Investing in Virtual Reality

Investing in Virtual Reality

Investing in virtual reality offers an opportunity to get up close to an industry that could very well transform nearly everything we do, from entertainment to work, even healthcare, shopping, and much more. Though the industry is still in its infancy, many investors and companies alike have seized on the opportunity to grab a slice of this pie.

Fueled by demand and rapidly advancing VR technologies, the virtual reality industry could be a game-changer for years to come. The prospects of what the future of virtual reality might hold even caused one of the biggest tech companies in the world to change its name. What was once Facebook is now Meta Platforms as a signal of the change in its business model to conquer the metaverse before any other tech company.

If you're anything like Mark Zuckerberg, you believe the possibilities in this new virtual world are limited only by the imagination of those working to make it a reality.

However, like many people, you may still be wondering what this all means and how exactly virtual reality works. Let's take a brief look into it all. Before we do that, we should try to answer one pivotal question.

What is Virtual Reality?

Virtual reality (VR) is a type of technology that creates an immersive experience in a digitally created world or imagined environment, also known now as the metaverse. It’s also directly related to augmented reality (AR).
Augmented reality companies, like the one that created the once popular Pokémon Go app, uses AR to digitally plant Pokémon characters around real-life cities and towns for players to go and capture. People use VR devices created by companies like Meta (META), Alphabet (GOOGL), and soon to be Apple (AAPL) to meet up in virtual luxe resorts, attend virtual raves and other concerts, as well as virtually fight on battlefields in alternate universes.

Video game companies have recognized that players want to be real participants in the action, and have moved light-years beyond the old Nintendo or Atari platforms to rapidly adopt VR hardware, software, and content (1).

During the pandemic, virtual reality games like Half Life: Alyx, The Walking Dead: Saints & Sinners, and Iron Man found a ready market and mountains of consumers that ordered their headsets, with each anticipated release of the next game prompting more to order theirs or to upgrade.

But VR isn’t just for video game enthusiasts. VR and AR are transforming the ways that almost all industries deliver goods and services to consumers. Consumers are now getting used to the idea of shopping in the virtual retail world (2), exploring kitchen options from the comfort of their couches by using augmented reality glasses and VR headsets, thanks to Ikea’s The Place App (3) or using a personalized VR avatar to try on clothes from Hugo Boss (4).

Business teams are finding their virtual work footing with immersive experiences, collaborating remotely around the world, with implications for improving employee health and productivity (5). For those who take well-deserved vacations, even spas now offer multi-sensory virtual reality and wellness experiences to recharge (6).

Virtual reality has huge potential to improve training for higher education and corporate entities alike. Walmart (WMT) recognized the opportunity and got on board, training employees with virtual reality programs that offer new hires the opportunity to experience customer situations like Black Friday crowds (7). The military is also using virtual reality for training purposes, and even the Denver Broncos football team is using virtual reality as a tool for training new and injured quarterbacks (8).

The technology also has the potential to be used for highly sophisticated simulations in the healthcare field. Emmanuel Hospice, a non-profit hospice company, offers patients the ability to leave their rooms with virtual reality-based therapy (9). Using the technology, one patient went on a trip to the lake where she had spent her childhood in Romania, and another took a ride in a hot-air balloon.

The metaverse is now taking the immersive experience into other dimensions, as a 3-D virtual network of worlds where people can socialize and collaborate through avatars.

First described in 1992 by author Neal Stephenson, the metaverse’s potential for networking, business, and entertainment is only just beginning to be tapped, thanks to a powerful confluence of technological advances, major infrastructure investments, explorations by sectors as varied as government to construction. With Gen Z and other early adopters, there is a rapidly growing desire for personalized engaging experiences (10).

All in all, tech-minded investors interested in VR don’t just pay attention to the giants of the metaverse and gaming, like META, Microsoft (MSFT), Epic Games, and Roblox (RBLX). They also track the innovators and technologies that are developing VR to next-gen levels. From big data to makers of semiconductors, even enterprise computing to software companies, the opportunities to tap into VR seem endless (11).

Why Invest in Virtual Reality?

With all of these different applications, it’s no surprise that the VR industry is primed to grow rapidly. The global virtual reality market is anticipated to reach $227.3 billion in 2029, a dramatic increase from $11.6 billion in 2021. The virtual reality market isn’t immune to stressors, however. Industry shutdowns during the pandemic delayed components, causing a dip in the market (12).

Nonetheless, the market is ripe for investment in virtual reality stocks. Accelerated development of technologies complementary to VR, like 5G and its infrastructure, are driving rapid growth, and the demand for VR technologies is only increasing. As the technology advances, virtual reality is expected to play an increasing role in training and education, entertainment, retail, healthcare, and more.

