The rule is thumb in the high-tech world is this: When Apple enters any space, the competition is watching it closely and looking for its own entry point.
That’s exactly what will happen in the wake of Apple’s announcement of the purchase of virtual reality (VR) streaming startup NextVR, which specializes in recording live events such as sports and entertainment. Its content partners have included NBA, NFL, Fox Sports, HBO…
And in the time of COVID-19, there’s no world except the virtual one.
Founded in 2009, NextVR had raised about $115 million with investors including WarnerMedia, Comcast Ventures and others. However, the company was reportedly struggling in early 2019 as a funding round fell through. It also holds more than 40 technology patents in VR and related technologies.
Apple and NextVR failed to disclose financial terms of the deal but 9to5Mac put the acquisition value at $100 million. In a statement, Apple’s spokesman said, “Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.”
The NextVR acquisition comes as Apple has been making a deeper push into entertainment and is reportedly developing an augmented reality AR-VR headset, which may launch its AR headset in 2022, followed by AR glasses in 2023.
The fact is that the tech giant has been looking at the technology for years but has held back from entering the market, which has been slow to mature.
Apple’s takeover of NextVR indicates that it’s joining the VR/AR market but that in the beginning it won’t seriously challenge the early movers, such as Facebook and Sony who are arguably more important to where the market is today.
The speculated price of $100 million Apple is paying for NextVR is chump change compared to how much Facebook paid for Oculus VR gaming startup in 2014–nearly $3 billion.
Sony, Facebook, and HTC earned 77% of all revenue generated globally by VR headsets last year. Sony is still a leader in sales with a market revenue share of 30% compared with Oculus’ 25% and HTC’s 22% — far more than Google’s 11% share.
Last December, analysts projected a surge of headsets sales, expected to reach $4.6 billion in revenue. Even though there is no data for the sales for 2020, it is likely that the pandemic is giving those figures a significant boost.
If it’s anything to go by, currently, Oculus devices are sold out.
Apple hasn’t been about the iPhone for a while now–it’s all about the service segment that generated 14% of its revenue last quarter. Apple could use NextVR’s technology as an augmented extension of Apple+ streaming service or Apple Arcade.
VR technologies could play a major role in broadcast rights for sports and entertainment in the future, which is the core of the NextVR business. Apple has nearly $200 billion in cash on hand that could help it secure broadcast rights.
Also, last December the Wall Street Journal reported that Apple was in talks with Pac-12 to acquire the conference’s exclusive broadcast rights when its current $250 million deal with Fox and ESPN ends in 2024.
Last November, Apple launched its paid, ad-free video portal for its own original movies and TV shows called Apple TV+. So far, it’s racked up some 35 million subscribers, but is still well behind the streaming giants such as Netflix or Hulu. But Apple is … well, Apple, and it’s got a huge and extremely loyal customer base upon which to rely. If Apple wants to be a VR leader, it will be, eventually.
