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Amazon’s Quest for Gaming Success

Leave a Comment / Gaming, Market Research, Technology / By Paul Watts

For Amazon, it is rarely enough simply to expand into new markets; the aim is always to become a key player in everything they do.

Of course, Amazon has served as an important channel to market in gaming for some time now. However, more recently, Amazon has been turning its attention to other opportunities in the gaming market. With its launch of Luna in the autumn of 2020, it set out its stall to become a key player in Cloud Gaming. And soon, it is set to launch New World – its major new Massively Multiplayer Online Role-Playing Game (MMORPG).

A New World in a Mature Market

We often think of online gaming as a new and rapidly growing market and, in many ways, it is. However, the MMORPG space now has a long, and well-established history.

World of Warcraft (WOW) has, since its launch way back in 2004, been the dominant player in the market. WOW has been with us for 17 years now. Its key rival, Final Fantasy XIV (FFXIX), has now been around for 11 years.

An MMORPG with an even longer history is RuneScape. It doesn’t attract the number of players you’d see with the big two, but it remains a popular and enduring game. It has been around for 20 years now – testimony to the potential longevity of a successful MMORPG. I remember playing it years ago (yes, I used to be an adventurer like you, until I caught an arrow in the knee…).

So, MMORPG is a market with several well known (and well loved) established players. It is also a market that has found a comfortable niche for itself. Only around 1 in 20 gamers would say they were MMORPG fans, so it is very much a minority interest even within the gaming world. However, as we all know, many of those fans are very devoted, spending many hours playing these games, month in, month out.

Breaking into a mature market like this, populated by several well established and popular brands, won’t be easy. But that’s never stopped Amazon before.

MMORPG in 2021

Exact figures on player numbers are hard to come by. The major MMORPG brands keep their numbers close to their chests these days).

WOW has been the most popular MMORPG for years now. It reached a peak of 12 million subscribers in its 2010 heyday. Its popularity has waned somewhat since then (the last official published figure was 5.5 million subscribers in 2015) but it is still the key player. Figures from mmo-population (which can’t be taken as gospel) currently place it as attracting around 3-4 million active players every month. That still places it ahead of its nearest rival FFXIV, which the same source estimates to have around 2-3 million active players per month.

FFXIV took a while to get established but in more recent years it seems to have been steadily building momentum. In the overall scheme of things, it came to the market fairly late (2010). At that time WOW was most dominant. Its success has come from a long haul rather than an overnight sensation but is now well placed to challenge WOW for the crown. It has taken a while to get to where it is today and that is despite the advantage of being based on a popular franchise that has been around since 1987. This just goes to show that establishing a successful game in the world of MMORPG can be a tough grind.

But that is often what it takes to make it in a mature market – sheer persistence, coupled with getting things right over the long-term, counts for much. After all, the nature of the genre is as much about building an engaged community as it is about selling a game.

Mature but Attractive

Attracting 2-4 million players worldwide each month may not seem like so many. These numbers are easily dwarfed by the tens of millions that play many free-to-play games (not least Hearthstone, WOW’s free-to-play spin-off card trader). However, WOWs players are not free-to-play, they provide Activation Blizzard with a regular source of fee-paying subscription income.

So, it is a potentially lucrative market to get into. You can see the appeal for the likes of Amazon.

How then might Amazon go about establishing New World as a leading MMORPG?

Troubles at Activation Blizzard

Any discussion of WOW these days can’t ignore the elephant in the room. WOW has clearly suffered from the sexual harassment scandal that has engulfed Activation Blizzard. Many point to a migration of MMORPG players away from WOW to the likes of FFXIV as being a direct result of this. Some speculate that perhaps WOW may finally be on the verge of losing its market leading position.

Could this be a weakness that might be exploited? With Amazon about to launch New World, the scandal that broke at Activation Blizzard over the summer could hardly have come at a worse time.

However, despite these troubles, I still think it would be a brave man who’d bet against WOW in the long run. Many have forecast its demise before, only to be proved wrong. The game has proven surprisingly resilient over the years.

The scandal has left WOW vulnerable but by no means fatally so. But the onus is clearly on Activation Blizzard to get its house in order and any failure to do so could yet lead to its demise. All that said, Amazon will need to do a lot more than simply capitalise on WOW’s woes to establish New World as a key force in the MMORPG space

Entering Mature Markets

The strategies that Amazon can use for successfully entering this market are not any much different from entering any other mature market.

First off, the mere fact that the market is mature means that it is inherently difficult to do anything radically different or ground-breaking. However, that is not to say it’s impossible to re-imagine and re-package the MMORPG concept in fresh and appealing ways.

Secondly, we need to remember the Jeff Bezos maxim “Your margin is my opportunity”, and the current subscription models generate a margin that Amazon can attack.

Thirdly, one way to attack a mature market is to make creative use of channels to market – by finding new and innovative ways to reach out to your target audience.

These will be the three things to watch out for in my view. If Amazon can get these elements right, it will, with perseverance, successfully carve out a place for its New World.

The New World

There are a number of ways in which New World may be able to offer enough points of difference to tempt players into giving it a try (and more importantly, retain them).

New World does have the advantage of being new. While it lacks the historic pedigree of its rivals, the flip side of that is that it also lacks the baggage. There is an advantage in representing a completely fresh start. It can leverage the latest technology without having to worry about legacy and, if it can do that well enough, it can make itself stand out.

