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How will Google, or any tech giant, make money from AR? And how does that signal the rest of the industry for strategic positioning? Google provided rare direction on these matters at the recent ARIA event during a remote presentation from XR content partnership lead, Aaron Luber.
In short, Google’s AR initiatives support its core business model. For example VPS ties to mapping and search. This validates our premise that tech giants enter and invest in AR to feed cash cows: Amazon for commerce, Apple for device sales, Google for search, and so on.
“Think of the things that are core to Google like search and maps,” said Luber. “These are core things we are monetizing today that we see extra added ways that we can use [AR]… All the ways that we monetize today will be ways that we think about monetizing with AR in the future.”
Reading into this, it’s partly about boosting search query volume, it’s biggest source of revenue… they’ll just include visual searches in addition to text. VPS indoor mapping could meanwhile help measure/prove search marketing ROI by tracking consumers all the way to the cash register.
Regarding search volume, we’ve long discussed Google’s moves to counterbalance the smartphone-induced deceleration of query volume and CPCs. Google Assistant, voice search and “micromoments” were one answer. AR, visual search (Google Lens) and VPS will be another.
Speaking of business models, Google is all about things that scale. And on that measure, mobile AR currently has more scale than VR, given an installed base of half a billion smartphones. Luber stresses that it’s pursuing both AR and VR, but the former has nearer-term returns.
“We’re very focused in both areas but when we look at that total addressable market, it’s obvious that one represents something that is vastly bigger,” he said. “We’re very focused on things that get us into hundreds-of-millions types of numbers, so that’s a huge opportunity.”
And it’s not just the number of users, but frequency — something we explored in last month’s Intelligence Briefing. And on that measure, AR wins over VR again. It’s about having more eligible hours per day for active usage — where VR is disadvantaged by technological invasiveness.
“VR is something that we hope that people will do once per day if we’re lucky,” said Luber. “The use cases are fundamentally different. VR, we’re learning, is very focused on entertainment…AR is more focused in utility and things that people are going to do multiple times per day.”
Moving beyond users, many of the same dynamics apply to developers. The friction for VR users mirrors that of developers, due to the ground-up development they’re forced to accomplish. AR conversely offers more opportunity for developers port apps, or add AR features to existing apps.
“Developers might want to build separate apps but this concept of adding AR features into an existing app is presenting itself for the first time in a smart, useful way,” said Luber. “This just adds to the the story around scale, and how this is going to be a market that’s widely accessible.”
And because AR developers avoid that point of friction, it naturally lessens another big XR challenge: platform fragmentation. It’s especially present in VR in terms of apps and games that aren’t interoperable accross platforms (a subtle nod to Google’s web XR initiatives).
“It’s like Instagram: you shouldn’t have to post a photo, so that it can only be viewed by people on their Android devices,” said Luber. “It should be across an entire network of people. If I make an AR sticker, I want that to be accessible across everybody who’s got an AR device.”
Interoperability leads to discussions of multi-player. The social AR killer apps we’ve envisioned require synchronous play and image persistence for several users. And that in turn requires interoperability, to avoid compatibility issues that impede social “pick-up” sessions between users.
“I think the real unlocking potential of AR rests in two things,” said Luber. “One is sharing and multiplayer: Your ability to do things in AR with multiple people at the same time… And then of course persistence, and being able to leave places and come back to them.”
Lastly, Luber is excited for the era of standalone VR, where Daydream will power a few headsets that compete with Oculus Go, like the Lenovo Mirage. And like the above factors, standalone VR feeds Google’s hunger for scale, as reduced friction and price will bring VR to greater numbers.
“I look at all the barriers to entry in VR that have existed today.” he said. “What hasn’t existed today is a purpose-built, purposely-purchased standalone headset and the ability to pick that up and be in VR in five seconds. That’s a big deal. That’s a big opportunity for consumers.”
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Disclosure: ARtillry has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.