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Market Reality: Augmented & Virtual Reality Represent Leading Growth Segment in Entertainment & Media

Jun 16, 2017 07:11 PM
Jun 16, 2017 08:15 PM
2021 percentage breakdown of digital trends including virtual reality, e-sports, internet advertising, internet video, video games, internet access, and music.

A report by PwC highlights that immersive experiences in augmented and virtual reality represent the fastest growing segment of the entertainment and media industry over the next six years. News from two companies working in the industry, Fox and NetDragon, underscore the growth forecast.

Report Shows Augmented/Virtual Reality Leading Growth for Entertainment & Media

According to PwC's "Global Entertainment and Media Outlook 2017-2021," augmented and virtual reality leads the growth segments of the industry.

Globally, virtual reality (which includes augmented reality in PwC's report) is forecasted to expand at a 77.9 percent compound annual growth rate (CAGR) in entertainment and media through 2021. In the US alone, the category is predicted to grow at 64.0 percent CAGR over the same period.

By comparison, the second-fastest growth segment, E-Sports, is growing at 21.7 and 22.6 percent CAGR, respectively.

The company forecasts a rise in the importance of user experience, where AR/VR plays a role in content delivery and immersive experiences.

"The next era of differentiation in entertainment and media is being defined and propelled by consumers' increased demand for live, immersive, shareable experiences. Consumers want to get closer, more engaged and better connected with the stories they love – both in the physical and digital worlds," said Deborah Bothun, PwC's Global Entertainment & Media Leader via news release.

While the growth rate for the segment is outstanding, the company notes, in a presentation of the report data, that total volume of spending is still lower than other traditional segments.

FoxNext Appoints President of Licensing & Publishing for Games Division

Rick Phillips has accepted a promotion to president of licensing and publishing for FoxNext Games, according to an announcement from FoxNext last week.

FoxNext develops immersive entertainment experiences by way of augmented and virtual reality, gaming and destination entertainment for properties in the portfolio of Twentieth Century Fox Film and Fox Networks Group.

"This is a very exciting and dynamic time in the video game industry," said Phillips, who has worked in leadership positions at Fox since 2012. "Fox's exceptional film and television portfolio, as well as our emphasis on finding both original and third-party properties, offers endless opportunities to build and grow."

NetDragon Releases Results for First Quarter, Teases AR/VR Pipeline

With 718.4 million yuan ($104.7 million) in revenue for the first quarter of 2017, NetDragon saw an increase in revenue of 24.8 percent compared to the same period in 2016, based on financial results announced by the company this week.

Though the company also reported declines in gaming operational metrics, namely average and peak concurrent users and active paying accounts, the company is bullish on future growth through augmented and virtual reality.

"Meanwhile we have a strong pipeline in terms of integrating our Virtual Reality (VR) and Augmented Reality (AR) technologies into our games which will expand our gaming portfolio into a new territory with substantial growth potential," said Dejian Liu, Chairman of NetDragon.

NetDragon is banking on integrating augmented and virtual reality into its portfolio of games, which includes MMORPG Eudemons.

Every Friday, Next Reality reviews the latest headlines from the financial side of augmented and mixed reality. This weekly Market Reality column covers funding announcements, mergers and acquisitions, market analysis, and the like. Check out previous editions of Market Reality for more news you may have missed.

Cover photo by Justin Meyers/Next Reality

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