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Digiday+ Research: Beyond the hype, how publishers are actually using AR and VR

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Digiday+ Research: Beyond the hype, how publishers are actually using AR and VR

This is the first part of a research series on the most popular emerging technologies. The series follows up on a report Digiday produced five years ago to discover how technologies previously reported on have evolved and to explore new technologies that have since emerged, including blockchain and robotics. In this segment, we look at how publishers are using virtual reality and augmented reality. 

Publishers to date have been reluctant to invest in virtual reality and augmented reality. In fact, they have decreased their use of both since Digiday last surveyed them in 2017. 

“We’ve seen the stats where there is an initial interest curve,” said Vincent Cirel, chief technology officer at Gannett. “Everybody was implementing and experimenting with AR and VR. Now there’s a bit of a retrenchment, backing away from it. That’s because people have played with it. They’ve learned something and now they’re trying to figure out the best way to monetize that.” 

With the U.S. augmented, virtual and mixed reality market worth $28 billion in 2021 and projected to reach more than $250 billion by 2028, according to Statista, publishers have a strong incentive to find a solution to that problem and to consider investing more in both technologies. And with companies like Meta and Google spending more to build out virtual and augmented reality tools, improving hardware and software for headsets and smart lenses and glasses, these virtual and mixed environments are being primed for publisher participation.

Despite often being grouped together for having similar technical foundations, virtual reality (VR) and augmented reality (AR) are two distinct technologies. For publishers, in particular, they offer unique opportunities: VR — which includes 360-degree video — allows for immersive storytelling and community experiences – and the ability to place ads in a virtual space; AR lends itself more readily to marketer applications, like allowing consumers to virtually try on clothing or makeup, or overlay a car into a driveway to gauge its size — but it offers publishers the ability to overlay data and insights on real-world surroundings. 

The pandemic further propelled the usage of and interest in these technologies since VR and AR offered potential solutions for people to remotely gather when in-person events were canceled – though success has so far been mixed.

For this report, Digiday+ Research surveyed 388 industry professionals, including publishers, agencies, brands and retailers, to uncover how they’re currently using AR and VR – and how they plan to incorporate the technologies in the future.

01

Key findings

  • The number of publishers using VR and AR has decreased significantly since 2017.
  • More than 50% of publishers had used some type of VR in 2017, but less than 20% do so now. 
  • Publishers use VR primarily to create entertaining experiences and as a new revenue stream, but the majority no longer think it is relevant to their business.
  • Meta-owned platforms are the main host platforms for VR, with fewer disruptors in the space compared to AR. 
  • Less than 15% of publishers use AR in 2022, down from nearly 20% in 2017. 
  • Even though publishers have decreased use of AR, marketers are using it more, indicating that publishers may have to build out AR capabilities to create better ad experiences in the future. 
  • All survey respondents have continued to use AR mainly for entertainment purposes, with social media and camera filters being the most-used applications, and almost half of respondents using AR for gaming.
  • Owned-and-operated platforms were the primary host space for AR technology in 2017 but have fallen in favor of third-party platforms. 
  • Meta-owned platforms top the list of platforms on which all respondents host AR technology.

02

Publishers pulled back from VR and AR

The number of publishers using VR and AR has decreased significantly in the last five years. In particular, publisher use of VR has dropped steeply, down 34 percentage points from 2017, when 51% of publisher respondents said they used some type of VR, to just 17% in 2022. The decrease may be surprising considering that VR is well-suited for publishers’ storytelling needs and, as Digiday noted in 2017, publishers everywhere were giving VR a shot. At the time, The New York Times had received wide acclaim for an immersive piece on children displaced by war, and the Financial Times made a splash with an Olympics-related exploration of the landscape of Rio de Janeiro.

However, the 34 percentage-point drop is likely due to a combination of the technology’s novelty having worn off a bit, high cost of implementation and slow user adoption rates. “Early on, with things like Google Cardboard [headsets], we were trying to do VR with our phones, and it just doesn’t work,” said Adam Simon, executive director for IPG Media Lab. “That was fun, the first time we did it, but no one did it more than a handful of times. It’s too much of an ask for users, and the quality was not good enough.”

