Company-X director David Hallett explores the business application of virtual reality.

One of the biggest confusions about the world of digital realities is the difference between augmented reality (AR) and virtual reality (VR).

Long before the hysteria surrounding the augmented reality game Pokémon GO, both AR and VR were earning significant media attention and held out promises of tremendous growth and business opportunities.

Conceptually augmented and virtual reality provide a similar experience: the remarkable ability to alter our perception of the world. Where they differ, is the perception of our reality.

Virtual reality centres on the creation of virtual worlds that we can interact with. These virtual worlds are designed so that users find it difficult to tell the difference between what is real and what is not. Through the use of VR helmets or goggles, users are blinded to the current world and are visually ‘transported’ to an alternative location (and reality).

Augmented reality however, takes our current reality and builds upon it. It does not move us elsewhere, it simply ‘augments’ our current state of presence. It is the blending of virtual reality and real life, as developers create images within applications that blend in with contents in the real world. With AR, users are able to interact with virtual contents in the real world, and are able to distinguish between the two.

The most tangible difference is the level of immersion for the user. With AR users continue to be ‘in touch’ with the real world while interacting with virtual objects around them. Whilst with VR, the user is isolated from the real world while immersed in a world that is completely fabricated.

Perhaps, as an analogy, think going to an aquarium (AR) versus scuba diving (VR).

The first concepts of virtual reality came from the world of science fiction. In the mid 1930’s a science fiction book called Pygmalion’s Spectacles described a goggle-based virtual reality system with holographic recording of fictional experiences including smell and touch.

However, in 1901, L. Frank Baum the author of The Wizard of Oz predated, by over a century, the invention and the possibilities of augmented reality. Baum’s is the earliest recorded reference to the concept of AR, in his book The Master Key:

“I give you the Character Marker. It consists of this pair of spectacles. While you wear them every one you meet will be marked upon the forehead with a letter indicating his or her character. The goodwill bears the letter ‘G,’ the evil the letter ‘E.’ The wise will be marked with a ‘W’ and the foolish with an ‘F.’ The kind will show a ‘K’ upon their foreheads and the cruel a letter ‘C.’ Thus you may determine by a single look the true natures of all those you encounter.”

Cue the passing of time. In 2013, Google announced an open beta test of its Google Glass augmented reality glasses. The glasses connected to the internet via mobile data on a user’s smartphone, and responded when a user spoke, touched the frame or moved their head.

Microsoft followed suit in 2015, announcing the launch of Windows Holographic and the HoloLens augmented reality headset. The headset utilises various sensors and a processing unit to blend high definition “holograms” with the real world.

Niantic released Pokémon GO for iOS and Android in July 2016. The game quickly became one of the most used applications, by one estimate, surpassing Twitter, Facebook, and Netflix in its day-to-day popularity on Android phones. On Apple devices, the game was downloaded more times in its first week than any app that came before it. This definitely brought augmented reality into the mainstream.

Upon Pokémon GO’s release, the value of Nintendo’s stock almost doubled, adding USD$17.6 billion in market value. Nintendo is a shareholder in the game’s developer Niantic Inc. and Pokémon Co., but has an “effective economic stake” of just 13 percent in the app, according to an estimate by Macquarie Securities.

Then just as quickly, Nintendo shares plunged by the most since 1990 after the company announced that the financial benefits from the worldwide hit Pokémon GO will be limited, sinking 18 percent and wiping out USD$6.7 billion in market value.

Perhaps virtual reality and augmented reality are over-hyped? That’s not the claim of Geoff Bentley, director of Better World VR, a Waikato-based company focused on bringing organisations up-to-speed with VR and AR.

He believes that VR and AR are finally here. “Thanks to advances in optics and machine learning, we will see explosive growth in digital realities over the next five years. Billions are being invested in developing this technology, which promises to disrupt the way we work and interact with the world around us”, Bentley said.

“This technology has now reached a tipping point where it can be successfully integrated into business across a broad range of industry to provide savings, enhance services, and create new revenue opportunities.”