It has so far promoted itself as offering a strong Player v Player (PvP) element. This may prove an attractive selling point if it works reliably. The beta test revealed some possible issues here, but Amazon should have the necessary resources to set these right. Certainly, the lesson of Cyberpunk 2077 should be that premature launches are dangerous waters. In the MMORPG market, this can be especially costly. FFXIV’s faltering start in 2010, cost it a good three or four years before it was able to get to a place where it could build some momentum. Amazon must avoid this at all costs.

Building a Strong MMORPG

New World’s early modern world setting is different enough and certainly promises the potential to offer a rich gaming environment. The challenge now is to really bring that to life with strong narrative content.

In the long run, it is crucial for an MMORPG, perhaps now more than ever before, to have a strong set of engaging storylines and intriguing quests. Strong PvP is great but Player v Environment (PvE) is key. PvE has, for many WOW players, been the key to WOWs enduring popularity. Indeed, many MMORPG players never or rarely play PvP. For these players, the richness of the environment, the quality of the quests and the strength of storytelling is why they play. This is what ultimately wins and retains players. This will be the key test for Amazon’s New World.

Margins of Opportunity

A real strength of Amazon is the brand’s ability to bring compelling offers to market at a great price. It is a common Amazon play to attack a market with the aim of making lower margins to leverage a price advantage that buys market share.

With New World the approach to pricing looks like it might be designed to create just such a point of competitive difference.

Rather than charging a monthly subscription, it looks like New World will simply require a single one-off payment. In all likelihood, it will then seek to make money from the publication of additional in-game content. That seems like an approach deliberately designed to attack the competition – why pay monthly fees when you can get the rival product for a one-off cost that’s less than a six month subscription?

That would appear to the aim anyway. A point of difference for sure – but it remains to be seen how appealing this will prove to be in practice.

Leveraging New Channels

In launching the beta version, Amazon set out its stall to attract key influencers in the form of streamers. Amazon have bet that if they can get enough streamers to buy into the concept, these people can each promote New World to potentially hundreds of followers.

Ultimately, the gaming market is heavily influenced by a cohort of highly engaged gamers who stream content, write blogs and contribute to online reviews and game ratings. They represent a highly influential minority and, if you can get them on board, they will do much of the work of promoting your game to the wider market for you.

Amazon have realised this and have clearly tried to woo these influencers during their beta testing. The only question is, have they made a strong enough impression upon these people to have sold their New World to them? The obvious risk stems from the fact that these streamers are not beholden to Amazon. If they like the game, they will promote it to a wide audience quickly. But if they don’t like it, they could just as easily put potential players off.

Launch

New World launches later this autumn. That’s when we’ll begin to find out if Amazon have got the ingredients right.

Launching in a mature market does require persistence and can be a tough learning experience if you haven’t got your ducks in a row. The one thing Amazon can’t afford is to launch with anything incomplete or buggy.

However, if it can launch a game with that works well for PvP, offers good value, makes good use of new technology and which, critically, offers strong worldbuilding and storytelling, it could make a serious impact on the world of MMORPGs.

About Synchronix

Synchronix is a full-service market research agency. We believe in using market research to help our clients understand how best to prepare for the future.

You can read more about us on our website.

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

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I Robot

Leave a Comment / Consumer behaviour, Market Research, Technology / By Paul Watts

“In the twenty first century, the robot will take the place which slave labour occupied in ancient civilisations.”

Nicola Tesla

The Robots are coming

The past few decades have seen many significant advances in robotics. As a result, we now live in a world in which an increasing variety of tasks utilise robots. Oxford Economics estimated that robots could displace about 20 million manufacturing jobs by 2030 (that’s 8.5% of the current global workforce).

Indeed, the number of robots in the world has doubled over the past decade. And, whilst they are not expected to revolt against the humans any time soon, they are nevertheless changing the world in which we live.

But what are Robots?

What counts as a robot? Before we get carried away talking about machine uprisings, let’s start by considering what a robot actually is.

As it turns out, it can be quite difficult to come up with a definition that everyone agrees on. Most people would agree that a robot is a machine. But a robot must be more than just a machine to make it a robot. Kate Darling, a roboticist at the MIT Media Lab, defines a robot as:

‘a physical machine that’s usually programmable by a computer that can execute tasks autonomously or automatically by itself’

On this definition a radio-controlled drone is not a robot. This is because it can only act based on instructions it receives from its controller. However, it can become a robot if it becomes capable of performing actions independently of its human controller based on some pre-programmed automated logic. For instance, if it is programmed to detect and avoid obstacles during flight without needing to be instructed to do so.

This fine dividing line between machines that are remotely controlled and machines that have the capability for autonomous action can make it difficult to spot robots. Just how autonomous does a machine’s actions need to be to count as a robot?

Simple machines that are not robots can perform tasks such as switching on and off, without human input, but we don’t necessary consider these to be robots. It needs to be automated; it needs to respond to input from its environment and it needs to act independently of direct human control. However, it also needs to be reasonably sophisticated in its ability to respond – otherwise a thermostatically controlled switch might potentially be called a robot!

How many Robots are there today?