On the other hand, publisher use of AR has declined less precipitously since 2017, down just five percentage points. But adoption rates of AR were not high for publishers in the first place, with only 18% of publishers using the technology when Digiday surveyed them in 2017 versus 13% in 2022. Five years ago, Digiday found that publishers’ lukewarm attitude toward the technology came from a lack of utility, with some publishers wondering whether AR could tell a story better than already existing technology like interactive graphs or images. 

Simon said he’s noticed a decline in the amount of strategy and consulting the company does around both technologies since 2017. “We used to do a ton of in-market activations,” he said. “Now, we do maybe one every two months, a handful of them a year.”

03

Publishers use VR to expand beyond journalistic purposes

When publishers first began experimenting with VR, it was anticipated that they would largely use the technology to provide immersive storytelling experiences for their audiences and to place ads within those environments — virtual extensions of two key publisher services. 

Some news organizations are giving users the option to engage in virtual environments or 360-degree video livestreams to experience a news event rather than just read about it. The BBC, for example, has a unit within its research and development division devoted to building its VR and 360-degree video capabilities to enhance its journalism, narrative and educational content. Most larger media outlets have experimented with the technology in recent years. 

“Almost everybody this year is talking, directly or indirectly, about this concept of immersive journalism and what that looks like for the future,” said Gannett’s Cirel. “If you think back 20 or 25 years, the news was [watching] CNN or reading a newspaper. Now that’s evolved into the web, mobile and Web3 among other things.” 

Cirel said the technological landscape is primed for expansion, giving consumers the opportunity to dip in and out of various virtual news experiences. For example, a user could potentially follow links from a news report about Parliament to a virtual tour of the legislative gathering, or hop into a 360-degree immersive travel experience of London. 

“One story can lead [somewhere else] when it comes to storytelling and immersive journalism,” he said. “The tentacles of a story can expand out and branch into other domains, and technology hasn’t been prepared to deliver a solution until now. Current and forthcoming generations are going to understand and consume storytelling and news in completely different ways than have been done historically.”

In a similar vein, many publishers who do currently offer VR activations are using the technology to provide another layer to journalistic storytelling: entertainment. 77% of surveyed publishers said they use VR to create entertaining experiences, and 46% use it as a new revenue stream, in addition to the more traditional ones like selling ad space and tickets for events. 

Publisher Blavity has used its virtual conferences to generate revenue from sponsored ads and attendee fees, while at the same time providing educational experiences. The company said it saw an uptick in attendance and sponsorship – and therefore revenue – year over year: Ticket prices increased between 57-75%, and the number of sponsors went up from 120 in 2020 to 170 in 2021. 

Blavity’s second virtual AfroTech conference hosted on eXp World Holdings’ virtual world platform included everything from a digital job expo hall and program stages to avatars designed to resemble the real-life conference attendees, including incorporating a full range of skin tones, hair styles, facial features and outfits that users could choose from to build their custom characters.

During the pandemic, Complex Networks, owned by BuzzFeed, similarly shifted its in-person ComplexCon fashion and music festival to a VR entertainment event, ComplexLand. While largely seen at the time as options of last resort, these experimental virtual environments offered the chance to continue having large gatherings with a real sense of presence without the in-person health risks. Neil Wright, head of experiential for Complex Networks, said the company wanted not only to push the boundaries of technology beyond a simple video call by creating a virtual experience, but also maintain audience engagement and generate a revenue stream for brands that relied on ComplexCon for a portion of their yearly profits. 

“It is a brand play for engagement of both our brand partners, the energy brands or streetwear brands, as well as attendees,” he said. “But also it is a pretty solid revenue opportunity for us with our clients as well. As we evolve it, there are unique opportunities we haven’t really scraped the surface of … Is it a video game? Is it e-commerce? Actually, it’s all of that. It’s really been interesting to see how fast technology is moving across the board with virtual environments and virtual opportunities. Each year, the conversations become easier because these activations and platforms are more commonplace marketing or commerce tactics at this point.”

