The Israeli Virtual Reality and Augmented Reality Road to Success - VR Life

The Israeli VR and AR Startup Landscape

virtual augmented reality


Virtual reality along with augmented reality are still in their infancy, and, depending on who you ask – venture capitalists, analysts, visionaries, tech enthusiasts, sociologists, etc. – you’ll get varying answers regarding how brightly the future is shining for the VR/AR markets.


Is 2016 going to be a defining year, or a reminder of unjustified hype?

Analysts and venture capitalists have been attempting to get a sense of the maturity of the VR and AR markets with regards to technology, cost and use cases in order to estimate its growth and total addressable market. Estimates by Goldman Sachs suggest that the size of the overall VR, AR market will be anywhere between $23 billion to $183 billion by 2025. The wide range is an indication of the uncertainty around uptake and adoption.

Oculus Rift

Several key mass market VR products are expected to launch, aiming to get into consumers’ living rooms, in 2016. An optimistic forecast provides that more than 5 million units of high end VRs (PC VR and Console VR) will be shipped (with various estimates predicting 1-2 million units of Oculus Rift, 1.5-3 million PlayStation VR and 1-2 million HTC Vive) while tens of millions of mobile VR units are expected to be shipped.


It will probably take more time than that for the key AR platforms to mature with Microsoft HoloLens and Google Tango expected to hit the market first, followed by Magic Leap and potentially Apple as well.

MSHoloLens GroupShot

Since 2014, VC have invested $2.56 billion globally (including the $1.4 billion investment in Magic Leap and excluding the more than $2 billion Oculus deal) in VR and AR. Over that same period, an estimated $120-$170 million was invested in Israel in the area of VR and AR.


How is Israel faring in the midst of all of this VR, AR innovation?

Israel already has great talent in these areas, and a strong adjacent video and computer vision ecosystem (led by companies such as Mobileye, Elbit, and Verint) that can impart to VR and AR innovation.

israeli virtual reality

Hardware and natural user interfaces (gesture control, eye tracking, etc.) are particularly strong points of Israel. They account for over two-thirds of total fundraising volume so far for Israeli startups in the field, even though additional sectors are expected to develop as well (development platforms, vertical solutions, and healthcare, for example). Israeli companies are also likely to leverage the county’s strong adtech and emerging gaming ecosystems in the areas of VR and AR.

A number of interesting Israeli startups currently under the radar will also likely emerge soon. Some big tech players like Facebook, Apple, Intel, Microsoft, and Baidu have already made acquisitions and investments in the Israeli VR and AR ecosystem, with the latest being Intel’s acquisition of Replay Technologies (a former portfolio company of Deutsche Telekom Capital Partners). This trend is likely to continue.


The Future of AR/VR

One of the most exciting facets of VR and AR is their power to instill certain experiences with a whole new level of emotion. For instance, the experience we enjoy when we look back on endless amounts of video recordings of our childhood is far richer than that of our grandparents, who only had black and white photos to remember their childhood by. It is possible that in the future, we will be able to fully immerse ourselves in a time capsule and experience birthdays and other pre-recorded childhood memories in 360 degree 4K 3D video using AR and VR. If these industries develop as anticipated, VR and AR give us experiences with a whole new range of emotions than the ones we’ve been used to until now. Israeli startups may just be an important part of that.

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