Most robots are, at present, used in manufacturing and, in particular, for automated assembly processes. The (International Federation of Robotics) IFR estimated that there were around 2.7 million industrial robots in use around the world in 2019.

Robots are big business. 2019 saw 373,000 new industrial robots installed at a cost of US$13.8b.

However, 73% of these robots exist in just five countries – the USA, Japan, Germany, China and South Korea.

So what are Robots being used for?

Most robots are used in manufacturing and logistics operations. Typically, that would be for assembly operations or for moving goods/parts around the factory floor or in a warehouse.

28% of all the robots installed in 2019 were in an automotive business. The image many of us have of robots assembling cars is still a fair representation of the reality of robotics in the workplace today. And a further 24% are in use in the electrical/electronic manufacturing industries. That’s just these two industry sectors purchasing over half of the world’s robots.

However, robots are now also being used in a wider variety of other manufacturing sectors such as metal machinery, plastics and food. We can expect to see them used more extensively across manufacturing over the coming decade as technology develops viable applications outside of the automotive space.

Also, whilst most robots are still being installed in factories, we are now starting to see new types of robots emerging in other industry sectors as well.

When drones become Robots

Most drones are not robots. That is because their radio operators directly control them. And in that respect, they are no different from radio controlled model aircraft.

However, some of the more advanced drones incorporate a degree of AI in the form of Computer Vision which enables them to detect and respond to obstacles whilst flying without the need for operator intervention. This kind of technology also allows them to record observations about their environment in a more automated way.

The more autonomous a drone becomes, the more robot-like it becomes. In future robot drones will become a reality.

Robots in logistics

Robotic (driverless) forklift trucks have been around for a while but up until now not in huge numbers. In 2019, firms bought around 5,000 of these robot trucks – that sounds a lot but it’s still only 0.3% of the global forklift truck market and only about 1% of the size of the global market for industrial robots.

Nevertheless, logistics is becoming more automated, and the competitive demands generated by businesses like Amazon will no doubt act as an accelerator of change.

How fast robots will catch on in logistics remains an open question, but many industry commentators expect to see significant growth in their use over the coming decade.

Robots in healthcare

Robots are now also starting to make an appearance in our hospitals and health clinics.

Here, there are number of different applications. Covid has seen a particular growth in interest in UV disinfection robots. These may have had most prominence in the news over the past year, but they are by no means the only application.

Toyota have developed a robot (WelWalk WW-200) to help with the rehabilitation of patients suffering from lower limb paralysis. And some companies have even developed robot surgeons to assist in simpler or more routine surgical procedures.

It is clearly very early days with a lot of this technology, but many people feel healthcare robotics is an area to watch for some potentially significant growth opportunities in the future.

Driverless vehicles

Driverless vehicles are, of course, a form of robot. Trials are currently underway with driverless cars and we could well see these vehicles start to make an appearance on our roads before 2021 is out.

These robot drivers can negotiate their way from A to B – responding to traffic conditions and making autonomous decisions about when to speed up and slow down, when to avoid obstacles, and when to stop for traffic lights etc.

Just about any form of vehicle could be driverless. Indeed, we may even see the day where passenger aircraft essentially become robot-controlled drones.

Robots in agriculture

One sector that is likely to see an increased use of robots is agriculture. Here we are likely to see more driverless tractors and combines in use in the future.

There are also robots today that can pick fruit, capable of gauging the ripeness of fruit and deciding for themselves which fruit to pick and which not.

Robot house servants

Simple robots are in use today for such basic tasks as vacuuming and CES 2021 showcased several concept domestic robots designed to help with a variety of common household tasks such as washing the dishes and tidying up.

The day when we are all served by Robot Jeeves is still a long way away, however, although the next decade is likely to see some increasingly sophisticated automation technology move us a lot closer to it.

I Robot

To get to a stage where we come face to face with a fully functioning, intelligent, humanoid, robot is (let’s face it) a long way off.

The key developments that are yet to come, which would make that possible, relate more to AI than to creating an electro-mechanical machine capable of replicating human motion.

How close are we to creating such an robot?

Various experts have different views on this. Some have suggested some time between 2030 and 2060 is theoretically realistic – so potentially within our lifetimes!

That said, we have an issue in creating that kind of AI. And that is the age-old AI problem – to design Artificial Intelligence, you really need to be able to define what “human intelligence” actually is. Philosophers have debated this question for centuries without really arriving at a clear answer!

One thing is for sure though, robotic technology is going to offer some significant growth opportunities across a range of different sectors and applications over the coming decade. It is just a question of identifying and exploiting the new opportunities that this technology will bring.

About Synchronix

Synchronix is a full-service market research agency. We believe in using market research to help our clients understand how best to prepare for the future. That means understanding change – whether that be changes in technology, culture, attitudes or behaviour.

We have considerable experience in the design and execution of market research surveys in the field of both b2c and b2b science, engineering and tech markets. We can offer a range of services to help you identify new market opportunities and to understand the position and strength of your brand in the market. You can read more about this on our website.

If you wish to follow our weekly blog you can view all out past articles on our website here.

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Interesting Engineering

The Drone Revolution

Leave a Comment / Consumer behaviour, Technology / By Paul Watts

Since 2010, the growth in the use of drone technology has been gathering pace at an incredible rate. When first developed in the mid-1930s drones were highly experimental and expensive. Today, they are not only used for a wide variety of commercial applications, but have also become a popular and affordable piece of consumer tech.

