Eye on AI - September 4th, 2020
Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!
Hi everyone! This week, we’ll be continuing with another retrospective, looking back on the previous year’s news to try to understand the progress of a specific AI-driven technology in the consumer markets. Building on last week’s topic, we’ll be looking at Virtual Reality (VR), a powerful form of Extended Reality, how progressed in consumer markets in 2019, how it’s evolving with the pandemic, and how it might look in the future.
Virtual Reality: The Next Frontier of Immersive Experiences
Already widely used in video games and complex training programs like flight simulations or mechanical engineering, Virtual Reality, an incredibly immersive form of XR, had begun to expand more into the consumer markets with the beginning of 2019. And yet still researchers were questioning whether it would be adopted, or if, like Google Glass, would die in spectacular fashion. But as the year wore on, and news continued to break of VR’s adoption, it became more apparent that the question wasn’t if VR would explode into consumer markets, but how.
By the fall of 2019, we were already beginning to see hints of how VR might be most widely used. Upscale restaurants had begun to combine VR with meals for performance art. Others offered VR headsets to customers waiting for their tables, programmed with immersive stories about the food they would soon be consuming. The Washington Post even suggested VR might be the future of dining.
Outside the restaurant industry, other markets had made VR inroads as well. British Airways began testing VR to calm nervous passengers, while New York City’s Museum of Food and Drink used VR for a cultural food exhibit, taking customers through the creation of a multi-course Asian meal, where ingredients were described by a professional chef / poet narrator as they floated by to combine into a virtual plate before the narration continued into dish preparation, food origins, how the dish originated, and how it was redefined by other cultures. Indeed, while these use cases were small in terms of how widely they were implemented, they hinted at new ways marketers were beginning to look at VR for potentially larger scale adaptation.
The Emotional Impact of VR
As we described in last week’s retrospective, the real pull of Extended Reality technologies, Extended Reality being the blanket term that encompasses all forms of mixed reality, is their emotional pull. VR is perhaps the most immersive form of technology, and thus the most emotionally potent.
By 2020, smart marketers, realizing the emotional impact VR had, began using VR in market testing environments. We touched on a novel market testing VR in our April edition of Eye on AI by highlighting the article, “A Piña Colada Tastes Better on a (Virtual) Beach,” which described how VR headsets were used to place testing participants in virtual environments –– in this case, a sunny beach –– to try and see if environment had an affect on taste.
“VR test data indicated statistically higher liking scores when the participants consumed piña coladas on a virtual beach than they did when tasting without the VR headset,” wrote the article’s co-authors Peiyuan Zhou, Mingze Qin, and Robin Dando. “The mean liking score for piña coladas increased from a 6 to a 6.3 with a VR beach scene; the liking scores for Bloody Marys remained the same under both conditions.”
As the results show, when users were placed in specific environments, their perception of taste changed based off their connection between the beverage and the environment. While this idea might seem obvious, the ability to place research groups virtually in a specific environment to test products was anything but, and something I believe marketing researchers will widely adopt.
But perhaps even more telling about this experiment was how users reacted to VR testing. 73% of them believed VR would be useful in the future, with first-timer VR users indicating that they believed there is significant potential for VR in sensory studies and younger participants more likely to accept VR as a useful tool for sensory. In other words, this type of testing seemed positioned for hyper-future growth as younger, more technologically proficient generations aged.
COVID-19 and the Rise of VR in Customer Engagement
The world changed after COVID-19. People were forced to stay at home. Global economies teetered on the brink of a recession. Coinciding with the pandemic, there seemed to be weekly-breaking news about the necessary adoption amid store closures. Marketers began to look to XR technologies to bridge the physical distance the pandemic was creating between them and their customers, with VR being most obvious link.
This idea was touched upon by an article we covered out of Glossy, titled “Brands look to VR e-commerce to replace the in-store experience,” which noted how Obsess, a VR e-commerce startup, saw a 300% increase in inbound inquiries after the pandemic hit. Physical stores were mapped out virtually through VR e-commerce companies, giving customers the ability to parooze isles, explore spaces, and connect with their favorite brands from the safety of their homes. Dior’s online store was developed with Obsess before the recent store closures. Ulta, Tommy Hilfiger, Farfetch and Levi’s are among other large retailers that have created their VR retail experiences with the company, with other large retailers following suit. Not only was VR commerce immersive, it proved excellent at converting sales.
“A selling point being made by VR tech companies is not just that the technology creates a more entertaining shopping experience for customers, but that it drives sales. According to [Obsess CEO] Singh, the company’s VR stores have a 70% higher conversion rate than traditional grid e-commerce.”
But it’s not just Obsess that is seeing high VR growth during the pandemic. Implementations across the board are on the rise in most industries. And while the pandemic expedited the need for VR, VR technology as a whole was already in a hyper-growth stage before the pandemic hit. In 2017, the global augmented reality and virtual reality market size stood at USD 11.35 Billion, and it’s forecast to reach USD 571.42 Billion by 2025. That’s a 4,935% increase in under ten years.
VR is not a gimmick. And it’s not going to crumble before our eyes like Google Glass. It’s here to stay, and from where I’m standing, its growth seems boundless.
That's it for now. If you'd like to receive email updates from Aigora, including weekly video recaps of our blog activity, click on the button below to join our email list. Thanks for stopping by!