Few industries are innovating as quickly as virtual reality (VR) and augmented reality (AR). Over the past 12 months, the much-hyped Magic Leap One, HTC Vive Focus, and Oculus Go headsets were released – each providing a more accessible virtual experience. AR made its way onto the battlefield with the U.S. military pledging to purchase 100,000 Microsoft HoloLens products, and sectors from healthcare to real estate adopted alternative realities into their businesses for the first time.
In Vancouver – home of one of the largest VR/AR ecosystems on the planet – 2018 proved just as groundbreaking. Top-flight post-secondary institutions like the Vancouver Film School launched accredited programs to teach individuals how to develop virtual experiences – one of the only diploma-level courses in the world. Vancouver played host to a number of immersive content events, including Siggraph conference. To cap off the year, the city became home to a second incubator dedicated solely to nurturing VR and AR companies.
With that momentum driving the ecosystem forward, local experts are expecting Vancouver’s VR/AR sector to hit new peaks in 2019.
THE INDUSTRY WILL CONTINUE TO GROW
The number of local virtual and augmented reality businesses has exploded over the past three years. Under the guidance of the Vancouver VR/AR Association—which has helped to foster community, increase collaboration, and fuel growth—the number of companies has rocketed from 15 to over 230 organizations. Last year, local businesses like Precision OS won millions in funding for their shoulder surgery software, while companies like Biba Ventures created innovative new ways for kids to play in outside using AR. For Ryan Peterson, CEO of Finger Food Studios – one of the largest Vancouver VR/AR businesses – 2019 will mark the point when the region’s smaller organizations get bigger.
“It’s hard to keep growing at that same rate,” he says. “Right now there are 200 companies, but how many employees are there in each? A lot of those are probably under 10 people. What we will see is these smaller startups getting to these medium- and larger-sized innovations. We want to see them mature into larger organizations because that’s going to show that we’ll have better traction.”
Tarrnie Williams agrees. As a veteran of the Vancouver technology ecosystem and the CEO of Blueprint Reality – a company that uses mixed reality to portray players in a VR world in real-time – he has a unique perspective on local organizations’ ability to scale up.
“I’d be surprised if we’ll see the rate of new companies increase at the same pace,” he says. “But I think we’ll see them get larger. We’ll see their impact on a global scale become bigger, and the number of people employed in the sector will increase. We’ve had some great support in terms of some of the incubators and shared workspaces like the BC Tech Cube and Launch Academy, and so what I see is some of those companies gaining further traction outside of B.C. and more globally. That will start to happen in 2019.”
SHIFT IN FOCUS
Much of that growth, the pair believes, will come from concentrating on enterprise solutions. Long-term predictions for VR/AR might suggest large returns for both B2B applications and the gaming market, but right now, the big bucks lie in resolving business issues. Peterson suggests that by next year, more Vancouver companies like local industry leader LlamaZOO will have made the shift.
“Companies are starting to embrace the enterprise market,” he says. “I think initially a lot of organizations went into entertainment. As there’s a move into enterprise, and we start to gain traction, that’s where we’ll see a better growth uptick. A lot of work is going to come to light. Much of it has been done in secrecy, and 2019 will bring a lot of big announcements from B.C. companies that can’t talk about the things that they’ve been working on for the last year or two.”
Some industries have realized the potential of VR and AR faster than others. Last year, giants in the healthcare, natural resources, and retail sectors each saw large corporations adopt the tech for everything from sales to operations. With its particularly diverse ecosystem, Vancouver has the ability to solve problems across all kinds of markets, and already boasts a roster of companies that have secured contracts with big players like Lowe’s, Lululemon, and Goldcorp. In the view of Microsoft Vancouver director Edoardo de Martin, 2019 will only bring further success for the city, as new industries begin to add immersive realities.
“As more companies begin to navigate digital transformation, it will be exciting to see how our partner community, including companies like LlamaZOO and Finger Food Studios, use the platform and tools to build compelling products and experiences,” he says. “Workspaces will continue to evolve, and technology will become more integrated into our day-to-day tasks. Imagine interacting within a three-dimensional space, untethered from your desktop computer…that’s where we’re headed.”
OVERCOMING TALENT SHORTAGES
Like any burgeoning industry, Vancouver’s VR/AR ecosystem has been faced with the challenge of bringing in qualified talent. The city is famed for its expertise in visual effects, animation, and gaming, and has seen increasing numbers of professionals porting their skills to virtual and augmented reality. But despite that home-grown base, hiring qualified professionals in such a new field has proven tough for an ecosystem that has exploded so quickly. In 2019, Peterson believes that Vancouver companies will adopt new techniques to answer the talent shortage.
“I definitely believe in home-grown solutions, but it’s important to bring international people on board—and to network,” he says. “Some projects we’re working on are truly global and are multi-company projects. We have our team, and we’re integrating teams from Japan, Europe, and North America. These projects are getting more and more complicated, and to succeed you to need to be able to collaborate. With talent, it’s about taking advantage of globalization, and that allows B.C. companies to punch about their weight.”
For local companies wishing to bring everything in-house, however, Williams suggests that Vancouver is well-placed to attract international talent.
“I believe that immigration is critical,” he says. “Our birth rate isn’t enough to support the needed pace of growth for our province, and that’s not going to change. We’ve got to look externally and we’ve got to bring people in. I think we do a good job on a country level—we’re incentivizing people who have these skills. What’s happening in America is helping us. I know people who have moved here from the United States because they did not want to live in [Trump’s] domain, and others who have moved here because they were having their immigration screwed up, and still others who chose to come here because they’ve made immigration that much more difficult. I think from that standpoint, it’s been good for Canada.”
B.C. IS OPEN FOR BUSINESS
B.C.’s vibrant VR/AR ecosystem has attracted companies such as South America-born multiplayer VR platform YDreams to open offices in the province. But despite offering a wealth of VR expertise and a generous interactive digital media tax credit—a rebate that returns 17.5 percent of all salaries and wages to a company—the Vancouver tech industry is held back by a lack of investment. A host of local companies like Form Athletica, Cognitive3D, and Stambol Studios are ready to grow into medium-sized businesses, and boast the concepts and track records to expand rapidly. The only piece required to advance Vancouver’s reputation as a global VR/AR hub in 2019, Williams says, is capital.
“We’ve got the talent base, and we’ve got the schools turning out the employees,” he says. “We’ve got a great place to live, and we have lots of innovation. We are hampered by growth capital. Investment that we see in San Francisco, Silicon Valley, or London, for example – I don’t see that here. I hear that all the time from entrepreneurs – it’s a common challenge.”
“VR/AR is one of the fastest sectors in the world, and we’re seeing a lot of investment in other jurisdictions,” Peterson agrees. “Although we’re seeing growth, there’s a lot more that we can get from out of there.”