So, are we on the verge of a Drone Revolution?

How many people are using Drones?

In the UK, in May 2021, there were nearly 4,500 certified commercial drone operators of small drones and 1,751 operators of larger drones. These are businesses using drones for serious commercial applications – applications deemed to present an equivalent safety risk to that of manned aviation.

However, these are now dwarfed by the number of hobbyists. The CAA estimated there were over 130,000 UK drone users at the end of 2019 – the vast majority of which were hobbyists rather than commercial users.

In a larger market like the USA, the numbers are even higher. The FAA figures show that there were nearly 875,000 registered US drone users in May 2021.

The Hobbyist

Drones are now very affordable, and a hobbyist can buy a decent drone to easily get up and flying for under £1,000 these days.

Research by Drones Direct shows that hobbyists are mainly using their drones for filming video (77%) or taking photographs (75%). The typical profile of these people is mostly male (96%) and middle aged (52% are aged over 45). It is also clear that these are hobbyists using their drones quite frequently (58% fly at least once a week).

There would appear to be a strong link between drone use and photography, with two thirds of drone users are also keen on photography. Around one fifth of the adult population list photography as a hobby (that’s potentially millions of people), so the potential for future growth, just based on current use patterns, is clearly significant.

Commercial Users

Drones have been used extensively by the military for decades now and much of the impetus for the development of this technology has come from the development of such applications.

The military will no doubt continue to provide an important impetus for innovation in drone technology. However, these days, a wide variety of other commercial applications are emerging. These are likely to prove increasingly important markets for drone tech suppliers in the future. Key commercial areas where drones are now being used would include:

Journalism & film making; drones are increasingly providing the primary way for obtaining aerial shots.
Disaster management; in gathering information and getting emergency supplies to isolated areas following disasters such as earthquakes.
Search and rescue; when fitted with enhanced imaging and thermal cameras, drones can play a critical role in search and rescue operations.
Mapping: drones can map terrain features in locations that are difficult to cover by other means.
Law enforcement and surveillance; drones provide a relatively unobtrusive means of surveillance and allow observation to be undertaken without the need for a physical human presence.
Weather monitoring and storm tracking.
Building inspections; drones allow construction workers to view the exterior of large structures and gain detailed photographs of places that are difficult to physically access by other means.
Inspections of processing plants (e.g. for the oil and gas industry); any large structure can now be inspected by drones. Detailed images, including thermal ones, can be taken of inaccessible areas, allowing maintenance engineers to view the state of equipment without being physically present.
Shipping and delivery; at present applications are being developed that focus mainly on the distribution of small packages. However, in the future, it may even be possible to transport larger cargos using large drones.

Developments

Virtually any application involving observation, or transport and delivery of small items are potentially suited to drone use. One thing is for certain. As the price of the technology reduces and the technology improves, it will become increasingly practical to perform a wider variety of commercially viable applications.

So, what further developments should we look out for in the future?

Logistics – Amazon Prime Air

Amazon have been working to develop a fleet of drones to deliver small packages as part of its logistics network. One key potential advantage of such an approach comes from the fact that drones can avoid traffic and deliver packages by a more direct route (as the crow flies in some cases).

The service will be called Prime Air and is currently being tested in several countries. In the UK Amazon have recently doubled the size of their Prime Air team and we are likely to see the service launch in a matter of months rather than years.

Hydrogen power

Hydrogen is an emission-free fuel and has the advantage of keeping a drone airborne for longer. The technology first appeared in 2016 but we are now starting to see more hydrogen powered drones come onto the market. The capability to remain airborne for longer makes them particularly suited for applications such as agriculture, mapping and for disaster response in remote locations. Any application, in fact, where there is a need for a long flight time.

At present the primary barrier to hydrogen power is the cost but as prices come down and technology improves we can expect to see more hydrogen powered drones in the future.

AI and improved navigation

As more drones fill our skies it will become increasingly important for them to navigate their way around avoiding each other and various other safety hazards.

AI drones that use computer vision to detect and navigate their way avoiding other airborne objects and hazards are now starting to appear on the market. High performance on-board image processing coupled with other navigational aids will make this increasingly possible. At present, of course, such technology is expensive, but we can expect to see it become more commercially available over the next few years.

Perching drones

Drones all have a limited amount of flight time available to them. However, this can be prolonged significantly if a drone is able to land on a building or other high object and make its observations without needing to expend energy to remain airborne.

Various technologies are being developed to allow drones to do this; perhaps enabling a drone to ‘perch’ on a streetlight or to rest on the corner of a building. This would have the benefit of making a drone more stable whilst it is making its observations as well as conserving power.

Problems and dangers

Of course, as drones become more ubiquitous, they bring with them their own unique set of problems and challenges. Not least is the potential for this technology to interfere with existing air traffic or for it to be misused by criminals and even terrorists.

In 2019, the year before Covid cleared our skies of aircraft, UK aircraft pilots reported 91 confirmed incidents involving drones and a further 29 incidents that may well have been drones but were unidentified. This compares to only 4 confirmed incidents involving drones and 1 unconfirmed incident that were reported in 2010.

