22 October

Mobile AR revenue outlook: 5x growth by 2024

Mobile AR revenue outlook: 5x growth by 2024

A recent report claims that mobile AR revenue will reach $21bn a year by 2024. From AR advertising to SaaS for technical maintenance, here’s a look at what this revenue is made up of. 

 

According to the latest research report by ARtillery, global mobile AR revenue should surge from $4 billion in 2019 to $21bn in 2021. This is an impressive figure, but at first glance, it can be hard to interpret. What is mobile AR revenue, exactly? How is it generated? Who earns it? Let’s dive into the details!

 

What enters into mobile AR revenue?

1) In-app purchases. A classic example is Pokemon Go, which made almost $800 million selling Poke Balls, PokeCoins, and similar items in its store in 2018. 

2) Paid apps and premium versions of free AR apps. While many great AR apps are free, there are some you have to pay for – for example, the game The Machines ($4.99), where you project transformer armies right onto your table top:

Image: tomsguide.com

3) Creation of augmented reality experiences, 3D models, apps, and ads that use AR. This is the revenue of agencies like ARzilla. Good examples are Snapchat lenses and Instagram filters. Note that here we count content that is designed for mobile platforms or is widely used on mobile.

4) Advertising. If you’re not familiar with AR ads yet (and you have an AR-enabled phone), drop everything right now and watch one. Some say that it’s the next big thing in advertising.

 

Facebook AR ads have been around for a while, and users seem to love playing with them in the newsfeed. For example, cosmetics brand WeMakeUp reported a 27.6% increase in purchases when they offered a virtual makeup try-on: 

Image: socialmediatoday.com

Things are going to get even more interesting soon, with Google entering the AR advertising game with its Swirl rollout. Swirl is a content format that allows you to add 3D AR models to search results. Users can even rotate the models and zoom in and out on them. The early results are more than positive: for example, Nissan’s Swirl ad achieved an 8x engagement rate compared to benchmarks: 

Image: particlenews.com

5) SaaS. This category includes all types of paid AR services and platforms for businesses. For example, mobile AR designers need to pay for full access to platforms like Unity ($399/yr per user), Vuforia ($99/mo), and so forth. Another example is AR solutions for remote maintenance.

 

What doesn’t count?

Just because some money is generated thanks to AR, or under the influence of AR, or somehow in connection with AR, that doesn’t mean that we should include it in our calculation. The main items in this category are as follows:

– Sales of AR-enabled smartphones. Most new flagship phone models support AR apps, but that’s not why people buy them. One may choose an AR-enabled phone over one that doesn’t have this feature, but you wouldn’t buy a smartphone for the sole purpose of consuming AR content, right? In contrast, when someone buys an AR headset, interacting with AR experiences is clearly the purpose. So, the headset sales do enter into the general AR revenue – but not into mobile revenue.

Goods purchased with virtual try-ons. We’ve already written blog posts about AR try-before-you-buy features in jewelry sales and cosmetics. Amazon offers AR try-ons for many products, especially makeup,  and so do Target and Wayfair:

Image: techcrunch.com

When a customer makes a purchase after using the AR try-on feature on a smartphone, the sale is definitely influenced by AR. But this doesn’t make it part of mobile AR revenue. If we were to count all the online purchases made thanks to AR, we’d get an enormously inflated figure. 

 

Why will mobile AR revenue grow so fast?

A 5x increase in just five years is a dramatic feat for any industry. What makes experts so convinced that it’s possible?

First of all, the number of AR-enabled devices is growing fast. Soon, almost all new smartphones will support ARCore and ARKit from the get-go. 

Second, with AR ads in our Google search results and Facebook newsfeeds, augmented reality will accompany us every day. You’ll have to consume AR content whether you want it or not!

The third factor is the natural evolution of the AR trend. Every trend starts with early supporters, visionaries, and pioneers. But sooner or later, everybody realizes what’s been going on and jumps on the bandwagon. At this point, what used to be innovative, visionary, and geeky becomes standard and natural. We expect the same to happen with AR advertising and virtual try-ons. Once brands see that some of their competitors are making more money with those 3D ads, they will be everywhere. 

 

Beyond numbers: a few interesting insights

Forecasting future revenue is hard – and it’s not the most important thing, either. It’s more interesting to think about what will happen, not how much firms will earn. We at ARzilla have a few predictions of our own to share:

1) WebAR will become a major source of revenue. Web-based AR experiences are inclusive and accessible because they don’t require any apps. They do require fast mobile internet, though: that’s why we think the true WebAR boom will happen once 5G becomes more widespread. Meanwhile, Google’s WebXR for Chrome is a space to watch. 

2) Games will become less dominant: in 2019, AR games accounted for over 90% of the total mobile AR revenue – mostly due to the popularity of Pokemon Go. But their share will go down in the coming years, as augmented reality gains traction in other areas, such as shopping, advertising, education, and maintenance.

3) As Google’s ARCore gains new features, it will catch up with Apple’s ARKit – and that means that AR apps for Android will eventually bring in as much money as those for iOS.

4) COVID-19 boost: the pandemic will have a positive impact on the spread of mobile AR. On the one hand, people will rely on virtual try-ons as they switch to online shopping as a safer option. On the other hand, AR-enabled technical maintenance will gain in popularity for the same reason: it’s better not to send out a technician when you can avoid it. Finally, people will just look for new distractions as they spend lots of time at home working remotely.

 

Would you like to try AR ads for your business? Or perhaps add a virtual try-on to your online store? Drop us a message at elay@arzilla.io, and we’d be glad to share our insights!

 

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