Transcript - Episode 20 - Seeing is Believing: Understanding the economic potential of VR and AR

Freddie Martin:

Hello and welcome to another episode of the Economics in Business podcast. I am your host Freddie Martin. A quick recording note before we begin, this episode, which focuses on virtual reality and augmented reality was recorded several months ago before the beginning of lockdown in the UK and because of this, we don't directly mention lockdown or the impact of the COVID-19 crisis in our discussion. However, we do feel that all of the content in the episode is still completely relevant to businesses and the economy in general. If you would like more information on the solutions VR and AR are providing throughout the COVID-19 crisis, you can listen to PwC’s Business in Focus podcast episode, ‘Visualise your response’, which also features today's guest, Jeremy Dalton from PwC’s VR and AR team. You can find it through our website or using the link provided in the description of this episode. For our latest view on the economic impact of COVID-19 on the UK economy, you can visit our dedicated site where updates are published weekly. Now without further ado, the original episode, I hope you enjoy.

Hello and welcome to the Economics in Business podcast. I am your host Freddie Martin, and in this episode we are going to be talking about virtual reality and augmented reality, or VR and AR, their use cases across a number of sectors and their potential to drive significant economic growth over the next 20 years. Joining me today in the studio are Jeremy Dalton, a VR and AR specialist at PwC, and Ryan Hamilton an economist from our team, who has been involved in quantifying the potential impact of these technologies on the UK economy. Thank you both for joining me today.

Jeremy Dalton

It is a pleasure to be here.

Ryan Hamilton

Thank you so much.

Freddie

Now, my first question is going to be quite a basic one, but Jeremy I was hoping if you could talk a bit more in detail about exactly the difference between VR and AR.

Jeremy

Sure, these immersive technologies are all about integrating digital elements within our world more strongly. On one side we have virtual reality, this is where you are completely enveloped in a digital environment, usually through a headset and that makes you feel like you're part of this different world, in a different set of circumstances, and so on. Augmented reality on the other hand is where you are still in the real world and you are receiving an overlay of digital information, objects, data on top of that real world and that can either be through your mobile phone or through another head mounted display.

Freddie

Already we are seeing this technology filtering through into everyday life. I think largely people tend to associate VR and AR with entertainment, so gaming devices or filters on social media and on mobile, but I was wondering what other use cases have you found with this technology and how does this fit into your work at PwC?

Jeremy

There are many use cases of the technology and one of the big ones is actually in training. There are use cases in design, in data visualization, in the visualisation of assets in different parts of the world, as well as in the consumer sector of course, with entertainment and marketing, some of the stuff that is usually talked about in the press so is more well known. But to talk about the business side of things, training is one of the biggest use cases that we are seeing out there and that can be training from a soft skills perspective, or a more hands-on technical perspective. Soft skills, for example, could be around helping you to deal with difficult conversations, helping you to improve customer interactions. Hands-on technical training could be helping you to get to grips with a certain procedure on a machine in the real world, that you need help and instructions on how to perform certain actions. With that overlay of digital information, you can have buttons flashing that you need to press in terms of your next step. You can have arrows showing you how to turn a valve in which direction, and which valve to tackle. All of that helps to reduce errors, decrease the risk, increase the safety of the interactions, helps make the training more scalable. You can conduct this training simultaneously with many people around the world, and that all results in reduced costs and greater efficiencies for business.

Freddie

These are the use cases that you're seeing at the moment, do you see that there are more opportunities for technology as it develops and matures in future?

Jeremy

Yeah absolutely, there are a few challenges that are preventing the fast, widespread adoption of the technology currently, but all of these are being tackled. To quickly run through them, they are education, experience, cost and content. Going through those quite summarily what we are talking about is education, a lot of people don't understand the true potential of the technology, they haven't experienced it first-hand, or they haven't experienced it at a high level. When we talk about experience, by that I mean the user experience, how easy it is to set up, how intuitive it is to use the technology. If it isn't intuitive, that's obviously an issue in terms of people using it regularly. There is also a cultural perspective that comes into it, we are used to using keyboards and mice and a 2D screen, which doesn't move. However, this is a completely different paradigm where you are now potentially using your voice to control the system, you are using gestures, you are perhaps using eye tracking technology, so you are selecting menu items by looking at them. You have a screen in front of you that effectively moves with your view, so you are able to naturally look around this virtual environment. That's something that we are not used to in terms of the way we work. It will take some getting used to, but also on the supply side, it will take some better development and understanding of what creates a good user experience and interaction. Then we have costs, fairly self-explanatory, and costs are of course coming down all the time. The sort of hardware we have now used to cost hundreds of thousands of dollars, only about 20 or 30 years ago. Then we have the content, less of an issue for business, because they generally produce bespoke content, but from a consumer perspective, being able to have access to a lot of high quality content to the quantities that we are used to, is still not quite at that level from a VR perspective.

Freddie

Going back to your first point about education being a key tool to helping to harness some of this potential growth. I know that PwC recently released a report called ‘Seeing is believing’, that was trying to quantify some of the potential impacts, but could you tell me a bit more about what led to this report and why it was commissioned?