This has prompted the UK government to introduce a registration system in 2020 and to require users of certain types of drones to obtain specific certification. Now even hobbyists must hold a flyer ID and past a test to legally fly their drones in the UK.

Whilst such measures will no doubt serve to help minimise the danger of accidental incidents, the threat of criminal or terrorist misuse is a different matter. In warzones, drones are already used for surveillance, to disrupt airspace and even to deliver small explosives.

With new threats comes new technology. Countermeasures of various kinds are being developed, these include directed energy weapons with the power to disable drones using such techniques as lasers, particle beams or radio frequency waves. One of the latest uses high-powered microwaves to knock out a drone’s onboard electronics.

If future, we can expect to see measures of this kind deployed to protect airports and other sensitive potential targets.

The Future

It seems clear that the coming decade will see an increasing proliferation of drone technology. This technology has grown from the highly specialised and niche use of a decade ago to a stage where it is now beginning to experience mass commercial and consumer adoption.

The coming decade will see this technology becoming more ubiquitous as it develops further and the costs come down. The challenges faced by drone suppliers will be to keep developing the technology at a rapid pace whilst remaining conscious of the public safety concerns.

However, the future is bright and no doubt there are many potential applications out there that new technological advances will enable drones to exploit. There is also a potentially significant untapped consumer market. As the technology reaches out to a mass market, so manufacturers will need to think increasingly about their marketing, and building strong and distinctive brand image and awareness amongst potential customers.

It would seem that we are indeed on the verge of a drone revolution.

About Synchronix

If you wish to follow our weekly blog you can view all out past articles on our website here.

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Interesting Engineering

Virtual Future – how will virtual reality shape our future world?

Leave a Comment / Consumer behaviour, Market Research, Online learning, Technology, Training and education / By Paul Watts

Part 2: VR beyond gaming

More than just a game

In our last blog we began our discussion of VR by looking at what the future may hold in store for this technology in the world of computer games. However, whilst gaming still represents the most widely used application for VR and AR at present, this technology has many other applications.

In this article, we would like to take a closer look the potential for these.

Remote working

One of the huge changes covid has forced on our professional lives is the need for virtual working. The business world has discovered that it is perfectly possible for most office staff to work effectively from home for long periods of time. Indeed, tools like Zoom and Microsoft Teams have helped to make home working become the new normal.

But a remote working world, for all its video calls, can be an isolating experience. Yes, we will be returning to the office sometime this year. But let’s not kid ourselves it will be the same. Many people will now be working from home as the norm and hot desking in the office when they need to. The days of the daily commute, five days a week, every week, are gone.

This remote working scenario is ripe for transformation into a virtual world. Using VR and AR technology can help to humanise the experience, it can make it more real, more interactive and allow work colleagues to participate in a wider range of interactive tasks.

This technology is already here. One such solution is Spatial; an AR version of Zoom, enabling work colleagues to interact in an AR office space. You can interact in a more 3D environment rather than just with 2-dimensional video but the technology also offers other tools such as enabling you to share ideas by scribbling on a virtual white board, share content and images in 3D and so on. No doubt, as time goes by, technology such as this will continue to add features and tools that make the experience even more interactive.

Socialising

In lockdown we have all, to some extent or other, been forced to get used to the idea of remote socialising. Often armed with a glass of wine and a Zoom call. Arguably many Gen Zs have been socialising remotely far more than they do in person for most of their lives. The only thing that’s changed over the past year is that the rest of us have joined them.

Now, I’m not suggesting people are going to abandon the pubs and restaurants any time soon. In fact, once these places can re-open, I’m sure they can expect a bit of a boom. Imagine the novelty value of going to the pub with your friends again?

But that said, I suspect that socialising remotely will remain a much more important part of our lives post-covid than it was before. For one thing it is a great way to meet up with friends and family who live far away. No need to travel, just hop on a Zoom call.

Again, as with working, remote socialising tends to lead naturally to virtual socialising. The ability to interact in 3D in a virtual environment is unlikely to catch on if it is expensive but – as soon as the price is right – this will eventually become a normal way of communicating. As with virtual reality workspaces, it is more a question of when than if.

Indeed, tools already exist for virtual socialising such as Altspace VR, VR Chat and Rec Room.

Interior Design and Architecture

An obvious application for VR and AR is interior design. Using this technology a designer can show their clients how they might transform an interior space. Such a visualisation can make a design look far more real and can be used to show clients what a range of different alternatives might look like.

Such technology should ultimately make it easy for people to visualise a range of different options and to alter and adjust designs to see how different scenarios might play out. And what goes for interior design applies equally well to architecture. Now it is possible to visit an empty plot of land or a building site and use AR to see exactly what a new building might look like. You can even walk around it to see just what it looks like in its environment from every angle.

Many clients find it hard to visualise what an end design might look like. VR can show them in a way that is clear, avoids misunderstanding and negates the need for lengthy explanations.

Having a clear virtual view of what the end product will look like before you even need to build, buy or change anything, clearly has the potential to avoid costly mistakes. Most importantly, it makes it much less likely that designers and builders will hear the dreaded words “Now I see it, I’m not sure I like it like that.”

Engineering and Industrial Design

Technical design work can often involve large teams and often those teams may be working together but are based in different parts of the world.

