Why ARKit will make more money than ARCore or Camera Effects

Why ARKit will make more money than ARCore or Camera Effects
From TechCrunch - October 7, 2017

After the iPhone X, iPhone 8 and ARKit launches, its clearer than ever that Apple owns the four waves of augmented reality. But Googles launch of ARCore has the startup CEOs, corporates and VCs Digi-Capital works with confused (not to mention Facebook Camera Effects).

While there are technical/performance differences between the platforms, theyre more alike than different from a UX perspective. But how much money theyll make (and how theyll make it) could be wildly different.

To understand the differences, were going to dig into each mobile AR platforms addressable markets, adoption rates, user bases, ARPUs, In-App Purchases (IAP), premium apps, adspend and eCommerce sales (as well as ROW vs China).

All about that base

Using hard data from OS/messaging feature adoption as a guide, the starting point is installed base (Note: this is installed base of devices for ARKit/ARCore and unique users for Camera Effects). Next year ARKit could have 1.5x Camera Effects and 2x ARCore installed base. The simple reason for the difference is Apples massive iOS adoption rate, which together with new device sales could see over 600 million iOS devices with iOS11/ARKit by the end of 2018.

But different adoption curves across Android and Facebooks Messenger, Instagram and WhatsApp might give ARCore 2.3x ARKit and 2.5x Camera Effects installed base by 2021. Only at that stage are we looking at over 2 billion installed base for ARCore globally. So folks who got excited about Sundar Pichais 2 billion active Android devices having ARCore next year were just thatexcited. ARCores addressable market is an order of magnitude smaller today, because Android is fragmented but whole.

Lets leave Camera Effects for the moment (well come back to it), and focus on ARKit and the fragmented ARCore market. ARCore is compatible with Android 7.0 Nougat and above, and will rely on Android OS adoption rates. Compared to iOS, new Android OS adoption is much slower with far lower penetration.

This means that Nougat, Oreo and subsequent Android OS versions (which are ARCore compatible) might not be on half of all active Androids before 2019. Then ARCore compatible Android OS adoption should hit an inflection point due to natural device attrition and new device sales.

But compatible Androids also need to be calibrated to ensure a consistent bar for quality and high performance, and Android phone makers might only do this to sell premium ARCore ready phones.

Today ARCore Preview is available on Google Pixel and Samsung S8, and Google has a job to do with Huawei, Oppo, Vivo and others to get them to calibrate their kit. While this may be more effective than what happened with Tango, there is the question of decoupling ARCore from Google Mobile Services with the Chinese market in mind. Tencent, Alibaba or Baidu could work with Chinese domestic phone makers to create their own ARCore (China) and freeze Google out, so Google will be hoping the force is with Clay Bavor.

ARKit should be the largest single mobile AR platform next year, with 3.2x ARCore (Google Playso ROW outside China) and 5.5x ARCore (China) installed base. But by 2021, ARCore (Google Play) installed base of over 1.4 billion could be 1.5x ARKit and 1.9x ARCore (China).

Show me the ARPU

While there will be larger differences at individual country levels, global ARKit ARPU could be 1.9x ARCore next year. Even as ARCore plays catchup on monetization due to a range of factors, ARKit ARPU might still be 1.7x ARCore ARPU by 2021. In practical terms, this means that developers will need to acquire two ARCore users to make as much money as a single ARKit user

The impact of this ARPU difference is that the best mobile AR developers with the stickiest mobile AR apps might launch on ARKit before ARCore. Some could bypass ARCore altogether (See early ARKit/ARCore/Camera Effects ratio in our comprehensive collection of hundreds of mobile AR apps).


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