Telcos are becoming interested in the potential revenue streams related to virtual and augmented reality (VRAR), since it is not only a vehicle for 5G monetization, but can also bring growth opportunities in connectivity, content innovation and service platforms, says leading data and analytics company GlobalData.

The company’s report, ‘Telcos and Virtual and Augmented Reality (VRAR): Opportunities, Challenges and Winning Strategies’ states that despite robust momentum on the supply side, the VRAR market is still nascent, with the penetration of VRAR headsets very low relative to other computing devices.

Ozgur Aytar, Director of Research at GlobalData, says: “Telcos have a key role in enabling VRAR services as providers of broadband and mobile network services, but we see them beginning to explore revenue opportunities in VRAR that are beyond 5G data and connectivity, with some leading players entering key segments of the VRAR supply chain in the past two years.”

“Take Verizon, for example, that has made acquisitions in VRAR content platforms, while SK Telecom is building its own, or, AT&T that is investing to develop compelling VR experiences and AR apps and Orange is taking steps to increase its participation across the board in devices, platforms, services and original content.”

The rising demand for VRAR experiences will undoubtedly place formidable pressure on telecom networks however. While smartphone augmented reality (AR) apps such as Pokémon Go can be handled by the existing mobile broadband infrastructure, immersive experiences demand much more bandwidth capacity. Interviews with industry players showed a wide range of expectations on VRAR’s impact on telco network traffic, with nearly half expecting a traffic increase by more than 40% by 2025. This is driving telcos to brace for the impact with aggressive network upgrades and 5G rollout initiatives.

Aytar concludes: “VRAR represents an opportunity for telcos to increase their digital services imprint and explore new revenue streams, but success in VRAR will require a long-term vision. Telcos interested in gaining ground in the space must be prepared to demonstrate their network readiness in order to satisfy the bandwidth demands of VRAR experiences, and meet the speed and latency requirements.”

“Additionally, cross-industry partnerships will be key to driving user volume and content creation in the VRAR space, and telcos should work with partners in delivering high-quality VRAR experiences, content and tools.”

Analysts available for comment. Please contact the GlobalData Press Office at pr@globaldata.com.