Here VR/AR has the same potential as in other fields to link remote working colleagues together and enable them to visualise concepts and designs in 3-dimensions.

People can all see how things might fit together and how the finished article might look. This can be particularly important if the physical styling and appearance of the end product is key. It is much better to spot potential problems in a virtual world and correct them, rather than having to wait until an expensive prototype has been created.

Like architecture, the key benefits will come from remote teamworking and the ability to visualise the end product fully before you need to start spending serious money on making it real.

As with other fields, the barriers will be all around cost and, given the data hungry nature of engineering design work, the ability of the technology to cope well with that. The ROI will become simpler and easier to justify, as the technology improves and costs come down.

Some companies have already been using this technology for a while now. Businesses like Jaguar Land Rover and Arup have been deploying VR in design for over a decade. In time smaller businesses will inevitably follow.

Healthcare

Another field where we might expect to see VR make increasing inroads is healthcare. Here the technology can be used for training in various surgical procedures. It can also be used to help surgeons plan for particularly complex operations.

Students can now study human anatomy extensively with VR, potentially continuing their studies from home if need be.

VR can assist with robotic surgery enhancing the degree of control a remote surgeon has over their instruments during a procedure and providing them with a much clearer visualisation of what is happening than would be possible just by looking at a video screen.

Other Applications

VR’s inherent ability to visualise and simulate makes it ideal for any training application where people need to interact with complex technology or a difficult environment. It can safely create realistic simulations that help prepare people for working in demanding and potentially dangerous work environments. It also enables students and tutors who may be scattered in remote locations to come together and interact as a group.

As the technology improves and the costs come down, it is inevitable that we will see VR become increasingly used as a go-to technology for many training applications.

Clearly the primary application for VR in entertainment is gaming. However, this is not the only one. VR can be used to enhance rides in theme parks or perhaps even to create an entire VR experience as a theme in itself.

VR can create spectacular interactive 3-dimensional landscapes and environments. The potential to use this technology to create something of great artistic beauty can deliver entertainment in the form of a sense of wonder.

Could we perhaps be engaging with VR films or other entertainment experiences in the future? I am sure we will, in time.

The Future

Given the wide range of different potential applications we could be looking at a world dominated by VR technology at some point in the future.

The fact that covid has rapidly accelerated the extent to which the world works and interacts remotely can only serve as an accelerator for the adoption of new VR applications. The only question is how fast will this happen?

Unfortunately, VR has suffered considerably from over-hype in the past. I am sure we can all remember the heady prophecies of 800% growth over four years and such like. In a way, predictions such as that have done more harm than good for the industry and run the risk of creating a sense of the “boy who cried wolf”.

We may not see a sudden, spectacular, VR revolution but I believe we will see a steady evolution and a sustained growth. One day we will wake up and all of a sudden it will seem as though VR is everywhere.

For the VR industry it is important to remember that VR itself is only a technology. For a technology to succeed it must have applications. So the real challenge, beyond improving the technology, is to identify and develop a meaningful range of products for which there is real demand. And here it helps to start by taking some advice from Steve Jobs:

“You’ve got to start with the customer experience and work back toward the technology, not the other way around.”

In this context that means looking for potential situations that would benefit from the visual power of VR – i.e. where visualisation can add real value. Its other key benefit is its ability to operate virtually, bring people in different locations together in a single experience. Those two things in combination represent the key to developing killer applications.

Identifying and refining how these applications work, overcoming customer objections and reservations and then successfully communicating the benefits of the technology all require a good understanding of the potential market. This would be where market research can help of course.

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Assessing the Impact of COVID on Retail and Online Shopping

Leave a Comment / Market Research, Technology / By Paul Watts

A far from reasonable year

COVID has had a huge impact on most businesses over the past year. One of the sectors which has seen some of the most significant change is retail. Lockdown restrictions have hit some parts of retail harder than others and prompted an unprecedented acceleration of the general trend towards more online shopping. In this article we will examine some of the key changes revealed by UK national statistics, taking stock of what happened and its longer-term significance.

Back at the end of 2019 (remember then?) UK retail was reflecting on another year of modest growth. It was another year in which our shopping habits continued to move increasingly online at a steady albeit not spectacular pace. Overall retail sales were up a modest 3% and the proportion of business done online had edged up from 18% to 19%.

In the absence of any global pandemic a reasonable person would have predicted that 2020 would have seen a similar modest 3-4% rise in retail sales overall and a steady increase in the amount of online shopping from 19% to 20% or maybe 21%.

But 2020, as it turned out, had no intention of being a reasonable year.

Now here we sit at the start of 2021, reflecting on a year in which retail growth has overall remained flat and the proportion of business done online has rocketed up to a staggering 28%. That has led to a massive 10% decline in offline sales, hitting the high street hard.

And now we are looking at the prospect of old high street names like Debenhams and Topshop being snapped up by the new e-kids on the block in the shape of ASOS and Boohoo. Who would have predicted that at the end of 2019?

Can the High Street bounce back?

Of course, much of the growth in online retail has been driven by the fact that COVID restrictions have meant that people have been forced to buy online. At various times in 2020, pretty much nothing was open on the High Street except for supermarkets, chemists and convenience stores. But the big question that many people are wondering is whether, once this pandemic is finally behind us, how many people will return to the high street and how many will continue to shop extensively online?