04

Publishers lay some groundwork for an emerging metaverse

Virtual events like ComplexLand and Blavity’s AfroTech conference offer glimpses of what the future might hold for the metaverse. The metaverse is defined as a “successor state” to the modern internet that will allow users – and companies – to generate and own content and assets that can then be distributed freely across the touchpoints and platforms that will compose a widely accessible and connected digital world. Many of the nodes composing this digital world will be virtual – or at least that’s the current plan. 

But for now, the metaverse is an abstract potential hovering over an emerging set of siloed virtual islands. Current online platforms allow users to move about somewhat freely within the confines of specific services, but limit interoperability between platforms. Right now, even so-called metaverse precursors such as video game “Fortnite” don’t allow players to recreate their own user-generated content or carry over collected assets to many other platforms. 

The metaverse is in its infancy, but publishers would be wise to start experimenting with it now, according to Gannett’s Cirel. “Central to the [metaverse] is VR and to a lesser extent, but it will grow, is AR,” he said. “Particularly when it comes to storytelling, you’ve got the reality of the world, and that’s the story that you’re telling. How do you augment that reality with different factoids, but really come under the broader umbrella of immersive journalism? That’s the secret sauce, the recipe that everybody’s got to figure out.”

Mass media owner and publisher Hearst isn’t waiting: They hope to sail their virtual airpship straight into the metaverse – whether it exists right now or not – and gain customers and create buzz at the same time. New customer acquisition and creating buzz are tied as the third-most-popular uses of VR among publishers, with 31% saying they use VR for those reasons.

Hearst launched the airship in the fall of 2021 to show new and future clients the potential for building immersive, co-branded VR experiences in the metaverse, hopefully resulting in branding partnerships down the road. Although, Hearst’s Nancy Berger, svp, publishing director and CRO of the Youth & Wellness Group, told Digiday the airship was not “necessarily going to be about revenue generation.”

Hearst, and other companies eager to place ads within virtual environments, need not fret about whether users will be receptive to the advertising, according to IPG Media Lab’s Simon. “We’ve seen in gaming in general that users and gamers don’t mind when there’s branding in places where there would be branding in the real world,” he said. “It’s totally normal, and they’re totally fine with that.”

Vadim Supitskiy, chief technology officer at business magazine Forbes, says there are advantages to using VR for events and that continued experimentation and buzz creation within virtual spaces is crucial for growth. Forbes, for example, launched a virtual billionaires NFT collection to engage consumers and has hosted several internal VR events for employees. 

“We’ll need to continue building out those experiences to make them more realistic and interactive,” Supitskiy said. “A lot of things are done to gain buzz and to get some publicity, but it’s important for publishers to experiment with the technologies and really start engaging their audiences in the space. It will change the way we interact. It will be the future. And if you don’t start now, you will be left behind.”

05

The VR platform landscape remains largely unchanged

Although publishers are experimenting with how best to use VR, the platforms that host VR experiences haven’t shifted much from 2017 to 2022. Owned-and-operated platforms, Meta-owned platforms and Google’s YouTube continue to be the main VR hosts among all survey respondents. That’s notable when compared to AR, which had greater shifts in host platforms from 2017 to 2022, with new players like TikTok overtaking legacy platforms.

VR’s lack of platform change is likely due to few players investing in VR tools, aside from Meta, which is betting big – including the name change – by essentially subsidizing the technologies to encourage adoption. Meta’s first-quarter 2022 earnings report showed that the company spent $3.7 billion on its VR and AR division, Reality Labs – though it took in only $700 million in revenue.

Perhaps it’s not surprising then that a Meta-owned platform overtook owned-and-operated platforms to become VR’s main player. Quest took the first-place spot with 45% of survey respondents saying they use the platform to reach VR consumers. Owned-and-operated platforms fell to a close second place at 42%; but they also had the greatest overall decrease in usage, down from 71% percent in 2017. Meta-owned platform Facebook came in third at 39%, and YouTube retained a healthy percent of usage at fourth place with 31% of respondents saying they use the platform for VR versus 40% in 2017.

