May 11, 2020
The extended reality market has seen a huge spike in interest over recent months. This is, in a large part, due to the Covid-19 outbreak and the new interest for millions of people in finding safer ways to interact with their friends, colleagues and families, with self-distancing precautions in mind.
This rise in interest seems particularly true for the “medical-facing’ sector. Last week, XR Health, a leader in extended reality and therapeutic applications, announced that they had raised $7,000,000 in funding to expand their tele-health platform to support more clinicians and patients for virtual/augmented reality therapy. XR Health quickly followed this up with another announcement that they will be partnering with Pico Interactive, a global tech company that develops innovative virtual reality (VR) and enterprise solutions, to provide VR headsets for the mass market tele-health demand due to COVID-19 precautions of self-distancing. The partnership will provide patients in the United States, Europe, and Australia with ‘VR Tele-health Kits,’ a combination of Pico headsets with pre-installed VR therapy so that XRHealth clinicians can treat and monitor patients remotely.
More good news for extended reality also came last week with the UK government announcing its £500 million start-up bailout scheme to help innovative/tech companies get through the coronavirus pandemic. The widely anticipated ‘Future Fund’ will issue convertible loans of between £125,000 to £5,000,000 to innovative companies that are facing cash flow and financing difficulties due to the Covid-19 outbreak. These loans will have to be matched by private investors.
This announcement is timely, as despite the clear opportunities presented in the current market, there has been a series of notable stumbling blocks over recent months for consumer focused projects, including the restructuring of “High Fidelity” (High Fidelity was touted to be the next generation of VR platforms) and Linden Lab’s Sansar sell off. Three other consumer focused extended reality enterprises also went into administration towards the end of the last financial year.
To further underline this developing shift in focus, extended reality company Magic Leap announced last week that it is abandoning the consumer market and laying off 1,000 employees. In addition to losing what amounts to half its workforce, the company will wind down its consumer-focused business, which included video games and entertainment apps. It will instead focus on enterprise uses, potentially including (in a move that surely recognises current trends) a partnership with a large unnamed health care company. Rony Abovitz, the CEO of Magic Eye, confirmed the shift to enterprise. “The recent changes to the economic environment have decreased availability of capital and the appetite for longer term investments,” he writes, and “the near-term revenue opportunities are currently concentrated on the enterprise side.”
Whilst these trends are worthy of note, this by no means indicates that consumer focused Extended Reality is failing. The Oculus Quest and HTC Vive are both extremely successful headsets, backed by major corporations, and the technology has the benefit of still being (relatively) young. But what can be said with some certainty is that the money to develop Extended Reality technologies can currently be found in commercial enterprise, which has the more immediate and pressing need. The hope is surely that where the commercial arm of this sector blazes the trail, the consumer arm will ultimately follow.