There is some evidence that we can expect to see at least some bounce back. We can see that from a closer look at the 2020 data. Q2 of 2020, when the first lockdown came into effect, saw the biggest drop in offline sales. 31% of retail business in this period was done online; up from 21% in Q1. However, once the High Street started re-opening in Q3 sales did start to pick up. And, whilst the level of online retail business continued to rise, it fell back from 31% of the total to 27%. This suggests that, when COVID is behind us, we can expect to see some migration of shoppers back to the high street.

But how much of a recovery might we expect? Can we expect the High Street to return to something like a healthy (if diminished) condition?

Without question we would expect to see a short-term uplift. People have been locked in for a while now, so being able to shop on the High Street without worrying about social distancing and COVID will have a strong novelty appeal. High Street retailers will then have a short window of opportunity to persuade people to stay on the High Street rather than returning online.

That said, some might argue that COVID has simply accelerated a process that was happening anyway. The historic trend has been for online to take an increasing share of retail sales. This has been evident for years now; the last decade having seen the proportion of online sales climb steadily from 7% in 2010 to 19% by 2019. Now, whilst the jump to 28% in 2020 clearly results from exceptional circumstances, the fact remains that many people have now grown used to shopping online. Many customers are more comfortable with shopping online now, which was not the case back in 2019. So, we can be sure that the proportion of online shopping is not going to drop back to around 20% again.

But not all sectors of retail have been equally affected

Looking at the details beyond the headline figures reveals a more interesting story. For not all sectors of retail have been equally affected by COVID and, as a result, a migration to online sales has occurred far more rapidly in some sectors than others.

Food retailing has held up well but has still seen a gradual move online

If we look just at food retailers (defined as businesses whose retail stores primarily sell food, like butchers, bakers, supermarkets and convenience stores), we have clearly seen some movement to increased online shopping. However, this has been more gradual than that seen elsewhere. It remains the case that over 90% of sales continue to be made instore.

This sector has doubtless benefited from the fact that its stores have been able to remain open throughout the pandemic. Indeed, during the periods of the strictest lockdown restrictions, food retailers could remain open while most other retailers were shut.

However, food retail does have certain characteristics that would encourage consumers to continue to shop in store. When it comes to buying fresh food, many consumers want to pick the product in person rather than leave it to chance. Freshness is not something you can easily judge online. So then the question is, how much would you trust the order picker to pick the freshest product? (Of course, if all you buy is packaged and processed food then this is clearly much less of a barrier to shopping online.)

Another limitation on online shopping here is the whole question of supply. Early on during lockdown, home delivery services were put under great strain. At times it was difficult to book a delivery slot from a supermarket, which naturally limited how much business it was possible to do online.

We can expect to see more online shopping, but even given the pressures created by a global pandemic, instore sales of food products continue to remain very resilient. The future here will be one of a steady migration to an increased level of online business, but physical stores will continue to remain the key channel to market.

Non-Food Retail stores have been hardest hit by the pandemic

Other retailers have been a lot less fortunate and have had to endure long periods of enforced closure during lockdowns. This has clearly had a dramatic impact on sales and has forced a much higher proportion of business online. In-store sales have dropped from £150 billion to a little under £113 billion in a single year. Over the same period, online shopping has seen a dramatic increase from £27 billion to just over £41 billion. And these numbers don’t even include any of the pure-play online retailers, like ASOS and Boohoo.

Unfortunately, the growth of online sales here was not enough to offset the decline seen in store. These figures underline the harsh trading realities that have seen the demise of such well-known high street brand names as Debenhams, Top Shop and Dorothy Perkins.

Here the migration online has been gathering pace for a while, but the past year has seen a particularly dramatic acceleration in that trend. This form of retail increasingly needs to rely on a strong online presence to survive. In a way, many of the principles of the High Street still apply online – you need an attractive storefront, your store needs to be easy for the customers to navigate and the products need to be well presented (and of course you still need the right mix of products). A strong brand image remains just as important online as in the High Street. The media through which sales are conducted may be changing fast, but many of the underlying criteria for success remain the same.

The rise and rise of the pure-play online retailers

Retail businesses that have no stores are, as you would expect, primarily the pure-play online businesses. These businesses have had a great 2020 with sales increasing by around one third.

However, a small amount of business here is not done online. This would include such businesses as mail order catalogues, telephone selling and automated vending machines. This type of retail saw a modest rise in 2020, no doubt driven in no small part by the ability of these models to continue to operate during lockdown (and potentially even benefit from it).

Nevertheless, the big story here remains the rise of the online retailers. No doubt we can expect this sector to continue to see significant growth into 2021.

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The Road Ahead to Greener Motoring

Leave a Comment / Climate Change, Green Economy, Market Research, Technology / By Paul Watts

In November 2020, the UK government announced that there will be a ban on the sale of vehicles with combustion engines by 2030. The sale of some hybrid cars and vans will continue until 2035 after which they too will be banned. The idea being that we are heading down the road to greener motoring. Aside from the environmental benefit, it is hoped that the associated investment in electric vehicles and the infrastructure needed to support them will help stimulate our economy in a post-COVID-19 world.

It all sounds like a great target to aim for – but where are we today? And more importantly, how can we reach our green destination?

