news


AR/VR investments declined during 2019

Each year seems to be the year for virtual and augmented reality, but analyst firm Digi-Capital is now reporting investments have declined below the levels reported in 2017 and 2018.

Although it is still too early for the VR and AR neigh sayers to strut around too pompously, it is not the most encouraging of signs. The issue seems to be investments made in the continuously embryonic segment made in the final three months of the year.

The levels of investment in 2019 were still the third largest annual sum to date, though it was 35% lower compared to 2018, down to $4.1 billion. Digi-Capital has been measuring the success of the segment in terms of deal volume (number of deals) and deal value (dollars invested).

“While there could be an uptick in AR/VR M&A activity if a market inflection point happens in coming years, there isn’t an obvious catalyst for large-scale M&A in the short term,” the firm said in a blog post.

The prospects of virtual and augmented reality are worth keeping an eye on, as there is always a chance of a revolutionary impact on areas such as gaming, entertainment, training or video conferencing, but once again the segment is failing to live up to the promise. Q4 was the problem period for the segment, a single quarter, which does offer a glimmer of hope.

The biggest deal attributed to this sector over the course of 2019 was attributed to Snap, with the firm aiming to raise $1 billion in convertible senior notes. The funds were lined up to be used for working capital, operating expenses and capital expenditures, as well as potentially repurchasing common stock and for acquisitions.

Interestingly enough, a slow-down in the investment category of this segment could see a dramatic shift in the way it functions. Should investments continue to drop, start-ups might need to focus on revenue generation and managing burn rates. Without seed money and continued investments, the quality of products might suffer as firms are forced into go-to market strategies sooner than anticipated.

However, you have to remember this is only a short period of time and not necessarily a death sentence to the segment. Perhaps this is a bit of credibility for those who have been less than enthused by VR and AR for some time, you correspondent being one of them.

  • AR & VR World Summit

  • TechXLR8


One comment

  1. Avatar Amelia Jacob 18/03/2020 @ 8:35 am

    Interesting development. With less funding and capital to go around with, startups will need to become more innovative and optimize how they spend their resources.

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Polls

What do you think will be the most likely role 5G operators will play in private 5G networks?

Loading ... Loading ...