Jeremy

Sure.

The reason we commissioned this report is because we noticed that there were a lot of misconceptions in the business world about virtual reality and augmented reality technology. There was a general view that it didn't have business value, or it didn't have significant business value, that it was mostly an entertainment and a gaming device primarily, and we wanted to be able to get across the real value that these technologies can offer to businesses across all industries. Our main aim was to fill that knowledge gap, but also do it in such a way that businesses had a number that they could call upon, or a set of numbers even that they could use in their own business cases when they're trying to understand the impact of the technology, and when they are perhaps trying to build a business case for adoption of the technology in their own company.

Freddie

Ryan, I know you are part of the team that conducted this research. I was hoping if you could talk a bit more about the main findings of the report, and a bit about your methodology.

Ryan

Thanks Freddie, the key finding really from this report is that we calculated AR and VR technologies to benefit businesses and people across the globe by around 1.5 trillion US dollars and that's by 2030. In addition, we estimate that around just over 23 million jobs will be enhanced as well by those technologies, and really the approach, I can summarize in three different stages.

The first stage would be around the identification and research around that list of use cases that we used. The second stage we focused more on the specific productivity increases that we would expect that likely occurred from each use case. Then lastly, we use our computable general equilibrium model to estimate the wider aggregated impacts as well for the rest of the economy. Really, the thing that stuck out to me the most and was really the most surprising result was the fact that two-thirds of these impacts really came from augmented reality and probably to many of the listeners, that's quite a surprising result and to Jeremy's point earlier on, the reason for this is actually that we feel much more comfortable describing virtual reality as opposed to augmented reality in terms of its definition.

Augmented reality actually has some very significant benefits across some huge sectors, such as the likes of healthcare. Healthcare, if you take for example the complex surgical procedure, the surgeon can use a head mounted display to look at some of the vital signs of the patient throughout the procedure, such as heart rate and the respiratory rate. Then you can also use 3D projections as well onto the patient. If we take, for example, some of the major blood vessels to ensure that the efficiency and also the success rate of those procedures are increased as well. That just gives some flavours to the potential benefits across some huge sectors for augmented reality.

Freddie

As you say, this is an estimate. This is a projection for future growth, and we have mentioned a bit about what the main barriers might be in terms of costs, in terms of education, and how we might start to overcome these. I was just wondering, Jeremy, what's your advice to businesses now looking to adopt VR and AR technology to increase productivity?

Jeremy

There were five real areas I would advise businesses on when it comes to adoption of virtual reality and augmented reality technology, and the first one is to make sure that you are focusing on a business problem. There is a temptation to get distracted by the hype and the novelty and the excitement of virtual reality and augmented reality technology, and they are indeed very exciting technologies, but that is not the reason to adopt them. If that is the reason it will be a fairly short-lived solution in business. So really think about what is the business problem, or the business opportunity that you're trying to take advantage of, and focus on that, keep that in mind as you are exploring the use of the technology.

Number two is to think about more than just the software. There are many aspects of a virtual reality or augmented reality implementation. The development of the software is one piece of the puzzle. The other pieces are around designing the solution, designing it from a user experience perspective, designing from a content perspective, designing it such that it is likely to be successful when you deploy it in your organisation. Then, as I've mentioned, deployment, deployment itself is a massive stage - it could be anything from a one-off event in a local office, all the way through to an international deployment of 1000 plus headsets across different countries in the world. If you look at organisations like Walmart, for example, they've deployed over 17,000 virtual reality headsets across their training centres and stores in the US, so that deployment stage is absolutely critical.

And thirdly, creating a seamless experience. This is very much connected to the user experience point. Consider how your audience are going to engage with it. Consider how they engage with technology currently, test it with them as you're going along, and not only the software, but also the hardware itself to make sure that you're selecting the right solution for your target population.

Number four, get stuck in with a test case. This is basically advice around, yes, there needs to be some deliberation, some strategy around it. But that shouldn't be so long-winded that six months later you are still discussing a potential solution. There is much more value to be gained just by getting in there and trying something small, seeing what results you get out from that small pilot, and then building on that. Then finally, measuring this result and acting accordingly. Once you have got it deployed, gather that feedback and talk to the people who are using it day to day and understand how valuable, or not, it is and then act accordingly. Either based on that choose to continue to the product, choose to go in a different direction, or in fact choose to abandon it completely. At the end of the day, there is no failure in being better informed.

Freddie

Thank you so much for all that helpful advice. I'm sure many people would be very interested to learn more about VR and AR, it's clearly a very exciting space and as we have discussed, the potential impact of this technology is enormous.

If you'd like to learn more about this topic, head over to the virtual reality page on the PwC website, where you can find out more about the work that PwC does in this space, read up on our advice for businesses and download a full copy of our ‘Seeing is Believing’ report. There will also be a link in the description of the podcast. Make sure to subscribe to keep up to date with the latest episodes of the economics in business podcast and thank you for listening.