Well, firstly it is important to acknowledge that like many other industries, the pandemic has hit the automotive sector hard. 2020 has been a tough year with SMMT figures showing a drop in new car registrations in the UK of more than 29% – the worst year since 1992.

Looking beyond the headline figure, 1.63 million cars have nevertheless been registered in 2020. That is still a lot but, under more normal circumstances, new registrations have been regularly exceeding 2m in every year since 2013. The good news is that some 465,331 (29%) of these vehicles were electric or hybrid. And, unlike the rest of the market, low emission vehicles of this sort have experienced strong growth (nearly 90% annual growth in a market that has declined by 29% overall can’t be bad).

But if we are aiming to replace all cars on the road with electric or electric hybrids, we still have a long way to go. According to UK government statistics there were just under 32 million cars on UK roads at the end of 2019. Of these only about 2.5% were electric, hybrid or used some form of lower emission fuel such as gas. Indeed, if you exclude all the hybrids, there were only just over 244,000 electric cars on the road at the end of 2019 (that’s less than 1%). To replace 31.5 million vehicles with electric ones in a market where, even when things are going well, is only buying say 2 to 2.5 million new vehicles of any kind each year is clearly going to take a while.

So how do we get to 100%? Well, one thing that clearly needs to happen is to develop the infrastructure needed to fully support electric vehicles. As of 13^th January 2021, charging points were available at 13,383 locations according to zap-map and 2,615 of these locations offered rapid chargers. On the surface of it that’s great news. Electric charging is now available at more locations than petrol / diesel filling stations.

However, these facilities are still in the process of being rolled out and many of our UK filling stations do not yet have them. Many of the current charging points are in places like car parks in town centres or shopping centres or in the corner of a motorway services car park. It is also the case that you may need to subscribe to several different providers if you travel around a lot and need to make use of charging points in different parts of the country. The roll out of more charging points will help but ideally, we will still need an easy way for motorists to be able to access any and all charging points in a universally accepted manner.

At present, the current set-up best suits people who are making mainly local journeys and who prefer to rely on charging at home. If you charge at home and only make relatively short journeys you don’t need to worry too much about the need for re-charging mid-journey.

This raises another issue that needs to be given some thought – how easy is it for motorists to re-charge at home? If you keep your car in a garage next to your house or on your driveway then it is very convenient. However, not everyone has off street parking and some people may sometimes find it difficult to find a parking space on their street near their home at all. This creates a real barrier to adoption that will likely make it necessary to introduce some form of viable mass access to electric charging for anyone parking on a residential street. This is a challenge but one for which there are possible solutions. One possibility here might be to adapt ordinary street lighting to be able to offer EV charging facilities – as has been demonstrated in a trial run by Siemens in Westminster.

The other issue, related to charging, is range. The range of electric vehicles is now much improved from what was once the case and we are now seeing vehicles coming to market with ranges in the order of 250-300+ miles on a single charge. Coupled with access to rapid charging points it is now just possible to boost your range by 100 miles or so with a 30-minute re-charge en route at a rapid charging point. So you can just about make a 400-mile trip with the current technology in practical terms. It may not yet be ideally suited for long distance driving yet but every year sees new advances.

In a way the pandemic may have brought about changes in our society which will make electric cars fit in better with our lifestyle. The long periods of enforced lockdown have caused many employers to re-think traditional practices of office working. Home working and remote working will be far more the norm in the post pandemic world. Not only that, but we have now got used to doing a lot of business via video calls rather than face to face. As a result, people will be spending more time locally and less time commuting or travelling for business over long distances. And more local motoring plays directly to the strength of electric vehicles.

A final significant barrier that needs to be overcome is the perception that electric vehicles are expensive. In terms of the initial price tag, there can be no denying that the price differential can be significant – sometimes 40%-50% more expensive for an electric vehicle vs a petrol equivalent according to figures quoted by thisismoney. That’s scary. When paid for with financing, the monthly costs can be made to look more palatable but there is no getting away from the fact that the up-front purchase cost for a new electric car looks daunting in the eyes of many consumers.

However, if you investigate the issue of cost in greater detail, a more nuanced picture emerges. One area where electric cars now offer a big price advantage is when you compare the re-charging costs to the cost of petrol. Here the savings are potentially significant (thisismoney worked out a saving for £640 a year for a car owner doing a typical mileage of 10,000 a year when comparing a particular electric car with its petrol equivalent). Electric vehicle owners may also expect to benefit financially in terms of tax, insurance, and maintenance costs. Overall, this serves to balance the equation somewhat, such that the total cost of ownership over several years ends up being broadly comparable. On this measure electric cars are not so expensive.

Comparing cars in terms of overall cost of ownership is, however, a task many ordinary consumers may struggle with. It can be hard to see beyond the upfront price tag. As a result, this may be an area the government will need to look at when crystalising their plans for getting petrol and diesel cars off our roads. The car industry itself will also need to look at how it can find better ways to clearly articulate the value of these vehicles. That means finding the right messaging to convince consumers that these vehicles are not actually as expensive as they first appear.

But, right now, we are at the early stages of this journey. A dramatic transition to greener motoring is on the cards over the coming decade. Challenges exist for sure, but so do opportunities. One thing is for certain – this is a market that will see some dramatic changes and significant growth over the next few years.