope it’s in 2024!

Trends in the XR industry for 2024

Zuza: When it comes to trends and further developments in the XR industry in 2024, I’d definitely point to the retail sector utilizing XR for problem solving and practical use cases like e.g. aiming to minimize returns, personalizing the shopping experience or increasing transparency by visualizing their production processes. Another trend I foresee is brands using XR for community building, not just direct conversions or sales, trying to bank on ongoing organic reach and engagement, which today’s advertising platforms and ad types like programmatic, paid posts or articles are not able to bring in today’s age of content clutter, bots, and then with AI boosting all these practices. Speaking about AI, we’ll definitely see more tools for XR ideation – like the AR Brainstormer we just launched at Lenslist! – creation and production, which may lead to very interesting developments both when it comes to software capabilities and the amount of use cases we see for XR today. Last but not least, I really hope to see a more collaborative approach between brands and XR companies – more discussions, more consulting, educating, and developing partnerships instead of one-time experiences, with big tech platforms backing these partnerships with resources, reliable software and community support – that’s what I’m crossing my fingers for the most this year.

Rob: Mobile AR continues to captivate marketing specialists and brands due to the widespread accessibility of smartphones, unlike spatial computers or desktops which are not as commonly available. The key for AR experiences is the distribution across devices worldwide. Another crucial aspect is the production costs, where AR holds an advantage over the recent trend of implementing brands in the metaverse. AR is poised for significant development, offering enhanced value propositions for in-store displays. Expect to see more immersive dimensions and a higher proportion of AR solutions entering the market.

Casie: I see funders getting a little more risk-averse with investment. You can’t just sell a dream and a vision anymore. Teams need to show traction in revenue or active users to show they’ve got what it takes to scale out a business. I’m taking a wild guess we’ll see not only some interesting M&As with XR companies that have been working in partnership with larger holding companies within the industries they serve but possible mergers and some amazing weeklong hackathons around the world…oh yeah, that’s coming for sure. And I would be so happy Sashiyu there for the first XR Villa Hackathon in Bali 17-23 March!

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