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Beyond 'Pokemon Go': New crop of start-ups boosting fortunes with AR, VR

A 3-dimensional image in a transparent cube.
Javier E. David | CNBC
A 3-dimensional image in a transparent cube.

There's more to virtual and augmented reality — the emerging technology behind the wildly popular game "Pokemon Go" — than mesmerized mobile users wandering the streets in an attempt to "catch 'em all."

With the sector coming of age, a few start-ups are already trying to show the world that AR can be used for more serious purposes, or at least for a form of stimulation that differs from rounding up digital creatures. In February, Goldman Sachs estimated that VR/AR would explode into a market worth at least $80 billion by 2025, and by as much as $182 billion under more aggressive assumptions.

"As the technology advances, price points decline, and an entire new marketplace of applications (both business and consumer) hit the market, we believe VR/AR has the potential to spawn a multibillion-dollar industry, and possibly be as game changing as the advent" of the personal computer, Goldman wrote.

That fertile technological ground is ripe for tilling by companies like Brooklyn-based Looking Glass. The company, which creates 3-D holographic displays in transparent cubes that use 2 million points of light, opened an exhibit in New York showcasing art made from its creation.


If the start-up has its way, it could become a counterweight to devices like Facebook's Oculus and Samsung's Gear. Looking Glass has pioneered a technique called "volumetric display," which allows the viewer to experience 3-D images without the burden of bulky goggles. CEO and co-founder Shawn Frayne said the technology can be put to practical use in medical imaging and academic research.

"It's almost like a crystal ball and a hologram had a baby," Frayne said in a recent interview. A true holographic image is generated from pure light, while Looking Glass' images are generated in a 3-D cube. Still, the first of its kind technology "achieves the dream of a hologram," he added.

Frayne said that one of its potential uses is letting artists create 3-D paintings, and even let "Pokemon Go" players house their creatures in a Looking Glass cube.

"We're giving [two-dimensional images] a way out and giving them a place to live," said the 35-year-old native of Tampa, Florida, who has a physics degree from MIT. "People will be able to create in 3-D with a much lower barrier to entry."

Although Frayne declined to disclose how much seed funding Looking Glass has received, he said the company was backed in part by Tumblr founder David Karp and Vimeo founder Jake Lodwick, along with a few venture capital firms. He declined to tell CNBC how much Looking Glass had received.


Augment app uses augmented reality in a retail setting.
Source: Augment
Augment app uses augmented reality in a retail setting.

In a July report, Digi Capital — which estimates the market could reach $120 billion within four years — said the technology has "the potential to play the same role in our lives as mobile phones with hundreds of millions of users."

Augment, a Paris-based start-up that's raised nearly $5 million since it was founded in 2014, is also trying to show that AR technology is more than just games and fancy pictures.

The company created a mobile application that lets a user insert a 3-D model of any object into a real-life environment. It's being used by companies like Coca-Cola and L'Oreal to size vending machines and public displays.

Founder Jean-Francois Chianetta told CNBC that the app can eventually be used to generate life-sized models of dinosaurs and molecules in a classroom or the body of a patient. The principle behind Augment makes it feasible for teachers, builders, doctors and retailers to perceive objects at scale and decide whether they fit a certain set-up.

"It's really about putting products in one place to visualize them anywhere, and remove the uncertainties" Chianetta said. "It's a trend where the border between virtual and real is merging."

Clarification: Digi-Capital recently updated its estimates for VR/AR market growth to reflect the sector would reach $120 billion by 2020.