by: Lucy Trang Nguyen
Providing Extended Reality (XR) services offers high revenue potential for media and sports rights owners, telecom operators and supporting vendors. The XR industry is projected to reach 472.39 billion USD by 2028 with an annual growth rate of 34.93% [Market Size, Share, Forecasts, & Trends Analysis Report by Mordor Intelligence]. Yet, many companies are struggling to define and verify XR revenue strategies. The ROI of XR services is unclear and finding and developing relationships with key partners is complicated. This article helps you to discover XR business value, revenue opportunities and implementation options.
Extended Reality (XR)
Extended Reality – XR is the umbrella term that encompasses all immersive technologies including Virtual Reality (VR), Mixed Reality (MR), and Augmented Reality (AR). XR represents a paradigm shift in user interaction, leveraging spatial computing to create immersive experiences beyond traditional 2D interfaces – converging the physical and digital worlds. The user interface is now being defined as the space around the user themselves which can be overlayed with virtual interactive assets.
XR Impact on the OTT Industry
XR changes the way humans interact with each other, with the world around us and the way we consume media. It is reshaping the Over-the-Top (OTT) industry by offering a new platform for engagement and monetization. The OTT experience can now be independent from the physical location of a TV screen in a living room and instead consumed anywhere in your home or even out of home via virtual video streams played on head-mounted displays (HMD i.e. AR glasses, VR/MR headsets etc.).
By leveraging the spatial user interface and the new extended real-estate beyond the traditional 2D mobile or TV screen, content providers can engage their audience with innovative, interactive and three-dimensional content delivery methods. Pioneers like Apple, are taking the video experience even to a whole new level by introducing a groundbreaking immersive entertainment format – 180-degree 3D 8K recordings captured with Spatial Audio.
XR also opens up new monetization opportunities including 3D advertising and product placement as well as personalized ad experiences based on spatial awareness. Compared to the linear TV consumption experience, the interactivity within the spatial interface allows content providers and brands to unlock a new level of insights on user behavior data.
XR Platforms
Leading technology companies like Apple have spent billions of dollars in R&D to enter the XR market, signaling its significance. Despite the high price point of the Apple Vision Pro, they have managed to create substantial movement in the market by accelerating the ecosystem to play catch up on the hardware development as well as the groundbreaking intuitive UX design. Right before Apple’s launch in the US market at the beginning of this year, Samsung has announced plans to launch their MR headset in 2025 with Qualcomm’s latest XR2+ Gen2 chipset that supports very similar specs (4.3k per eye resolution, 12+ concurrent cameras) to the Vision Pro. We are also seeing major OEMs adapting their UX to head and hand tracking to emulate Apple’s intuitive eye and hand tracking UX. In the next 12-18 months we can expect to see a pipeline of major OEMs to launch XR devices competing at a lower price point leading to higher market adoption.
XR Vertical Industries
Telco operators, media companies, and sports organizations are actively observing the XR market and the launch of high-quality XR hardware as they are the main players that will drive the ecosystem by distributing meaningful consumer-facing XR services. Telcos see XR as a next-generation growth path to potentially upsell their connectivity and bundle offers including XR hardware and XR services, while media companies view it as a new distribution platform. With sports being one of the key XR use cases, Sports organizations can leverage XR sports services to grow their existing fan base and attract younger audiences as well as generate significant revenue streams through establishing a new category of XR media rights.
XR Revenue Generation Opportunities
Even though there have been lots of XR experiments or even XR services launched in the past, the XR market can still be considered a blank canvas. This represents a huge opportunity for first movers to rethink their traditional business model and lay the foundation for next-generation growth.
Rights owners, especially in the Sports industry with upcoming pending events like major tournaments or rights renewals, are now actively looking for guidance to define a monetization strategy around their rights. Now is the time to explore and learn if they should go down the traditional business model and sell XR media rights, launch direct-to-consumer services or take the chance to build B2B2C services and license them all together to potential right holders. The latter will allow them to take control over the fan experience and data ownership. Let’s also not forget that OEMs are now high-potential targets to become right holders as they need beloved content to attract users to their platform, i.e. Apple and MLS, Meta and NBA.
With the new XR platform, brands can take advertising and sponsorships to a next level. Their success and impact can now be measured beyond traditional KPIs. Firstly, the spatial real-estate allows users to interact with e.g. 3D product placements or sponsored gamifications instead of consuming linear ads. Secondly, XR technologies allow for spatial awareness and with the understanding of the user’s physical space, brands can personalize the experiences and map them to their surroundings. It feels like yesterday, when everyone had to learn how to serve ads on mobile – today we need to start learning how to serve ads in XR.
Starting in the XR Business
While entering the XR business requires building a solid business case, we are seeing the market facing challenges such as unclear monetization strategies and ROI that need to be addressed. And sourcing partners and vendors to help build your own roadmap can be resource-intense as well.
To support these players who want to be first movers and move the needle, we at Accedo have put our heads together with like-minded partners within the XR and media ecosystem to launch a global strategic initiative aiming to accelerate go-to-market for Sports rights owners and telco operators. We have put together an end-to-end pipeline of immersive video production, processing and distribution, XR advertising frameworks, spatial data analytics, immersive technologies, XR hardware partners etc. – a managed service portfolio to help sports organizations and telcos validate their business case with data-driven live test deployments.
Conclusion
As the XR market continues to evolve, businesses must seize the opportunities it presents. By understanding XR’s definition, impact, revenue potential, and starting points, companies can embark on a successful journey into the world of extended reality.
Lucy is the Business Development Director – Emerging Technologies Business Development at Accedo TV. She has a mix of key business and product development roles at and worked with leading companies including Qualcomm Technologies, Red Bull TV, Disney & Comcast NBC Universal. Lucy is an expert in immersive video entertainment technologies for XR devices and platforms.