If you keep up with technology news even slightly, you have probably heard about augmented and virtual reality.

Even if you rarely follow tech news, you have probably heard about Oculus Rift or Samsung Gear VR.

Truth is, there has been a lot of hype about augmented and virtual reality over the last couple of years, with the two touted to be the technologies that will replace mobile computing.

Over the last three to five years, a lot of companies have brought various VR and AR products to market. There have also been a lot of investments into this technology.

In 2014, Facebook paid $2.1 billion to acquire Oculus VR, a company that manufactures virtual reality headsets.

Facebook then went on to buy 11 other VR and AR startups, showing the social media giant’s belief that AR and VR will have a key role to play in the future of computing.

While the industry is still in its infancy, it is expected that by 2025, the AR and VR industry will be worth about $95 billion, according to estimates by Goldman Sachs.

At the moment, a lot of the interest in AR and VR technologies is coming from a handful of industries, such as gaming, video entertainment, live events and retail.

As the technology matures, however, it could potentially revolutionize a wide range of industries, including education, healthcare, real estate, the military, and so on.

Source: McKinsey

Source: McKinsey

In this article, we are going to take a look at some of the potential impacts of AR and VR technology, as well as some of the challenges that the technology might face.


There is a lot of confusion about the two technologies, which can be attributed to the fact that the two technologies gained prominence at about the same time and that both involve altering reality in some way.

Despite these similarities, there are some key differences between virtual reality and augmented reality.

Virtual reality is a technology that totally replaces the real life environment with an artificial simulation of reality.

With virtual reality, a user wears some closed VR goggles or headgear – such as the Samsung Gear VR, Oculus Rift or Google Cardboard – which blocks out your current environment and immerses you in a very realistic looking and convincing.

The user feels like they are part of the artificial world instead of the real world.

Augmented reality, on the other hand, does not try to replace reality. Instead, it tries to enhance reality by using technology to layer useful or entertaining digital information over your real world.

Examples of information that may be layered over your real world through AR tech include maps, text-based directions, virtual characters (in the case of an AR-based video game), emails, a reminder about a scheduled task, and so on. AR does not interfere with your perception of reality.


Virtual and augmented reality will impact how we create and consume content in four ways. These include:

Shifting Content Consumption from Observation to Immersion

For a long time, the only option we had when it comes to consumption of content is observation. When you watch a video on your phone or a movie on your TV, you are basically observing what is happening on the screen.

Even with video games, while you have control over what is happening on the screen, you can still easily distinguish between your real world and the virtual world within the game.

Attempts have been made to make this observational consumption of content more immersive.

For instance, 3D movie technology was developed to make viewing movies more immersive, but there is still a clear distinction between reality and what is going on in the screen.

AR and VR technology has brought about a new way of consuming content.

Rather than observing content from our reality, we become part of the reality that is on the screen.

When you step into a virtual world through a VR headset, all your perceptions are based on the virtual world.

You become part of that world and for a moment, you forget about the real world. With augmented reality, the virtual world becomes part of your reality.

It seamlessly integrates your real world and virtual data into one.

This will make consumption of content a totally new form of experience.

Reducing the Cost of Production in Creative Activities

Virtual and augmented reality will enable something known as virtual prototyping, which allows products under development to undergo several iterations while keeping time and costs low and improving the quality of the final product.

A good example of this application of AR and VR technology is an aeronautical design firm that used VR prototyping to bypass two physical prototyping cycles and reduce the time it would have taken to complete development, resulting in savings in excess of $50,000 for the client.

Another good example of the use of virtual prototyping is IKEA’s use of augmented reality to enhance the shopping experience for furniture shoppers.

Instead of buying a piece of furniture based on your mental image of your home and hoping that the piece of furniture will not only fit within the available space, but also look good in your home, you can simply scan the space with your smartphone camera and then layer different pieces of furniture over this scanned image to find the best piece of furniture for your space.

Of course, virtual prototyping is not a new thing.

However, AR and VR technology takes virtual prototyping a notch higher, making the process more immersive and increasing the number of ways through which designers interact with and experience their prototypes.

This will result in reduced cost of production, higher accuracy in design and an improvement in overall product quality.

Making it Easier for New Creators to Get Started

In the past, producing quality content was an expensive affair, something that kept it out of the reach of small firms with lower budgets as well as hobbyists.

Fortunately, AR and VR technology is making it a lot easier to produce high quality content at a low cost.

This lowering of costs will make it a lot easier for new creators to get into the market, the same way smartphone cameras made it easier for new creators to get into photography, videography, vlogging, and so on.

