Weekly Metaverse #135: Snap lets creators monetize AR, and a look at other AR business models
Put a useful digital layer over the real world? Get paid.
We’re very quickly seeing AR content grow in both quantity and quality (a few great examples in last week’s newsletter if you missed it), and Snap has now taken the inevitable next step by enabling creators to be paid for their AR lenses.
Right now it’s mostly gimmicky, fun stuff - lenses to make you look like a potato or have cat ears or the like. I can’t imagine it’ll be a huge revenue driver for Snap for the next few years. But that’s okay! This feels like a great time to roll it out - you’ve got some basic AR content that people are willing to pay for, so start developing the reputation as the place where AR creators can make money while also making sure you work out the kinks before you have thousands of creators and millions of customers.
It’ll be interesting to see where pricing lands for this kind of thing. The main form of interactive digital experiences that users pay for right now is video games, and we have a pretty good handle on the price elasticity of those. AAA game pricing tends to move in lockstep across the industry (a few have just gone up from the usual $60 price point to $70, and inevitably the rest will follow), while free-to-play games with microtransactions all tend to use roughly the same pricing strategy, with small purchase amounts that can rapidly add up, which is important because it’s a whale-driven industry.
What would you pay for a lens that you can put over the world? Right now, given that this AR content is pretty much all intended to be viewed on a phone, the amount of value you get isn’t that high. I’d maybe pay $0.99 to be able to talk to my friends as a potato, but honestly probably not because I am very cheap.
When this goes on your face, though? That’s where you start get real utility. Would you pay ten bucks to get turn-by-turn navigation when walking around? That feels like a steal to me (though I suspect we’ll all get that for free via Google Maps). What about ten bucks a month?
And what about purely aesthetic things? Christmas is coming up - what if someone offered an AR experience to make the world more festive? Santa Claus randomly flying through the air in his sleigh, snow flurries, maybe “Happy Holidays” written in red and green in the sky every once in a while? I’d pay five bucks for that (though I am an unabashed lover of Christmas, so I might be an outlier).
On the other hand, maybe we end up with a sponsorship/ad model. One could imagine something similar with Fourth of July - an AR experience that shows spectacular fireworks all day long - sponsored by Bud Light. Amidst the fireworks, every once in a while come some fireworks that say “Drink Bud Light” - I’d be fine with that.
We’re already starting to see corporate-sponsored AR in sports and entertainment - recently Stagwell, a digital marketing agency, was commissioned to build an AR experience for the LA Rams. They’re starting with something for folks inside the stadium but will be adding experiences for folks watching at home as well. Does it look like a really great AR experience? It most certainly does not. But it’s a good peek at how corporate dollars will drive AR for the foreseeable future.
And of course we’ll have some effectively corporate-sponsored AR experiences, like the aforementioned AR Google Maps. Some of those (most, at first, I suspect), will just be shameless attempts to put notifications in front of your face (since god knows you need to see that new Instagram follower immediately).
The smart ones, though, will actually leverage the power of AR to earn that precious real estate right in front of your eyes. As someone who’s terrible with names, I’m praying LinkedIn gets this right and gives me an AR experience that identifies people I’m looking at (who they are, how we know each other, and when we last met would be just fantastic). To walk into a meeting with some guy I’ve met twice but can’t really place and immediately know who he is would be a godsend. Same thing with Facebook, I suppose (and if this kind of identification were limited to people you’re friends with, it’d certainly be a strong motivator to connect with more people on FB).
That does raise lots of privacy concerns - perhaps I don’t want to be identified by anyone using facial recognition. I could probably write a newsletter on that, but on the other hand I’m a pretty firm believer that the vast majority of people will happily sacrifice their privacy for tools that are free and useful. I probably wouldn’t want anyone to be able to easily identify me, but if I had to opt in in order to use the same functionality to identify others, I’m pretty sure I would.
I digress, but the point of all of this is to say that we live in an era in which attention is perhaps the most valuable commodity out there, and AR’s ability to put things in front of your face will be the most powerful way to control someone’s attention. It can be used for fun or business or even education, but it will most certainly be monetized. Ideally, as much of this as possible will go to the creators, and while we don’t know what Snap’s revenue split looks like, they’re nonetheless taking a great step in the right direction.
Metaverse News
Future Astronaut Suits Could Feature Augmented Reality (Nextgov): Makes a lot of sense - you’ve got people who are already wearing full suits, so getting to a glasses-sized form factor isn’t critical. Using your hands is harder in the suit, and making sure that astronauts have important information delivered clearly and at the right time could be a literal life-saver in the harsh environs of space and other planets.
FDA move signals a forthcoming increase in the use of virtual and augmented reality devices in radiology (HealthImaging): Another use case that might save lives.
BAE to Integrate Advanced Augmented Reality into Hawk Trainer Aircraft (The Defense Post): We’ve talked Red 6’s AR pilot training software before, and now it’s being integrated into actual training planes. My question is whether this will all be a waste if planes are controlled by AI in a few years.
Metaverse Seoul: How One City Used Citizen Input to Pilot a Government-Run Metaverse (Working Knowledge by Harvard Business School): Professor Mitchell Weiss of HBS discusses Seoul’s entry into the metaverse with a virtual version of the Seoul mayor’s office designed to engage citizens and eventually offer government services.
Metaverse company Infinite Reality will go public through $1.85B SPAC (VenureBeat): The fact that they’re going public via a SPAC at a terrible time for the market does not give me confidence that this will be a long-lasting company.
New in Bentley University's Undergraduate Core: "Living in the Metaverse" (Campus Technology): The metaverse is increasingly becoming a subject of study in colleges and universities.