While AR/VR has been a buzzword in the ecosystem for a while, AR is now emerging as the new platform of choice for distribution, ie from web-first to mobile-first to AI-first to possibly now AR-first. For instance, Houzz, which is a website and online community about architecture, interior design and home improvement, has already delivered 11 times sales conversion using mobile AR.

When it comes to gaming, augmented reality (AR) offers an innovative technology that includes digital information thereby providing a composite view to the user and in real-time.

Augmented Reality (AR) based gaming and toys market is expected to reach $284.93 billion by 2023, growing at a CAGR of 152.7% during the forecast period 2017–2023. While Europe represents the largest market worldwide, Latin America ranks as the fastest growing market. As per a recent report, Apple ARKit, Google ARCore, and Facebook’s Camera Effects Platform could have 900 million users by the end of 2018 and Mobile AR’s installed base could grow to over 3 billion by 2021.

The AR technology allows gamers to scan physical world with an augmented experience by providing digital information. With AR, you’re not just controlling the game but you’re IN the game. That means the possibilities are much greater than with pinch-and-zoom functionality in smartphones.

Augmented reality toys, app integrated toys, and toys that can be controlled by smartphones and tablets are emerging into the new frontiers of growth in this day and age. There’s a brilliant TEDTalk by Bill Gross talking about how product timing is the most important factor that defines a startups journey.

Major factors driving global growth

Increasingly digital lifestyles of consumers worldwide and exposure to technology at an early age Increasing penetration of smartphones and tablets Growing affordability and availability of AR games in mobile devices

Alongwith the above factors, several factors locally are providing strong tailwind for adoption of premium quality AR Gaming toys/products

Increasing share of organized retail/omni-channel commerce Spectacular growth of 4G internet services Growing awareness about sub-par quality toys from other regions Higher disposable income of parents and willingness to spend

The future of this large market lies in products that bridge the gap between real-world and virtual toys. Shifu is operating right at the center of AR gaming with its ‘phygital’ line of products and IP protected tech.

source: www.playshifu.com

Superior Product/Tech

Globally many players have been trying to blend AR with STEM learning but very few have been able to find success:

Consumption is moving towards smart-screen/mobile network — Deep research driven tech IP has enabled Shifu to create products which provide seamless experience on even on a low-bandwidth/low ended phone. Regular update of content at scale — To keep the child entertained, buying new physical toys each time is an expensive and arduous exercise. Ability of gaming companies to closely tie the software, hardware and user-generated content on a single platform will be a key for rapid growth. Blending of 3D content — 3D content is not something like graphics, images or videos that can be produced/engineered at mass scale. Large scale marketplaces do not exist for game-ready assets and it is not easy to build meaningful scale in a short period of time. Keeping the entertainment piece intact-Many products solve the STEM first than finely blending the fun element into the products. Very recently, I was listening to Luis Ann, the founder of Duolingo who mentioned that the power users of Duolingo not only use the platform for learning a new language but also because it gives them a sense of getting entertained while learning something.

Blend of right skill-set of the founding team

The company operates in a space that requires strong product design skills, ops / offline-online distribution experience and understanding consumer behavior. The founding team brings in a combination of skills including product design, consumer behavior mapping, omni-channel distribution and sales. Given the complexity of the business in ideating, developing, manufacturing, procuring, setting up distribution channels, Vivek and Dinesh complement each other well.

Strong Product Distribution will be key

Having the right distribution pipeline, which allows the products to reach the end consumer faster, completes the important feedback loop which is critical in developing world-class products.

With a successful Kickstarter campaign taking the Orboot to over 60 countries, right offline and online channel partners both in India and globally, Shifu is well positioned to capture a large and rapidly growing market opportunity.

It is exciting to partner with Vivek, Dinesh and the entire team at Playshifu in this journey towards building a unique emersive gaming and learning experience for kids.

With inputs from Karthik Prabhakar!

If you’re building an exciting product, please feel free to reach me at arpit_mittal@idgvcindia.com