At a session on “Gaming is the Killer App for AR/VR,” moderator Ariella Lehrer of HitPoint Studios stated that a “killer app” would be defined as any app that moves hardware units. That brought a wince from Needham & Company’s Laura Martin who objected that money, not hardware, is the metric to look at. Martin added that hardware sales don’t take into account the fact that so much AR will be done on a smartphone rather than a game console. “Because it uses your smartphone, AR will get faster adoption,” she suggested.

According to Martin (below right), AR also has a more diversified revenue base, including advertising and e-commerce, and that it is double the numbers of  VR in the marketplace. She also pointed out that, like eSports, AR/VR is a global business. “The big eSports games are off shore, so many Americans underestimate it as a revenue driver,” she said. “Similarly, Asia is driving a lot of the adoption of AR and VR.”

Lehrer asked what the most discouraging event was for AR/VR in 2018. S&P Global Market Intelligence’s Greg Potter pointed to IMAX getting out of location-based VR.  Independent consultant Jenna Seiden, representing LUMO Labs, was disappointed in the lack of curation of VR/AR content, and Academy of Interactive Arts & Sciences Foundation’s Don Daglow pointed to the media asking if VR represents a “false promise.”

“Early coverage creates outlandish expectations,” he said. “The failure to achieve the numbers became the story.”

But Skydance Media’s Guy Costantini (above left, with Martin) reported on some of the good news. “A lot of us are making larger-than-life games, such as our ‘Saints & Sinners’ VR game based on ‘The Walking Dead’,” he said. Under the hood, you see that people are really learning how to use the technology.” Grab’s Anthony Borquez noted that the debut of PlayStation 4 (with VR) was an extra platform that made it easier to make revenue goals.

Seiden was happy about the announcement of Oculus Quest. “The untethered experience showed the evolution of the hardware,” she said. Potter was pleased with the expansion of AR and VR on the enterprise side.

Lehrer noted that, in a talk the previous day, Marc Andreessen said he believes VR will be “one thousand times bigger than AR,” because most people live in uninteresting places they want to escape. “I push back hard on that,” said Martin. “Fifty percent of the country still doesn’t have a DVR. You’re not going to buy a VR headset if you don’t have a DVR. VR makes sense with enterprise, for training. AR is a kind of stepping stone to VR.”

She noted that, when “Pokemon Go” did $1.5 billion in 12 months, Wall Street got excited. “A consumer-facing AR game on a mobile phone can blow up,” she said. Potter added that, “it’ll be interesting to see how the upcoming Harry Potter game does.” Constantini predicts we’ll see very appealing VR games in 2019. “Dust off your headsets,” he joked.

Daglow suggested that killer apps are usually happy accidents. “They usually start off with smaller ambitions,” he said. “You identify them as killer apps in retrospect.”