Despite investments in VR tools by companies like Meta, VR apps and services still struggle to reach consumers. “When you look at [Facebook’s] engagement on owned-and-operated apps like Horizon Worlds, they only have about 300,000 people on a regular basis,” said IPG Media Lab’s Simon. “Facebook is buying up a lot of companies to try to jumpstart [the gaming market]. But the thing that will start to expand that, is when we see companies like Apple moving into the space and bringing a pathway to bring some of the smartphone apps into the headset space.”

06

Publishers struggle to find uses for AR

While VR has the potential to be more immediately endemic to a publisher’s mission, AR – which layers digital elements over a real-world view, often through a camera lens – can be harder for publishers to apply. The technology lends itself more readily to marketer applications, like allowing consumers to virtually try on clothing or makeup, or overlay a piece of furniture into a living space before deciding whether to buy it. In fact, product demonstration via virtual try-on and real-world overlay has seen the greatest increase in AR usage in the past five years.

But for publishers, AR thus far hasn’t proven an effective tool to disseminate information, and fewer publishers are using it now than were five years ago. Only 13% of publisher respondents said they use AR in 2022, down five percentage points from 2017 when 18% of publishers reported using the technology. And fewer publishers overall are using AR than VR. One concern for publishers, and a likely barrier to adoption, is how to use AR to present information or tell a story better than can be done with existing technology like on-screen interactive graphs or images. 

The anticipated boom of AR devices, like smart lenses for eyeglasses, has yet to materialize, although the technology has become more accessible on smartphones through apps’ use of their cameras. “You can have a decent AR experience on mobile,” said IPG Media Lab’s Simon. “You won’t have longer experiences, but [you can have] snackable, tactile content….Even if the tech is not quite there yet, it’s getting there and it’s improving every year.”

What usage there is remains largely hedonic, and entertainment purposes continue to be some of the top reasons all respondents use AR, with social media and camera filters taking the No. 1 spot and almost half of respondents using AR for gaming. And, while publishers are using AR less than they did five years ago, Digiday’s survey revealed that marketers have been using it more – and the next installment of this series examines marketers’ use of AR and VR. 

AR also has a large addressable market. Snapchat alone, for example, has over 250 million users engaging with AR every day on average. Increased marketer use combined with vast audience numbers signals that publishers might have to build out their AR capabilities moving forward to allow for better ad experiences. 

Complex Networks, for one, experimented with AR through a partnership with Snapchat at its return to an in-person, reduced-capacity ComplexCon in November 2021. “People physically at the event would hold up their AR filter and see [virtual] ComplexLand through it,” said Wright. “So it was like a multiverse, metaverse if you will. It combined both.

“And we had shopping capabilities. When [product] drops happen within [virtual] ComplexLand, they fall from the sky and your avatar has to go chase them. It’s very similar to ComplexCon, where participants would hold up the filter and [products] would drop from the sky as AR creative artwork. Those are really interesting ways you can leverage this technology, especially if you’re doing a physical event and there is reduced capacity because of Covid. People can still participate.”

But there are pockets of more journalistic pursuits. The New York Times, for example, has doubled down on AR, creating an AR division or “AR Lab” in collaboration with Meta, which it says is devoted to AR-driven reporting on Instagram. Many of The New York Times’ AR news reports focus on demonstrating specific topics or events, for example, skiers executing jumps at the winter Olympics or masks blocking Covid particles by overlaying virtual models enacting an example into the readers’ space – such as a living room – using smartphone cameras. 

The publication has also created a hub page on its website to house reports that use AR for storytelling. And, perhaps bucking the trend of favoring VR over AR, the publication also did away with its in-house VR app, though users can still access VR content via mobile devices on the Times’ website, among other ways.

Sporting events may be one area in which publishers can use AR equally as well as – if not better than – the written word to cover news. Like The New York Times, The Washington Post and USA Today used AR to report on the summer 2021 Olympics. The Post, for example, tapped into the technology to show Olympic climber Brooke Raboutou climbing a 15-meter wall in about 10 seconds. Users scanned a QR code within a news story to see the event in their own space at scale. 

