By Arjun Srinivas
In the simplest of terms, Augmented Reality [AR] is an amalgamation of the real world and virtual technology. It will allow you to perceive your natural surroundings with the option of a few embellishments that will augment your sensory capabilities.
Imagine a world with augmented reality. You look around and you see all the information you need embedded on your natural vision. You observe a restaurant and instantaneously, you can see its fare and the prices along with user reviews. You come across a stranger, and if she wills, you know enough about her to strike a conversation. If you are a surgeon, the X ray vision might make an invasive procedure redundant.
These technologies are not beyond the realm of today’s technological paradigm. Augmented reality has a host of utilities which is set to transform how we perceive our surroundings, quite literally. There are a few practical issues that need to be resolved before this technology becomes universal. This includes scalability and cost considerations. There are ethical and aesthetic considerations too. However, these are beyond the purview of this article. The implementation of these technologies on a large scale will have a tremendous economic and social impact through productivity gains. This article is an attempt to envisage the Economics of Augmented Reality.
In the simplest of terms, Augmented Reality [AR] is an amalgamation of the real world and virtual technology. It will allow you to perceive your natural surroundings with the option of a few embellishments that will augment your sensory capabilities, and hence you can discern more than you can with the naked eye. These technologies have come into the collective consciousness of the population, following the popularity of Google Glass.
Pioneering work has been undertaken by Innovega-inc, whose technology iOptik is a contact lens which placed on the cornea, operates as an augmented reality device. However, the most promising mode of augmented reality seems to be through the screen of your smartphone. Mobile augmented reality is poised to make these technologies pervasive and accessible to all categories of consumers.
“Augmented Reality gives us the opportunity to democratize the production and consumption of information that is relevant to the world around us”, according to Blair Mcintyre, a researcher at Georgia Tech. One way of gauging this technology is considering it as an extension of the data revolution.
However, crucially the availability of instantaneous information has profound implications on information economics. There is a complex relationship between the time of acquiring information and its value. For some, the value lies in immediacy.
Furthermore, there are cost considerations. Costs are incurred not only for the acquisition of information, but also its publishing through an appropriate medium. The conventional information models of the Mass-Media have been under threat due to the emergence of the internet. Augmented reality has the potential to exacerbate this trend by delivering immediate and personalized content to consumers, on the go.
Instant information can veritably transform the nature of transactions. Transactions historically, have been limited by the problem of asymmetric information. However, the use of Augmented Reality will revolutionize the conventional marketplace experience. These technologies can be used not only to discern the quality of the product being purchased, but also give you a comprehensive knowledge of the price dispersion, substitute products and offers. Thus, it can eliminate the drawbacks of both online and conventional shopping. Bridging the information gap will result in more completed transactions and consequently enhanced economic activity.
The industry that is poised to gain most from this technology is the world of advertising. Innovative companies such as Blippar, Aurasma and Layar have used the medium of Augmented Reality to engage customers. This is a prototype of how they function: – “Users hold up their phones or iPad’s to an advert. After reading the layout of the image, and connecting it with the app’s ad database, Blippar then takes users to a website, or overlays video or game content on top of an image. “ Amazon and Google have invested significantly in these AR ventures, and their clientele includes global corporations such as Unilever, Nestle, Samsung and Tesco. Such an advertising platform enhances the quality and reach of conventional ads, by increasing consumer engagement.
Finally, Augmented Reality challenges the fundamental principle of behavioral economics, which assumes that individuals rely on heuristic rather than rational behavior. There are bounds imposed on rationality, since it is assumed that individuals rely on intuition rather than information to make instantaneous decisions in the real world. However, AR provides immediate and relevant information so that individuals can make informed, rather than impassioned decisions.
We are at the cusp of a technological revolution. It is difficult to envisage the future trends in Augmented Reality, just like it would have not been plausible to predict the full potential of the internet in 1994. The real success, limitations and implications of this particular technology can only be gauged in retrospection. However, it is another reminder that study of economics is inherently dynamic and needs to continually evolve in response to evolution in technology, culture and society.
Social Science will be confronted by the virtual human; science will seek to mould the virtual universe to prescribed ends; & philosophers will contemplate the virtual world, confronting a new reality with new questions and possibilities.
(The Author is a student at Madras School of Economics)