Just as the technology required for virtual reality is improving, the costs associated with it are decreasing (13). Quality virtual reality experiences require both a headset and a powerful graphics card. These two elements have big-name companies like Sony, Samsung, and Meta, as well as lesser-known companies, competing for market share in each. As virtual reality becomes increasingly mainstream, these companies are poised to benefit.

Beyond these two primary technology elements, virtual reality is also primed to create new investment opportunities in the industries that adopt it. Whether it’s the next big game, the next big hospital training platform, or something we have yet to imagine, industry-specific virtual reality solutions are sure to create a buzz and further stimulate consumer adoption.

How Can Magnifi Help You Invest in Virtual Reality?

When it comes to virtual reality, you can invest in the innovation and technology itself, or the products, services, and solutions that it delivers. Investors should take note that virtual and augmented reality are high-growth, high-volatility sectors, meaning that they can make for risky investments when bought directly.

An AI-powered investing assisted search on Magnifi suggests a number of other ways to gain exposure to all the virtual reality innovation, augmented reality stocks, even metaverse ETFs via a wide variety of investments that cover this fast-growing industry.

Once you find some you like, you can quickly buy the relevant stocks and funds that grant you access to this industry. Here are a few virtual reality investments you may want to consider:

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FAQs:

What are some top VR stocks?

Investing in virtual reality stocks is a great way to get in on all the action the future of this technology has in store. One of the quickest ways to get started is consulting your AI investing assistant, Magnifi. A conversation with this AI investing platform can bring about recommendations for different virtual reality stocks and ETFs.

What is Virtual Reality?

Virtual reality is a simulated experience that employs pose tracking and 3D near-eye displays, through technology like VR headsets and augmented reality glasses, to give the user an immersive feel of a virtual world.

Is VR the future?

In many ways, virtual reality is the future. For industries like healthcare, video gaming and entertainment, even social media VR is set to be very disruptive. Now, users will be able to be immersed in whatever it is they're doing, whether that be surfing the internet or playing their favorite video game.

Where will be VR in next 10 years?

It is hard to predict the future of VR, as it is with any new technology. Oftentimes these new tech inventions are believed to be used for X and also end up being used for Y. The short answer is, we often don't know the full impact these technologies have until many years after they have gone mainstream.

What should I look for while investing in VR stocks?

For those who are interested in investing in virtual reality, you should look for the companies that show the most promise with the products they offer or that are in development. With companies like Meta (META), Alphabet (GOOGL), and Apple (AAPL) already rolling out their own VR products, it is hard to see who can compete with them, thus allowing them to possibly dominate the space.

References:

1. Virtual Reality (VR) in Gaming Market Size, Share & COVID-19 Impact Analysis, By Component (Hardware, Software, and Content), By Device (Mobile, Consol/PC, and Standalone), and Regional Forecast 2021–2028, Hardware & Software IT Services, accessed November 17, 2022, link
2. June 2022 Global Consumer Insights Pulse Survey, PwC, 2022, link
3. Marr, Bernard, “10 Best Examples of Augmented and Virtual Reality in Retail,” September 13, 2021, Forbes.com, link
4. Hughs, Huw, “Hugo Boss introduces virtual reality dressing rooms for online shopping,” August 2, 2022, Fashionunited.com, link
5. Purdy, Mark, “How the Metaverse Could Work,” April 5, 2022, Harvard Business Review, link
6. Rogers, Sol, “Virtual Reality – A Turning Point for the Spa and Wellness Industries,” August 12, 2019, Forbes.com, link
7. Incao, Jane, “How VR Is Transforming the Way We Train Associates,” September 20, 2018, link
8. Spiegel, Rob, “The Fundamentals of AR and VR – and How the Military Is Using Them,” November 22, 2021, link
9. “Emmanuel Hospice Embraces Technology to Better Serve Its Patients and Families,” September 8, 2021, link
10. Hazan, Eric, Greg Kelly, Hamza Khan, Dennis Spillecke, and Lareina Yee, “Marketing in the metaverse: An opportunity for innovation and expansion,” May 24, 2022, McKinsey Quarterly, link
11. Levy, Adam, “Investing in Virtual Reality Stocks,” June 8, 2022, The Motley Fool, link
12. “Virtual Reality Market Size,” Share & COVID-19 Impact Analysis, By Component (Hardware, Software, Content), By Device Type (Head Mounted Display, VR Simulator, VR Glasses, Treadmills & Haptic Gloves, Others), and Regional Forecast, 2022–20229, Hardware & Software IT Services, accessed November 17, 2022, link
13. “Headset technology is cheaper and better than ever,” October 1, 2020, The Economist, link

Disclosures:

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The information and data are as of November 17, 2022 unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

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