For Post editors, it came down to how to best tell the story. “We could write a long paragraph on sprinting up a 50-meter wall in 10 seconds, but we try to figure out how to show that to you, in your own space, how tall 50 meters is,” said Elite Truong, director of strategic initiatives at The Post. 

Political coverage has also benefited from the use of AR, in some cases providing a sense of proximity to a candidate. Verizon Media (since acquired by Apollo Global Management and rebranded as Yahoo) and Gannett partnered to create an AR viewing experience of an interview with then presidential candidate Andrew Yang in 2019. USA Today’s and Yahoo News’ apps hosted the experience. Readers could hear Yang discuss issues while watching a 3D version of the candidate, whose image was overlaid on top of the reader’s own surroundings.

07

Meta-owned platforms unseat Snapchat to top the list of AR hosts

Unlike VR, which hasn’t had many changes in host platforms over the last five years, AR platform deployment has shifted massively since 2017, and mostly in one direction. Meta-owned platforms dethroned Snapchat to now top the list of platforms that host AR content among all survey respondents — a distinction Meta also holds among VR host platforms. Owned-and-operated platforms, which were by far the primary AR hosts in 2017, have fallen down the list to third place, in favor of third-party platforms. 

Meta’s Instagram is the leading AR host platform (and the leading third-party platform), taking the No. 1 spot with 64% of survey respondents saying they produce content for the platform. Facebook, also owned by Meta, came in second at 44%. Snapchat, which held the first-place spot among third-party platforms (and was second overall) five years ago, fell to fifth overall with 33% of respondents using the platform in 2022. New entrant TikTok overtook Snapchat by a small margin, with 34% producing content for the video platform. Amazon and Google’s YouTube and ARCore rounded out the list.

Notably, owned-and-operated platforms shrunk as the primary host space for AR technology, dropping from the No. 1 slot in 2017 with 76% of respondents using them at the time to third place in 2022 at 36%. One reason for the drop may be that as AR technology becomes more widely available and third-party platforms build out the technology, respondents need to rely less on their own first-party capabilities – as they may have for early skunkworks experiments. And compared to VR, which depends on potentially cost-prohibitive headsets, AR offers ease of consumer access through ubiquitous smartphone cameras, reachable by scores of apps. 

“We do not have mainstream augmented headsets yet,” said IPG Media Lab’s Simon. “We have [Microsoft] HoloLens, which are high-end and enterprise-focused. But we can get a really good AR experience for bite-sized pieces of content on our phones.”

This shift in technology accessibility was also reflected in how respondents are building their AR applications. In Digiday’s survey, the majority of respondents favored working with a third-party vendor (48%) or a mix of third-party vendors and in-house offerings (31%) to build AR apps. Only 21% of respondents favored building AR applications in-house.

08

Despite hurdles, some publishers play VR, AR long game

Consumer interest in AR and VR appears to be growing, with the worldwide market for AR and VR headsets increasing 92.1% in 2021 over the prior year and headset shipments reaching 11.2 million units, according to the International Data Corporation (IDC). But both technologies face challenges to widespread publisher adoption, as publishers struggle to find appropriate, repeatable and monetizable ways to use the technologies for storytelling and more. 

Sixty-two percent of publisher respondents who are not currently using VR said VR was not relevant to their business, and 59% who are not currently using AR said the same about AR. When asked why they weren’t investing in the technologies, publishers cited a lack of relevance as the main reason for not spending. 

Secondarily, low consumer adoption of and interest in the technologies kept publishers from committing resources. Consumers tend to use VR mainly for gaming, and they use AR to virtually try on products like makeup or place items like artwork in their homes. Most do not use the technologies to enhance their consumption of news or even feature articles and other web content, a primary publisher offering. 

While many publishers find neither AR nor VR technologies immediately relevant to their businesses in 2022, 36% of publishers not currently using AR still plan to invest in AR in the future, and 33% not currently using VR plan to invest in the future. 

“The willingness of companies to invest, or how they’re going to invest, is not really any different for AR or VR … than it was for any technologies that have emerged over the last 20 years,” said Gannett’s Cirel. “In the late 1990s, we were asking the same question about the web. The business fundamentals don’t change. How much is the investment? What is the ROI?” 

