What Does Extended Reality Include?

Extended Reality, or XR, is experiencing a growth explosion as it continues to be applied in a growing number of applications, from entertainment to marketing, employee training, education, and remote work. Here, we’ll dive deeper into XR as well as XR stocks you should know about.

What is Extended Reality?

Extended reality refers to all environments — both real and virtual — that combine human and machine interactions that are generated through the use of computer technology and wearables. 

XR includes:

• Virtual Reality (VR)
• Augmented Reality (AR)
• Mixed Reality (MR)
• Everything in between 

Why is Extended Reality Important?

In the past couple of years — and especially accelerated by the pandemic — we’ve watched XR transform from a novel concept into a critical and disruptive technology.

In fact, estimates forecast that between 2020 and 2026, Extended Reality production worldwide will grow by 46.5% every year. The Extended Reality market is expected to eclipse $209 billion this year. That figure will increase to more than $905 billion by 2027.

The health crisis has been one of the XR industry’s largest catalysts as people suddenly had to seek out new, immersive, and meaningful experiences that could take place during quarantine, lockdowns, and social distancing measures.

There is also the fact that the workforce transitioned to a work-from-home or at least hybrid model — that’s likely to stick around with nine out of ten remote employees reporting a desire to continue working remotely. Today’s workforce is finding new ways to collaborate without limits using disruptive tools, most of which include components of XR.

Still not convinced of the importance of XR?

80% of executives believe it will be essential to leverage XR to close the physical distance when engaging with employees and consumers. An additional 27% of executives say it’s very important for their companies to pioneer XR solutions.

What Is An XR Experience?

XR experiences can take place on a broad spectrum of playing fields, from gaming to health care and business, including:

Business

Businesses of all sizes have already started reaping the benefits of Extended Reality, from employee onboarding and training to facilitating webinars with executives and clients from across the globe.

XR is also helping consumers feel more confident in purchases with e-commerce retailers via try-before-you-buy experiences. This XR experience allows consumers to preview how something will look in their home or on them before they buy it.

For example, indecisive customers who are trying to decide between two couches can get a glimpse of how each one will look in their living room to make a more informed decision. This allows for a reduction in returns while one-upping the brick-and-mortar shopping experience.

XR is also revolutionizing employee training by providing a hands-on training experience with step-by-step virtual instructions and demonstrating in real-world facilities.

Gaming

XR, and more specifically, VR, has been on display in gaming for years now.

From piloting X-Wings via a VR headset to the Pokémon Go craze a few years ago, VR offers gamers the first-person perspective that many of them are looking for to immerse themselves in the game completely.

These immersive experiences make gaming more memorable and engaging, bringing the gamer’s most longstanding fantasies to “life.”

Education

When it comes to education, XR allows students to learn in new ways that have never been possible, from teaching the seasons to kindergarteners to more humane virtual dissections in high school science, and even training medical students to perform life-saving surgeries.

XR goes where humans cannot. Your child’s teacher certainly can’t take them on a real-life field trip to Mars. But, with XR, the class can start exploring the Red Planet within seconds. 

Even more importantly, with XR, students can gain impactful, real-world understanding of modern problems that are often far too complex to conceptualize through traditional education models.

Extended reality can encourage empathy in students as they’re able to build perceptions well beyond the four walls of a classroom.

When they throw on their VR headset, they are instantly transported to an engaging lesson with a first person POV, allowing them to develop the capacity to truly understand what other people are going through — something that cannot be done through a textbook.

Real Estate

XR allows property managers and real estate agents to streamline the showing process by allowing potential buyers and renters to take a virtual walk-through of properties.

Prospective homebuyers and renters can simply throw on the same VR headset they used to attend a client meeting in the morning and spend the afternoon browsing home listings. When they find one they like, they can take a tour directly from their sofa.

Or, a couple expecting a baby can see the nursery in a more soothing color before deciding to close on a house. 

Architects and interior designers can also leverage Extended Reality to bring their designs from paper to life, showing their clients as many different colors, textures, and fabric combinations as they please.

In real life, all of these changes would be costly and would not even be worth the hassle. But, in XR, changing the location of the fridge or swapping out color swatches can be done as simply and quickly as the click of a button or swipe of the finger.

Remote Work

Extended reality removes distance barriers, which allows employees to work from anywhere in the world while still having access to data and all other tools needed to do their jobs.

Remote employees can leverage XR to attend meetings in different time zones, collaborate with co-workers around the world, and have face-to-face one-on-ones with clients from the comfort of their home office.

Extended Reality Vs Augmented Reality: Differences

Don’t think of Extended Reality and Augmented Reality as separate entities. Instead, you should think of them as a family — that also encompasses VR and MR — and that’s led by Extended Reality.

Augmented reality is a fairly well-known XR component. One of the biggest benefits of AR is that, unlike VR and MR, AR typically does not require as much investment in expensive equipment, headsets, and hardware.

AR is most commonly seen in the form of apps as modern apps are able to scan environments using built-in algorithms intelligently. Then, they use the perception of that environment to overlay digital content IRL. For example, open up your Amazon app. Type in “office chair.” Click on one, and you’ll see a “view in your room” option. Voilà. No more wondering how a piece of furniture or decor will look in your room.

AR is especially appealing in the world of retail — 71% of consumers report being more willing to shop with businesses that offer AR experiences. Thanks to Snapchat filters, many consumers are already comfortable using AR.

Unlike VR, which asks consumers to step into a new, digital world, Augmented Reality is built on top of currently existing reality.

3 Top Extended Reality Stocks

If you’re looking to get a piece of this growing industry, there are three top XR stocks you should know about:

1. 1. Snap (SNAP) — Known for developing the popular social media platform Snapchat, Snap as it’s now called, has been making big waves in AR with its Lenses. More than 170 million people use Lenses daily. The company hopes to dive even deeper into Augmented Reality with Spectacles — glasses that will “bring AR to life” through an immersive lens experience.
   2. Nvidia (NVDA) —Nvidia also has an iron in the VR fire with its devices that deliver VR across 5G and Wi-Fi, allowing users to stream their Augmented Reality tech tools wirelessly. The company is also working on technology to incorporate AR into vehicles. 
   3. Qualcomm (QCOM) — Qualcomm produces immersive 3D graphics, machine learning, and intuitive security on its quest to build the foundational technology necessary to bring AR to life. Qualcomm is also known for investing in AR startups, and the company’s Ventures’ Portfolio includes Matterport (MTTR), a company that produces 3D reconstruction cameras and software.

When it comes to Extended Reality, it’s a matter of “when,” not “if.” This means that now is the perfect time for investors looking to beef up their stock portfolios and increase their gains with tech stocks, particularly those in the XR space. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.