Acting as a Tool for Cognitive Enhancement and Empathy

By putting us at the center of the experience rather than being mere observers, virtual and augmented reality make us feel as if we are part of the reality being depicted in the content being consumed, and therefore evokes a greater level of empathy and allows us to feel closer to global issues.

For instance, if you consumed content about a humanitarian crisis through VR, you would feel greater empathy for the victims, because it feels like you are there with them.

This is because with virtual and augmented reality, there is a layer of authenticity of experience that is not present with other content consumption mediums, according to artist and director Lynnette Wallworth.

In the past, there have been concerns that increased digital media consumption could lead to decreased ability to feel empathy.

However, artists who have worked with virtual and augmented reality technologies feel that these technologies will enhance our ability to feel empathy, terming AR and VR technology as the ultimate empathy machine.

In addition, AR and VR technology will contribute to cognitive enhancement by providing opportunities for immersive learning experiences.

In addition to gamified learning, AR and VR technologies can also be used in therapeutic domains.

For instance, in one case, AR and VR technology was used to allow a man to drive a car using nothing other than his brain. You can view the video here.


While virtual and augmented reality will bring about the positive impacts discussed above, there are also some challenges that will need to be overcome if the potential of this technology is to be fully harnessed. These include:

Shortage of Talent is Limiting Growth

While there are technical challenges facing this technology – including battery life and bulkiness of devices – probably the greatest barrier preventing the rapid advancement of virtual and augmented reality technology is the lack of adequate talent to push this advancement.

Being a relatively new technology, it is difficult to accurately show the disparity between the demand and supply of talent.

However, there’s some evidence to this effect. For instance, data from Bloomberg shows that in the second quarter of 2017, there was greater growth in demand for freelancers with VR skills than for any other skill.

Yet another study of 200 Canadian companies with a focus on AR and VR reported that companies in this industry will experience a talent crunch in the near future.

Strategic Development of Domestic Talent

Any government that wants to be part of the countries that will lead the march into the next frontier of computing needs to start coming up with a strategic plan that will ensure the development of talent in emerging technologies.

Some countries have already started doing this.

A good example is China, whose government has already put in place measures to support the growing VR industry.

For instance, VR companies in Zhongguancun, Beijing, are receiving government subsidies to the tune of up to $1.45 million.

The aim is to have this region grow into a technological hub that will spearhead the VR industry globally. Companies in other locales in China are also receiving grants from the government to support the development of VR-related content and hardware.

Attracting Foreign Talent

Aside from developing content, governments that want their countries to become leaders in the next frontier of computing also need to put greater focus into funding development of immersive content.

According to a 2016 survey by the UBM Game Network, more than half of companies in the AR and VR industry use their own funds to fund projects. Only less than 8% of companies reported having raised funds from “other” sources such as the government.

The problem is that VR and AR development is a costly affair. Costs associated with VR projects often run into hundreds of thousands of dollars, something that keeps out a lot of people from venturing into VR development.

To encourage more and more people to get into the AR and VR industry, governments can come up with policies that give subsidies and grants to companies involved in immersive content.

This will attract VR companies and talent from all over the world.

Already, some governments have started doing this. For instance, in France, there is the CNC Fund, which is backed by the government.

This fund offers grants to VR and AR companies, provided these companies partner with local talent in the development and production of VR content.

The fund also has the mandate to provide tax rebates of up to 30% to foreign companies that produce VR content within the country.

These forward-looking policies meant to support VR and AR development and production are a fairly new approach to encouraging people to get into the VR industry, and therefore we cannot say with absolute certainty whether the policies are effective.

However, available evidence seems to support the view that the policies are working to encourage people to get into the“traditional” film industry.

For instance, following the implementation of such policies to support the traditional film industry in France, 31 projects were launched in France within a year, with the companies involved in these projects coming from eight different countries.

These projects took over 450 days of filming and saw over €119 million spent within the country, which is a great improvement compared to 84 days of filming and just €7.4 million spent in the year before the policies were passed.

Considering that the VR and AR industry is still in its infancy, it is still too early to say whether the gains seen in the traditional film industry will be replicated in the VR and AR industry.

Considering the growing popularity of immersive content, however, we can expect these policies to have similar effects within the industry.

Content Will Become More Personalized, But This Will Come at a Cost

Today, almost everything is becoming digital. In addition, the business models of most digital services are becoming more reliant on the gathering of personal data as a way of providing a more personalized experience to users.

This need for personal data is giving software designers an incentive to do all they can to keep users engaged within their apps and websites for as long as possible.

This is because the longer users remain on the apps and websites, the more data they generate.

Developers are continually trying out tons of features with the aim of making their apps and websites as engaging as possible.

