Exploring consumer expectations and needs in an evolving XR landscape
Ericsson ConsumerLab conducted extensive research across 10 global markets with current and prospective extended reality (XR) users, revealing four pivotal insights shaping consumer expectations for augmented reality (AR) experiences over the next five years.
A glimpse into the future life with AR: a consumer view
Augmented reality enhances reality by merging digital and physical elements, elevating experiences. It transforms how consumers entertain, shop, socialize, and express art. It is pivotal across industries and is increasingly accessible to consumers via smartphone AR apps. However, challenges with current smartphone AR experiences, including limited applications and content, low immersion, physical discomfort, and social acceptance issues, hinder consumer adoption. Furthermore, consumer-friendly AR/MR devices remain scarce. Nonetheless, consumers consistently express interest in AR experiences, anticipating lightweight and portable AR/MR devices to become essential companions to smartphones.
Key findings
Consumer AR – key insights with Jasmeet Sethi
Ericsson ConsumerLab conducted extensive research across 10 global markets with current and prospective extended reality (XR) users, revealing four pivotal insights shaping consumer expectations and needs for augmented reality (AR) experiences over the next five years. Tune in and learn about the key insights and implications with Jasmeet Sethi, head of Ericsson ConsumerLab.
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1. Consumers combining smartphones and AR devices will double in the next five years
The smartphone has become inseparable from consumers' lives, serving as an extension of their bodies. Its ubiquity makes it challenging for users to envision a replacement. While smartphones serve as the primary entry point for AR experiences, and consumer interest in AR experiences has been increasing steadily among 5G users in the past three years, overall satisfaction remains low, at only 42 percent, due to numerous limitations and challenges with current smartphone AR experiences, including limited applications, irrelevant content, small screens, arm fatigue, and low immersion.
However, consumers who use both smartphone AR apps and VR/AR/MR headsets/glasses tend to be more satisfied with smartphone AR experiences, with almost half reporting content, about 10 percentage points higher than those who don’t use both. Today, about 1 out of 10 users utilize both smartphone AR and VR/AR/MR headsets/glasses, and this number is expected to double in the next five years. This highlights the undeniable importance of headsets/glasses in delivering comprehensive experiences alongside smartphones, despite ongoing challenges in achieving full consumer-friendliness.
User groups - today versus in 5 years
Consumers expect AR/MR devices, likely in glasses form, to become companions to smartphones, with 62 percent expressing willingness to connect these devices to smartphones for elevated experiences, provided these devices will evolve and become compact, lightweight, and offer extended battery life.
2. Consumers are hungry for on-the-go AR devices and willing to pay 20 percent more for the portability
Today, VR/AR/MR headsets/glasses are predominantly used within homes and perceived as shared devices, with 64 percent of users reporting sharing their devices with household members. This highlights the current domestic and communal nature of such devices.
However, as anticipation grows for the evolution and enhancement of AR/MR devices over the next five years, three-quarters of consumers express a desire to extend their usage beyond home settings. This shift mirrors the historical trajectory of the telephone, which transformed from a stationary household device to a mobile, personal essential. As AR/MR devices become more portable, advanced, sleek, affordable and socially acceptable, they are poised to transition into personal, everyday accessories akin to smartphones.
In fact, the desire for increased portability is so pronounced that consumers are willing to pay an average of 20 percent premium for devices usable outside of home. Locations that can command relatively higher price premiums compared to home are arenas or concert venues, common shopping areas/centers and social establishments such as cafes and restaurants.
- XR user, Japan
3. As AR technology advances in adapting to geospatial surroundings, the range of experiences will become more diverse and demanding on 5G
As the industry advances, we foresee a three-stage transition for consumer AR experiences over the next five years.
Initially, basic AR experiences, such as social, and informational applications, will become widely available to consumers. This stage has already commenced and will continue to evolve in the coming one to two years. This is followed by the second stage during which more location-based and geospatially aware experiences will become widely accessible to consumers thanks to the expected advancement in geospatial AR technology. Finally, more advanced, and native experiences will begin to emerge and gradually become widely available to consumers. For instance, consumers will be able to enjoy mixed reality cinematic experiences anywhere and have 3D digital exercise companions during workouts.
As AR experiences evolve, the devices available to consumers will also undergo a transformation. This evolution will commence with smartphones dominating the initial stage, followed by lightweight, portable AR/MR devices acting as companions to smartphones, enabling outside-the-home and on-the-go use. Eventually, standalone AR/MR devices will emerge to facilitate native and more advanced experiences.
4. Bystander privacy still looms large, hindering device adoption
While early adopters have shown interest in XR, the adoption among the general population still lags. This slow uptake is attributed to a variety of factors, including technological challenges, device design, social acceptance, alongside privacy concerns.
Social acceptance plays a crucial role in influencing consumer adoption. Over 60 percent express reluctance to use AR/MR devices publicly unless they are visually appealing. Additionally, more than half are apprehensive about potential health and safety risks. Another significant aspect of social acceptance is bystander privacy, meaning consumers are exposed to others taking pictures or videos with AR/MR devices. While fewer consumers, around 2 out of 10, show concern about being captured by others using AR/MR devices as bystanders, many more, around 6 out of 10, show concern if these pictures and videos are shared with others, with or without their consent.
The amassed impact of bystander privacy issues influences consumers' willingness to adopt AR/MR devices. This becomes evident when examining the share of consumers intending to purchase an AR/MR device. Notably, for those who are concerned about bystander privacy, the intention to adopt is 18 percentage points lower than for those who are not concerned.
- XR user, the US
Implications on the 5G network
The evolution of the AR market will require efforts from a range of ecosystem players to drive both technological development and consumer adoption. Collaboration within the ecosystem will be essential to propel AR technology to its full potential, focusing on diverse areas such as improving connectivity, ensuring seamless transitions between devices, improving application and content relevance, addressing privacy concerns, and shaping the societal acceptance of AR/MR devices.
As portable AR/MR devices, likely in glasses form, gain popularity and social acceptance for everyday use, their reliability and utility in various contexts will increasingly hinge on network and cellular connectivity. Network infrastructure must be optimized for widespread usage outside of home and on the go. Wide area connectivity or 5G hotspots will be vital in high-traffic locations such as airports, train/subway stations, arenas/concert venues, stores or shopping areas, social establishments such as cafes and restaurants, or while commuting.
On the other hand, increased AR adoption and the use of smartphone-connected portable AR/MR devices will also present new revenue opportunities for communications service providers (CSPs) in both consumer and developer markets. For example, CSPs can offer higher tethering allowances for AR/MR devices and premium plans with quality of service (QoS) differentiation in high-traffic locations for consumers. Simultaneously, they can provide developers with network APIs optimized for XR traffic demands.
What will AR development look like in the near future?
Methodology
Qualitative research:
22 in-depth interviews were conducted between April and June 2023 with 12 current AR/VR users, 7 industry experts and 3 XR startup companies: TagSpace, forwARdgame and EyecandyLab. Interviewees were located in the US, Japan, South Korea and Germany.
Quantitative research:
An online survey was fielded between July and August in 2023 in 10 markets. The sample consists of 10,000 early adopters aged 15 to 69, with 1,000 from each market, who use smartphone AR apps and/or VR/AR/MR headsets/glasses at least every other week or plan to do so in the next five years. The sample represents 280 million early adopters in the markets surveyed. While early adopters are a small fraction of consumers globally, their early adopter profile makes these individuals important when exploring how wider groups of consumers might use these technologies in the future. The respondents were asked a range of questions about their current usage, the perceived benefits, challenges, future adoption intention, and expectations around XR-powered experiences in the next five years.
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