Broker Check

Virtual and Augmented Reality: More Than Just Fun and Games

| July 20, 2016
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Entertainment is the current focus of virtual reality (VR) and augmented reality (AR) technologies, but their potential doesn’t stop there. The first thing that comes to most people’s minds when discussing VR and AR is video games, with one company currently making headlines based on a successful new release. Amusement parks have also made headlines with the technology, using it to update older rides and give customers a new experience.

Just as video calls significantly improved upon phone calls, VR may one day take the video call to the next level, allowing users to meet up with others in virtual settings. These settings could be anything from a conference room for those working remotely, to a virtual trip with family members to the Grand Canyon, or even Mars.

AR also offers practical improvements for day-to-day activities like driving. Using a specialized headset or eyeglasses, driving would become safer and easier. Rather than look at a GPS screen, directions could be fed directly through glasses and sensors on the car could feed information about obstructions or animals on the side of the road. Although the display technology isn’t there yet, many big tech names and small startups are actively working on technologies to make these ideas a reality.

A near-term beneficiary of VR and AR may be the $4 trillion retail industry. VR could allow the customers of online retailers to shop in a store-like setting, allowing them to see and virtually manipulate products from the comfort of their living room. This may fall short of testing a product in a physical store, but it would certainly be a step up from the current experience of online shopping.

Similarly, AR could bring the benefits of online shopping to brick and mortar retail, overlaying in-depth item descriptions, reviews, and information about related products onto the customers view. The $60 billion online advertising industry could benefit from these developments, giving companies a new way to interact with customers at the point of sale. This opportunity may help explain why a major tech company agreed to spend more than $2 billion to acquire a company that sells VR headsets in 2014.

Both VR and AR technologies are still in their early stages, but both possess huge potential for several industries, not just entertainment. Ten years ago, few would have imagined the impact that smartphones would have on society. However, once the hardware became affordable and widespread, enterprising developers and app creators found ways to make them even more useful over time. Given time, these same developers are likely to come up with more uses for budding VR and AR technologies, creating new experiences for users, and potential opportunity for investors.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

Because of its narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

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