Desire for Content Is at an All Time High, and Apple Is Positioned to Dominate in Immersive Content

Apple’s latest confirmed venture into the immersive technologies space—Augmented and/or Virtual Reality (AR/VR)—is through the acquisition of VR content house NextVR for US$100 million. The company was founded in 2009 and has been at the forefront of VR content creation. The company is perhaps most notable for the big content partnerships names it has secured, especially in sports, which has long been a dominant but difficult to license domain.

NextVR joins a long list of acquisitions and moves for Apple that strongly position the company in many AR/VR domains: ARKit is already a dominant force in the AR space and is a foundation for any immersive content activity; in-house Apple hardware is coming soon, likely both in AR and VR; dedicated AR sensors have already made their way into the iPad, and the iPhone is likely next; and AR/VR hires abound, with minds from Jaunt, HoloLens, Oculus, Magic Leap, and many other notable names. There is also overlap in the light field capture and content space, with Apple filing a patent for light field capture on mobile devices and NextVR having added light field for 360-degree video capture back in 2015.

NextVR’s primary value to Apple comes in content partnerships and some patents, not only in VR content capture and creation, but also in distribution through video streaming. While it’s not yet known how this will be applied, there are a few likely scenarios: an extension of Apple’s Services branch with a brand-new immersive hub, an extension of existing services into AR and VR, or perhaps most likely some combination of the two.

Both an existing service extension and a brand-new dedicated service would make sense for Apple. Apple Arcade for gaming, Apple Music for music streaming, and Apple TV for video streaming all exist already and have seen success. Other subscription opportunities like iCloud might not factor in directly to a new content play, but again value for a new service can be immediately expanded through ecosystem ties. A hub for immersive content slots in very nicely as a more innovative content opportunity for the company that can leverage existing partnerships and the Apple ecosystem to hit the ground running. Looking to Apple Arcade as an example, Apple rolled out a new service that had a selection of content that was different enough from existing options in value to warrant the subscription while also having enough of that content to bring in a swath of users. This prevented the service from declining after initial novelty wore off, while also differentiating it from the beginning.

It’s not easy to take this approach for most companies, especially in the immersive space where nearly everything is new and changing, but Apple is not most companies. A US$100 million acquisition is barely a sliver of Apple’s total buying power, and millions have been spent paving a content and services pathway for the company already.

A lack of compelling content is often a death knell for a market; users are impatient, and even if there’s novelty and interest surrounding something, lacking a catalog to maintain interest leads to quick churn. This is especially true of immersive content, where consumption presents obstacles from a significant hardware investment to a confusing collection of fragmented content stores and delivery options. The immense momentum around mobile device-based VR has entirely died out, all within a few years; granted, standalone VR devices have captured some of that market, but it’s undeniable that a lack of compelling content as the first wave of decent mobile VR rolled out hampered it to the point of indifference and then termination.

The market is different today than it was four years ago when mobile VR started growing, though. The number of content creation and development tools is significant, with big names in content creation such as Unity, Unreal, Blender, Maya, Autodesk, Adobe, and more having either in-house immersive authoring tools or a network of plugins.

All that said, valid questions remain around value to consumers. Are users now willing to use a VR device for hours, in the case of sporting events? That hasn’t been the case in the past. Are devices affordable enough and user-friendly enough to warrant a purchase? This varies by technology, with VR being farther along than AR on the consumer front. Are content distribution methods mature enough and broad enough to maintain a critical mass of users? Again, this varies by participants, but things have been improving.

Apple has been addressing each of these areas over the years through Research and Development (R&D), product, acquisitions, and hires. Combined with Apple’s brand power and marketing expertise, this creates a potential immersive content powerhouse as soon as the company decides to fully dive in. This is a rare luxury in the AR and VR space, or any new technology space for that matter. The only true End-to-End (E2E) competition for Apple are the other incumbent technology names: primarily Google, Facebook, and Amazon. These companies all showcase differing levels of maturity across different components of the value chain, but again Apple is (likely) positioned the best holistically.