Person in wheelchair interacting with virtual reality headwear

Extended reality 101

Our deepening reliance on smartphones and other connected devices has been preparing us for a new, extended reality.

One report by Research and Markets predicts that the market for extended reality (XR) — an umbrella term that encapsulates augmented reality (AR), virtual reality (VR) and mixed reality (MR) — will jump from 2020's $25.8 billion to $397.8 billion by 2026.

But what is extended reality, and will it genuinely live up to the hype?

In a way, we're already living in a world enriched by extended reality. We use digital interfaces such as Google Maps or Waze to navigate real streets, and we use gaming and shopping apps to add digital figures and items to our surroundings. We give orders to virtual assistants, put on virtual reality headsets to play video games and use smartwatches to count our daily steps.

The concept of XR captures all of this and more in an increasing amount of complementary interactions. As technology advances and the realm of possibility expands, brands looking to explore these emerging frontiers see an abundance of opportunity.

What is extended reality?

Extended reality is a term used to summarily describe augmented reality, virtual reality and mixed reality. Each of these technologies is an extension of the same concept: creating an immersive experience that blends the digital and material worlds. However, each component has its own unique purposes and technologies.

For organizations, extended reality creates an opportunity to reimagine the customer experience and build on it in exciting ways.

pizza Image of Pizza Hut and PAC-MAN extended reality campaign.

Extended reality vs. augmented reality

Typically, augmented reality overlays digitally rendered images and information on top of pictures or videos of real-life items and events. Think of scanning a QR code with your phone to scroll through a restaurant menu.

So far, AR is most commonly used with smartphones, and those devices' omnipotence means AR is an easy gateway to extended reality for many. In terms of commercial potential, eCommerce has already embraced AR as a key part of building new customer experiences, from virtually trying on clothes to seeing furniture in your home — all through a smartphone screen. According to Snap's 2021 Future of Shopping report, one in four Gen Zers and Millennials have already used AR when shopping online, and more than a third of shoppers expect AR to be available when they're shopping for clothes, beauty products, furniture, luxury items and cars.

In that same report, Snap warns, "Retailers not utilizing AR technology run the risk of not meeting consumer expectations, and missing an opportunity to nudge shoppers closer to the checkout with an enhanced shopping experience offering the benefits of in-store retail at home."

Extended reality vs. virtual reality

VR differs from AR in that it normally involves a headset in which a person's entire field of vision is occupied by an immersive digital experience. It has a number of active use cases, ranging from playing games, to exploring a virtual car showroom, to wandering around a museum.

Although the need to use an additional piece of technology (i.e. the headset) makes it somewhat less accessible than AR, the technology is gaining traction. In fact, you can already observe how VR is expanding beyond the customer experience to become a vital part of the employee experience as well. According to an XR Association report, nine in 10 HR professionals view immersive technologies like VR as having enormous potential in their field, particularly when it comes to pandemic recovery.

Extended reality vs. mixed reality

Mixed reality bears some resemblance to augmented reality, but it adds a layer of interactivity. It's a blurring of the real and the virtual, perhaps best conceived as an experience on the spectrum between VR and AR. In a lot of cases, mixed reality requires some sort of headset that still allows you to view the real world with an augmented world transposed on top of it. MR also opens the door to creating digital twins, which are virtual duplicates of real-world objects and environments.

Extended reality examples

Extended reality is an important frontier for technology today and into the future, and organizations are already capitalizing on it; Nike's foray into digital shoes and virtual worlds is a prime example.

The activewear brand closed off 2021 with several moves that explore XR's potential, including the acquisition of RTFKT, a digital studio that creates AR experiences and digital collectibles like non-fungible tokens (NFTs).

The brand also announced the opening of NIKELAND on the online game platform, Roblox, a space where visitors can play, build mini-games and collect digital items in a virtual environment. For example, "NIKELAND visitors can take advantage of accelerometers in their mobile devices to transfer offline movement to online play," said the brand in a statement on their website. "For example, you can move your device and body IRL (in real life) to pull off cool in-game moves like long jumps or speed runs."

In addition to a digital showroom in the Roblox world, visitors to Nike's House of Innovation in New York City can use a Snapchat lens to see the kids' floor transformed into an AR version of NIKELAND.

Nike's use of VR, AR and MR help illustrate the unique ways each form of extended reality can be used to create unique and fascinating customer experiences.

But extended reality also stretches beyond retail and the "try before you buy" concept. Consider these additional use cases:

  • Energy company Avangrid Renewables used VR technology to train its employees 65% faster than with in-person training.
  • Automation company ABB is testing MR wearable technology and AR to allow remote technicians to see procedures and track data while servicing automation products.
  • Pizza Hut released a limited-edition collaboration with Pac-Man that allowed customers to turn their pizza boxes into a gaming experience. Customers could play the retro favorite using the pizza box and AR on their smartphones.

The link between all these different applications? They're all expanding the user's experience of in-person reality.

Your customers already use their smartphones to seamlessly move between digital and material worlds. Extended reality is an opportunity for organizations to create a unique customer experience that is sure to turn heads.

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