Those with huge budgets are also working with teams of psychologists to find out what keeps people engaged and then implementing this within their apps and websites.

As these digital services become more engaging, the more time we spend on them, which in turn means we generate more personal data.

This data is then used to personalize the experience for us and make it more engaging, leading to a cycle that will see us spending more time on these services. As immersive technologies become more mainstream, we can expect that this cycle will become even faster.

The result is that immersive content will become more personalized than most of the other forms of content we have today. This will have a number of effects, including:

Advertising Will Become More Targeted

Today, the personal data we have left behind during our interactions with digital services has allowed advertising to become highly targeted.

Today, advertisers can target you based on things like your internet searches and your Facebook likes.

As immersive technologies go mainstream, we will be providing more data to advertisers, which they will use to serve targeted advertising at unprecedented levels.

Already, ads served through AR and VR devices have been shown to be 30 times more effective compared to ads served via mobile.

As immersive content becomes more personalized, we can only expect the effectiveness of AR and VR ads to increase.

Increased Engagement Might Have a Negative Impact on our Privacy and Well-Being

This quest by developers to capture our attention will have two negative effects.

First, it might end up being harmful to our well-being. Various studies have shown that people who spend more time on non-screen activities are more likely to report feeling happier.

For instance, a longitudinal study of Facebook use found that increased engagement on the social platform led to decreased levels of individual well-being.

Similarly, another study found that US teenagers who spend about 6-9 hours on social media per week are 47% more likely to feel unhappy compared to those who devote less time to social media.

Secondly, enjoying an engaging and personalized experience on most digital services requires us to trade in our personal data.

Unfortunately, once we give up this personal data, we have little say over how the data is used.

Over time, this lack of control over our data will discourage users from adopting new technologies over the long term.

According to a report by the World Economic Forum which polled over 6000 people of different ages in 6 different countries, 47% of the participants reported that they have a avoided or stopped using a service because they felt that they had no control over their personal data and how it is used.

In countries like China, this figure rises as high as 70%.

This is a clear indicator that privacy and sovereignty of data is a major concern for users.

Considering that immersive technologies provide enhanced data tracking capabilities (facial expressions, eye movement tracking, haptic data, etc.), therefore making our privacy more vulnerable, we can expect that these concerns about user privacy will become even more pertinent.


If immersive technologies are to go mainstream and gain widespread adoption, developers and designers will need to address the concerns raised above. Below are some strategies and recommendations on how to make VR and AR design more user-centered:

Regulatory frameworks: The same privacy concerns that have plagued other forms of digital media are also becoming apparent in VR and AR technologies. Considering that developers are not doing much to address these concerns, regulators will need to step in and come up with frameworks for protecting users.

A great approach to developing a regulatory framework to protect user privacy in regards to immersive technologies is to borrow a leaf from regulatory frameworks that have been put in place to protect users of other forms of digital technology.

For instance, many jurisdictions today have in place laws to prevent providers of digital services from collecting data without the consent of users and others requiring these companies to disclose how personal data will be used, or to erase personal data on the user’s request.

The same approach needs to be applied in regards to immersive technologies.

Give users sovereignty of personal data: Concern  over the collection of personal data by companies has led to the emergence of services that act as buffers between users and companies, giving users control over the data that they share with these companies, as well as anonymizing  some of this data.

With traditional digital media, we have various such tools, including VPNs, privacy-focused browser extensions such as Privacy Badger, and entire browsers such as the Tor Browser.

While such tools are currently lacking for the immersive environment, they will need to be developed in order to ease privacy concerns among users.

Managing Consumption: Today, we have multiple solutions meant to prevent the overuse of most forms of digital media. For instance, we have services that allow parents to manage the kind of content their kids can access online, as well as other services that allow users to receive warnings once they exceed healthy levels of screen time.

Similar solutions also need to be developed to manage and control the consumption of immersive content.

While such solutions are not infallible, they will go a long way in managing the consumption of immersive content and complimenting regulatory frameworks.


While VR and AR technologies are still in their infancy, we can expect that they will grow to gigantic proportions.

Over the next decade, there is a chance that the VR and AR industry might grow to become bigger than the TV industry.

These technologies will shift content consumption from observation to immersion, reduce the cost of production in creative activities, lower the barriers to entry and act as a tool for enhancing empathy and cognitive ability.

However, for these immersive technologies to go mainstream, a number of challenges and concerns will need to be addressed.

Governments will need to partner with creators to develop talent and provide incentives for more people to get into the industry.

In addition, governments will need to step in and develop regulatory frameworks, while developers and creators should also focus on efforts to address concerns over the privacy of users.

Augmented and Virtual Reality: The Promise and Peril of Immersive Technologies

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