Cirel noted that beyond devoting funds to AR and VR, publishers who find the most success with the technologies in the future will be the companies who approach them from a long-term perspective rather than just to create momentary excitement. 

“Lots of companies put out press releases to generate buzz … and 10 to 15 minutes after the press release goes out [they’re looking] at the financial sites to see if it moved the needle on share price,” Cirel said. “Companies are throwing a bunch of stuff against the wall to see what might stick. But the companies that take their time — they do the proper foundational business analytics — those are the companies that are going to benefit the most from these emerging technologies.”

09

Costs behind VR tech are still prohibitive for many

When it came to VR, publishers selected the cost of building and implementing the technology as the third most important reason they aren’t laying out funds, putting it above lack of technical skills as a barrier – though cost and technical skills are linked through hiring and spending on specialists to work on the technology. Developing virtual apps can be costly, with companies spending tens of thousands of dollars depending on software and which platform they’re targeting. A lack of spending for development leads to a lack of technical skills.

Joe Ferencz, CEO at video game development company Gamefam, pointed out that larger companies like Meta and Google are investing in VR technology and platform build-out and he thinks widespread use of the technology will occur. But content creation — and this where publishers have a crucial role — will need to keep pace. Without strong content, VR isn’t yet at a stage to attract mass users.

“Whether Meta or other competitors bring VR hardware to the market, eventually the hardware will find wider adoption,” he said. “It might take three to five years, or even 10 years, but we will get there with mass-market VR. For Meta to build enough high-quality content to meet demand is not realistic. If you look at big companies, like Google, they’re not in the content business. They’re always in the platform business [because] making content is hard and isn’t as scalable.” 

Meanwhile, user headsets can be out of financial reach for many consumers. Meta’s subsidized Quest 2 starts at around $300, while premium headsets can range up to $1,000 or more. The Quest 2 was the most popular headset purchased in 2021, with 78% share of the combined AR and VR market, according to IDC. But as IPG Media Lab’s Simon noted, the overall number of consumers investing in the technology is minor compared to market size. 

“VR right now is stuck in a weird limbo,” he said. “The total addressable market [for Facebook, for example] is about 10 million people. But we also know a lot of VR headsets aren’t in active use….People went through a bit of interest in things like [Google] Cardboard, and that’s not something consumers are interested in anymore. AR is just easier for people to dip into.”

10

AR technology is user-ready, but distribution still lags

AR technology, however, has moved past the basic stages of platform build-out and has become more accessible to consumers via their smartphones, making adoption much smoother for companies. According to Artillery Intelligence, there are currently about 1.1 billion AR-capable devices, a number expected to grow to 1.73 billion by 2024. 

Because of increasing user access to AR via smartphone apps, publishers don’t have to spend as much to develop AR features. They can focus instead on creating content to attract users, although much of that content still lacks sophistication. As seen in the survey results, publishers placed the cost of building and implementing the technology (14%) slightly lower on their list of reasons not to invest in AR than they placed lack of technical knowledge (16%). 

Despite the proliferation of smartphones, Simon pointed out that distribution for AR activations can be a challenge. “As we look towards more dedicated hardware for AR, one of the questions is whether we are going to have an app store model,” he said. “[Software developer] Niantic is definitely pushing the idea of channels, which I think is right. If we fast forward 10 years, users could have an AR device they wear all day, in which they could turn on or off different information channels, for example, restaurant reviews or a game they want to engage with.”

11

Ease of access and market size may determine VR, AR future

As the technology behind VR grows and companies like Meta continue to spend to create more accessible options for users and publishers, adoption may increase among both. Still, VR will likely need to achieve the same ease of access that AR has discovered, particularly through the release of new, less obtrusive hardware, before widespread publisher adoption can take hold. But the draw of potential revenue can move mountains, and with the market size for AR and VR expected to increase by a compound annual growth rate of 41.6% from 2021 to 2030, according to Allied Market Research, publishers may find themselves drawn to both technologies in the not too distant future.

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