Posted: 19 Apr. 2018 10 min. read

Augmented reality: will 2018 be the breakthrough year?

2018 looks to be a year of progress and experimentation for smartphone-based augmented reality (AR). Over a billion smartphone users will create AR content at least once this year, Deloitte Global predicts; 300 million will be monthly creators, and tens of millions will make and share content weekly. Tens of thousands of apps incorporating AR capabilities will likely become available during the year, and by year’s end, billions of smartphone users will probably have downloaded an app or operating system update that incorporates AR content creation capability. In all, billions of people are likely to view AR content created on a phone this year.

Thus far, smartphone AR creations typically have been photographs or primitive animations that are exaggerated, artificial, and cartoonish. Starting in 2018, that may begin to change. AR content created on a smartphone will likely look increasingly photorealistic and will often be recorded and shared as video.

Photorealistic AR is being enabled by a combination of software and hardware advances, one of the most significant of which is the launch of dedicated AR frameworks in smartphone operating systems. As of October 2017, a few hundred million smartphones had dedicated support for AR. By the end of 2018, about 800 million smartphones will likely have both an operating system with dedicated AR support and hardware sufficient to power it.

Promising applications

This year, AR could enable users to appear to be singing along with their favorite performer, interacting with a tiger, or juggling balls with a star soccer player, to name just a few examples. AR video will probably be the most commonplace application, simply because the camera app is one of the most widely used smartphone features.

One major AR genre is likely to be games, the largest category of apps available. Game developers could use AR as a differentiator to encourage new downloads. AR is also likely to be integrated into popular game apps and distributed via updates to current users.

During 2018, an abundance of home decoration apps will likely launch as well, although in most instances they will complement rather than replace a visit to the showroom. These apps can enable users to see—with varying degrees of accuracy—how a sofa with a certain fabric might look in their living room, for instance, and even to walk around it. However, until these apps can reveal how firm or well-constructed the couch is, they are likely to remain just one of many inputs to the final purchase decision.

In general, enterprises will likely experiment enthusiastically but pragmatically this year with possible applications. Aside from marketing opportunities, such as the ability to place an AR-generated animated company logo anywhere, there are also possibilities for AR to assist with sales, technical guidance, and aftermarket support.

Bottom line

While AR is likely to drive device usage, app downloads, and smartphone sales this year, discrete app revenues for AR content will probably remain less than $100 million globally. Core enabling technologies such as cameras, sensors, and processors should continue to improve over the coming years, however, helping enable the range of applications to grow rapidly. By 2020, Deloitte Global expects direct AR revenues to surpass $1 billion.

This essay is an abridged version of “Augmented Reality Takes Another Step Forward,” published in Deloitte Insights in the Wall Street Journal CIO Journal and CMO Today.

The Wall Street Journal articles are derived from Deloitte Global’s 2018 Predictions report, which looks at trends across the technology, media and telecom ecosystems over the next one to five years. The full report can be accessed at www.deloitte.com/predictions.  

Meet the author

Mark Casey

Mark Casey

Global Leader

Mark has been with Deloitte for 32 years and has worked out of our Dublin, London and Johannesburg Offices.  He has been a partner for 20 years. He has worked across most of the firm’s service areas – assurance, risk advisory, corporate finance and consulting.  His clients are predominantly multi-national and he has developed a strong network across DTT in all major geographies which enables fast access to the right resources. He also served on the South African Board of Directors from 2000 to 2004. He acts as lead client services partner or advisory partner to a number of large, strategic clients of the firm in both the media and telecommunications sectors. Mark also leads the firm’s Technology, Media and Telecommunications industry for Africa and is a member of the global TMT executive, with a responsibility for learning. In October 2015, Mark took over the leadership of the global media sector with an emphasis on using his global network to support our global media clients’ ambitions to internationalise their businesses. Areas of Focus Mark specialises in the provision of strategic, operational and technology enabled solutions to many sectors of the digital, multi-platform media industry, ranging from TV broadcasters to digital businesses such as internet, interactive TV and mobile content companies. He remains active in the M&A domain for internet media companies and in the transformative changes for newly acquired businesses and their back-office evolution. Much of Mark’s time is spent helping companies to internationalise their businesses, dealing with market entry and expansion considerations and identifying partnership opportunities to accelerate their growth.