Imagine if your hotel guests could traverse oceans of space and time on their lunch break. Would they still fly economy class to stroll on your beach?
There's an emerging industry out there that might make them think twice. Enter Magic Leap, a cutting-edge spatial computing and mixed reality firm based out of Plantation, Florida.
Since 2011, the company has raised $1.9 billion from the likes of Google, Alibaba, and Axel Springer. Advisory board members include Google CEO Sundar Pichai, Donald Harrison - Google's president of global partnerships, Jack Ma, and Paul Jacobs at Qualcomm.
At 700 employees, the company is gaining serious traction with its patented lightfield technology. Other players in the VR and AR space are mindful. Instead of looking at a film or mini-screen, the Magic Leap headset sends data directly into your retina. The quality is supposed to be astounding.
The terms mixed reality and augmented reality are used interchangeably. Magic Leap uses “mixed”, to disassociate from the likes of Pokémon Go and other more rudimentary smartphone applications. Mixed reality applications use headsets, but are different from virtual reality headsets. The infused data layer interacts with the physical world. It does not consume it.
Most opinions affirm that augmented reality will become the more widely used technology. Eventually, we think that one device will serve both functions. Users will be able to toggle back and forth between augmented, virtual, and actual reality. Many of the current advanced applications for AR have been industrial and military.
Nintendo's Pokemon Go was arguably the first basic test case for the mainstream market. The response was immediate with record-breaking app downloads. The app still receives 65 million monthly average users. What Magic Leap is doing is far more advanced.
At a recent Recode conference, Magic Leap CEO Rony Abovitz and NBA chairman Adam Silver discussed the technology and their partnership and how users will soon be able to "experience" basketball games court-side from their living rooms. "We're building a new computing platform for the experiential economy." Those words should ring alarm bells for anyone in the travel industry. The first iteration of the Magic Leap headset is due for release sometime later this year. The price tag will be around $1,000, but Abovitz believes that spatial computing will eventually replace other devices including smartphones.
Lock-step with 5G network expansion
As with other "edge" technologies including artificial intelligence, IoT, and autonomous vehicles, adoption of spatial computing will depend on the proliferation of fifth-generation (5G) mobile networks. For those unfamiliar, 5G is the latest in wireless networking aiming to power these emerging technologies. Speeds will exceed 10-100 times that of existing 4G LTE networks. This bandwidth will foster wireless, low-latency augmented reality experiences. Current networks are fast enough for existing applications but spatial computing will need a faster network to fully mature at scale.
The pace of 5G network adoption is therefore a good proxy and timescale for the roll-out of spatial computing. Network operators have already begun installing 5G infrastructure in trial markets throughout the United States. South Korea piloted 5G capabilities during the PyeongChang Olympics. Verizon and AT&T have pledged their full intent to push forward with the required investments. The full roll-out will take time, barring the needed investments in new high-frequency infrastructure.
The entire grid will require refitting with miniature base stations called small cells. For operators, the business model is also a leap of faith, since demand will ultimately come from applications that have yet to be developed. This lag in use case may impact network expansion somewhat, but operators seem undeterred.
Here is the anticipated adoption curve:
The applications that will eventually run on 5G, including spatial computing, will likely mature in lock-step with the network. The first consumer-grade access to 5G will come in the form of fixed wireless access (FWA), essentially as a faster alternative to existing copper and fiber networks. TBR Research estimates that adoption of 5G-enabled AR and VR applications will accelerate within the next few years.
Implications for the travel industry
The potential to disrupt travel from a brand, product, and marketing perspective is real. Some obvious applications include new categories of local attractions that transform mundane urban landscapes into veritable jungles; vivid, three-dimensional shopping experiences that bring hotel lobbies into our living rooms; the gamification of loyalty, and digital billboards.
We also consider some of the more ominous implications for the industry. For example, how will having access to spatial data impact our need and willingness to travel great distances for either leisure or business purposes? Given the pace of innovation with the technology, we think that spatial computing could start to have a meaningful impact on travel demand with the span of a decade. Here’s our logic:
Early Adoption Phase: Spatial computing will initially kick off with content partnerships for in-home entertainment purposes. Expect to see more arrangements similar to the NBA deal. Early iterations of the content will pull existing web data from the monitor and into physical space. Facebook is already working on it.
Compounding Phase: Spatial computing will increase and shift travel demand as spatial content studios begin to offer access to unique digital layers. Augmented reality tours in Indianapolis (one of AT&T's 5G test cities) - for example, might attract visitors ready to experience vivid overlays and digital stories pulled over the physical canvas of Indy's buildings and boulevards. Museums might offer Magic Leap headsets to their visitors as part of their interactive exhibit series.
Cannibalistic Phase: Market penetration will reach mainstream levels as headsets begin replacing other devices including smartphones. Artificial intelligence and machine learning will also accelerate the content production process by creating nuanced duplicates of existing code. Rich content will grow in sophistication and splendor. Here, we should anticipate an offset in travel demand among certain demographics. Young and old might opt to stay “grounded” as they explore new layers within their geographic proximity. For the sake of conceptualization, a local lake or pond could be transformed into a deep blue ocean complete with a skyline of stellar moons, planets, shooting stars and other stimulating visuals.
What do we mean by “offset”
The implications for business travel are fairly obvious as more meetings and events take place on the spatial layer. Leisure travel is more complex; its psychological underpinnings dictate our desire to experience different cultures and new surroundings. This exploration fulfills our modern humanistic quest for self-understanding and transformation.
We have our bucket list of “experiences” that we believe will complement our understanding of ourselves and the world. Paris, Mount Fuji, Austin, Mexico City and Patagonia spring to mind. In a magic leap world, urban and natural landscapes might have numerous (if not infinite) iterations, depending on the content and context created by designers and developers.
Twenty years from now Mount Fuji might feel like a mole hill compared to what’s out there on the spatial layer. Designers and developers will be put to work creating truly magical experiences. Paris might compete for visitor dollars with Pategonia, but also with Pandora and any other worlds that we dream up.
At their core, hotel chains and airlines are in the physical storage and logistics business (and customer care of course). Over the last 20 years, online travel agencies and mobile computing have completely transformed the industry. Given the exponential rate of change in technology, the next 20 years are likely to bring even bigger disruption to the space. Spatial computing seems like a logical next jump. There is the resistance to change and the creepiness factor which might slow down adoption. Key content partnerships like the one that Magic Hat has with the NBA will help build mass-market appeal and acceptance. We think that the spatial computing experience will be adjustable from basic functional overlays showing time and temperature to full-on VR immersion. This range in intensity will also help sell consumers on the product.
Global demand will also play into it. China for example, will likely see a rapid rate of adoption, as government authorities push through an aggressive innovation agenda. In this context, our 10-year adoption window may be a conservative estimate. Here, corporate travel venture funds might start looking into investments in the space. Hotel groups might start thinking about content studios and what their digital experience will look like in an augmented world. Airlines are already experimenting with AR for in-flight entertainment. Destinations might want to think about incubators dedicated to the space. In short, hold on for a ride because spatial computing is about to take off.
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