On April 28, Facebook announced quarterly earnings that clobbered analysts’ expectations. The company put up enviable numbers by any measure, including remarkable increases in revenue, earnings, and users. Many analysts looked at the success of Facebook’s advertising business as the key to its success. But we see something else: a willingness to shape its future, especially with virtual reality (VR) and augmented reality (AR).
- Facebook’s quarterly numbers include:
- Earnings: $3.30 per share vs. $2.37 per share forecast.
- Revenue: $26.17 billion vs. $23.67 billion expected.
- Monthly active users (MAUs): 2.85 billion vs. 2.86 billion forecast by FactSet.
During a meeting with investors, Mark Zuckerberg discussed how Facebook intends to grow by continuing to embrace immersive technologies such as VR and AR. He said, “I believe that augmented and virtual reality are going to enable a deeper sense of presence and social connection than any existing platform, and they’re going to be an important part of how we’ll interact with computers in the future. So we’re going to keep investing heavily in building out the best experiences here, and this accounts for a major part of our overall R&D budget growth.”
He cited the uptake of the Quest 2 all-in-one gaming VR system. He noted that a recent product innovation includes enabling wireless streaming of games and content from PCs and support for 120Hz refresh rates. He described the high-quality wireless experience as a major breakthrough: “Having wires wrapped around you just really breaks the sense of presence and immersion. The technology to deliver a great experience wirelessly is very advanced, and most companies aren’t going to be able to deliver this, but we believe that it is the minimum bar for a high quality experience.”
In addition, he said that Facebook is investing more in neural interfaces for interacting with AR. Facebook is developing natural, intuitive ways to interact with always-available AR glasses. Per Facebook, a better neural interface means AR “won’t force us to choose between interacting with our devices and the world around us.” Rather than dragging our attention to the periphery in the palm of our hand like our mobile phones, AR glasses will see the world exactly as we see it, placing people at the center of the computing experience for the first time and bringing the digital world to us in three dimensions.
Why This News Matters to Businesses
As we have reported, the pandemic is creating a newfound interest in using AR and VR to deliver experiences in the era of social distancing. AR and VR deliver more immersive experiences for people without needing to be in the same space. And at a time when consumers are living increasingly online, AR and VR could differentiate businesses through more compelling user experiences. Indeed, eMarketer says that the uptake of AR and VR users will increase more so than eMarketer originally expected.
But will AR and VR grow in a post-pandemic world? The answer is far from certain. VR in particular continues to experience slower uptake than AR because of the cost of entry and user interface (wearing a headset connected to a PC is more intrusive than wearing AR glasses or using AR on your mobile phone).
But Facebook’s breakthroughs are important because they address issues such as the user interface (wireless VR makes the experience more natural). Big technology companies such as Facebook and Apple are going to play a crucial role in making AR and VR flourish beyond the surge that these technologies are experiencing during the pandemic.
What Businesses Should Do
- Businesses must take a human-centered approach to evaluate the potential of VR and AR. We recommend first creating an “experience case,” which covers all dimensions of a human-centered experience, such as the desired relationship between the person and the VR product – for instance, is VR supposed to act as a coach to help someone learn a skill or does the business want VR to be an inviting host for a captivating entertainment experience? And what emotion does the experience want to evoke? Those are but two considerations. We discuss many more aspects of the experience case here.
- In addition, take a measured approach to adopting VR and AR to prove its value with real people. Fortunately, test-and-learn tools such as design sprints make it possible to try new business models and technologies quickly and cost-effectively.
Contact Moonshot to get started.