Before PlayerUnknown’s BattleGrounds or PUBG got Indians hooked, finding Pokemon and catching them on smartphones had caused a frenzy among Indians.
Young Indians were seen thronging beaches, parks and malls searching for Pokemon. While Pokemon Go mania died out soon after, it introduced many to what augmented reality can do.
According to the TechSci Research report, the augmented reality (AR) and virtual reality (VR) market in India is projected to register a CAGR of 55.3% from 2016 to 2021. The rising applications of AR and VR in education, defense, healthcare, finance and shopping along with the ecommerce industry and many other sectors are anticipated to give rise to business demand for these technologies in the Indian market.
Many believe that AR and VR can have the same impact that the internet had on retail businesses, that Amazon effectively leveraged to score one over Walmart. Similarly, AR and VR are expected to be disruptive technologies that will lead to a shift in how consumer demand is generated and business models. For example, AR applications can enable consumers to make more informed buying decisions while for retailers, the technology will make it easier to engage with the target audience.
With AR in retail or even ecommerce, a customer can juxtapose various products next to real-world elements in a 3D view. This has a major impact on which product is finally purchased.
“Human sensory perception is highly visual in nature and humans experience the world with strong depth perception. However, digital consumer experiences are severely limited to 2D digital screens on mobile phones and desktops. This creates a huge experience gap between offline and online retail.” said Sravanth Aluru, CEO & cofounder of Avataar.Me
An AR marketing platform, Avataar.Me was founded in 2014 by Gaurav Baid and Sravanth Aluru. The company provides solutions to ecommerce players to convert 2D photos and videos into life-size 3D visual discovery experiences on social media platforms. This helps bridge the online-offline experience gap in online shopping.
Avataar.Me claims to be running such AR campaigns in partnership with Instagram and Facebook, offering direct integration onto its partner brand’s social accounts globally.
“Today, there are about 1.5 billion smartphones with in-built AR capabilities, but the projection is that it would more than double to 3.4 billion smartphones by the end of 2022, opening a big opportunity for the 2D to 3D visual discovery shift.”
Aluru told Inc42 that the AR advertising is projected to grow from $453 Mn in 2018 to over $8.5 Bn in 2023 and that Avataar’s partnerships with social platforms help them target over 50% of this ad spend. He attributes this growth to the increasing camera AR engagement happening on mobile devices. “The graphics compute power of mobile phones has also helped us a lot, enabling us to do a lot more on mobile devices now than just two years back.”
What Avataar.Me’s AR Platform Brings To The Table
So what do companies gain by having the AR/VR model as a part of their business? Aluru said that as per consumer tests conducted by Facebook, there is a 53% uptick in clickthrough rates for a brand campaign when consumers are interacting with immersive content.
Decoding market trends and feedback from customers, Aluru stated that brands understand the power of interactive content in terms of higher engagement and conversion and have been eager to bring such experiences to their end consumers. “What seemed to be critical, however, was to present a feasible working AI platform that caters to the consumer base realities/constraints in India.”
The high bandwidth requirement for such applications is down to the realism in the AR campaigns. Aluru added, “At Avataar, photo-realism has been the primary focus of our platform R&D. This applies to our personalization AI (life-size 3D avatars) as well as our 3D Fashion AI (2D website apparel images converted to 3D life-size renders) with fabric realism, realistic folds and drape, etc.”
Avataar has clientele primarily in the US and in Asian countries outside India at present. The company is focusing on building penetration into digital volumes in these markets while eyeing possible expansion to European markets in the future. The company currently works with Instagram, Facebook, Messenger, WhatsApp, Snapchat, Google ARCore, and Apple ARKit, which gives it wide acceptability.
The startup generates revenue from two channels. One is AI-led content creation from the brand’s existing 2D product catalogue and the other is the platform’s end-user reach in terms of actual AR/VR engagements. While the first is a fixed cost as per the AI render cost, the other is a volume-dependent platform pricing for customers based on the number of end-consumer impressions the campaign ends up driving.
“We have profitable unit economics and do not have to incur heavy customer acquisition costs – our revenue model is geared towards scaling up with profitable growth,” said Aluru.
Avataar.Me has raised close to $3 Mn in funding from angel investors in the USA and India and is looking at a Series A round in 2020, which Aluru said will be primarily geared to expand its global client base and R&D for the product roadmap.
The Challenge Of Bringing AR To India
Even though Indian businesses have been slow in adopting this 3D marketing tech, Avataar claims its AI platform has been developed with the Indian market’s constraints and realities in mind, and its AI-powered campaigns can effectively run on high-latency internet connections and device configurations that are most common here in the Indian market.
One of the biggest challenges Avataar.Me faces is that of financial constraints mostly driven by intensive manual labour involved in 3D asset creation. Aluru told Inc42, “While Hollywood movies can afford to pay such exorbitant manual effort for each video, digital marketers and commerce players simply would not be able to justify it on a unit-economical ROI basis.”
Low internet bandwidth is another pain-point. India as a consumer market is riddled with low internet bandwidth — while 4G works quite well now, 5G would be a real game-changer for innovative experiences and allow for far more immersive experiences that are possible today, said Aluru.
“The USP of our fully automated 3D AI platform is that it can manage huge scale and product inventory volumes at “no-manual-labour” AI compute costs. This makes financial unit economics viable for interactive life-size 3D visual experiences on digital discovery platforms, and more importantly viable at scale to drive a holistic adoption of the experience upgrade from static 2D video engagement,” he added.
Key players of the industry include names like Google, Facebook, Atracsys, Augmented Pixels, Blippar, COSY, liateR, Holition, Infinity AR, NavVis and Quytech. However, Avataar claims that the rigorous bar it sets for its visuals helps it outperform competitors in terms of responsiveness and drives better user experience eventually.
The Indian market has the potential to have a billion users online before the middle of the next decade. The current issues of a low addressable base for ad-spend and commerce volumes will be solved in the near future with newer models and the rise of the regional language internet ecosystem. India’s unique position as a predominantly mobile-first internet economy is another advantage for AR/VR applications for mobiles.
Aluru said, “India’s technology sector is shaping up well, driven by our high-quality talent pool – we are perhaps one of the leading geographies along with Israel and China on AR/VR innovation. Digital bandwidths, online consumption, user growth rates are all tilted in favour of India becoming the next big technology hub globally.”
The number of startups working in the field of virtual and augmented reality in India is growing steadily and attracting the attention of conglomerates such as Reliance, which acquired VR startup Tesseract earlier this year. However, the ecosystem is still emerging and the domestic market is still a niche category, so both startups and venture capitalists face challenges in navigating the space. As the VR/AR ecosystem takes hold and as technology penetration grows, it remains to see how quickly such technology is infused with the existing advertising and marketing models so that they not only become mainstream, but also cost-effective for businesses.