Nearly every major tech company has a stake in augmented or virtual reality. Or both.
But even though some of the world’s largest companies are diving headfirst into both AR and VR, the categories remain nascent. Aside from Snap filters and occasional enterprise use cases, both AR and VR have yet to disrupt the ways in which we compute. However, Apple, Google, Facebook, Microsoft, and others think that mainstream adoption is a matter of when, not if.
Therefore, it wouldn’t be surprising to see increased acquisition activity for startups operating in similar spaces. And while acquisition activity is up, the bark is bigger than the bite.
VR And AR Present Mixed Acquisition Picture
Using Crunchbase data, we looked at both AR and VR startups that were acquired during and after 2012. These are startups that work on creating hardware, software, or content for VR and AR endeavors. Prior to 2012, few acquisitions in either space were made, likely due to the nascency of the tech. Here’s the chart showing the pace of acquisitions below.
In total, Crunchbase records 53 known acquisitions deals from 2012 to 2017 YTD. Of those 53 deals, 14 deals had disclosed prices totaling to $2.4 billion. Over half the acquisitions made in this time period were in 2016 and 2017 YTD, with 35 known deals being made in the time period.
Overall, it’s a disappointing metric when compared to other hot sectors in tech. For instance, artificial intelligence startups have seen a total of 300 acquisitions in the same time period. In 2016, which is, so far, AR and VR’s most active year with 18 known acquisitions, AI startups pounced by a multiple of 4.5.
Of course, disappointing news is not a surprise to those in the VR and AR industry. Techcrunch declared only a couple of months ago that the VR cycle is dead. MagicLeap, which has raised huge sums of money, still has yet to release its AR technology. And Crunchbase News’s own Joanna Glasner reported earlier in the year that VCs have lost interest in funding VR startups.
But despite comparatively modest activity and short-term prospects that don’t look much better, there are still some interesting notes we can pull from the acquisition data.
Big Tech Fuel Big Exits
Likely the largest of known acquisitions in the VR/AR category was made by Facebook, which acquired Oculus for $2 billion in 2014. Initially funded as a Kickstarter project, Facebook continues to run the virtual reality company as its own division. But the results of the acquisition, unlike Instagram and Whatsapp, are likely disappointing for Facebook.
Even with prices dropping for headsets, there does not appear to be much demand for Oculus’s products. Still, the social media company appears to be standing behind the VR movement. Likely to support Oculus’s VR gaming efforts, Facebook also has acquired Two Big Ears Ltd., which creates “efficient audio toolkits for game and virtual reality developers.”
But while virtual reality has gotten a lot of attention, Apple has looked towards augmented reality not only in the form of ARKit, but in its acquisitions as well.
The company has acquired two AR companies for undisclosed sums. Metaio, which was acquired in 2015, was founded in 2003. The company made AR tech for retail purposes, and it also had over 150,000 users worldwide, according to TechCrunch.
Following Apple’s Metaio acquisition was Flyby Media in 2016. The startup raised a total $19.1 million for its AR app that could identify objects. According to its Crunchbase profile, the company also claimed to be working on “indoor navigation, sensor fusion, image recognition, and 3D tracking.” It’s likely that some of its tech, or its team, has made into some of iPhone X’s suite of AR and face-tracking features.
However, other than one high-priced acquisition in the form of Oculus, and a few big name acquirees, there’s not much positive to be said for AR and VR startups looking to exit. Whether this is because developing such tech is out of reach for most startups, or the category is just not worth acquiring for is hard to parse. What we can tell you is that big tech seems insistent on propping up AR and VR tech in hopes of winning the future of computing. But so far, consumers seem very content to let them hold their breath.