How to invest in the $150 billion virtual reality boom

Published Wed, Sep 7 20163:45 PM EDT

Computer-generated simulations of three-dimensional images, also known as virtual reality, could spark the next wave of technological advances, potentially becoming a $150 billion industry by 2022, according to estimates by Bank of America Merrill Lynch. Here are some of the companies at the forefront of this trend. "Augmented and virtual reality is breaking into the public consciousness through wildly popular consumer-focused technology such as 'Pokemon Go,' while even more profound commercial opportunities evolve in the background. The eventual convergence of AR [ augmented reality ] and VR [ virtual reality ] devices could push the nascent market to become the next electronic platform, and replicate the volumes reached by TVs, PCs and smartphones," wrote thematic investing strategist Beijia Ma. "Together with other innovation accelerators — artificial intelligence (AI), robotics, Big Data and wearables — AR/VR/MR [ mixed reality ] can drive efficiencies, transform established sectors and create new business opportunities," she said. According to her analysis, the technology, which aims to merge the gap between physical and digital experiences by allowing users to interact with digitally generated graphics through special equipment such as smartphones, has the potential to become the next "computing revolution." "It could be the one device to disrupt and rule the world of technology — bridging the digital and physical worlds for the 3.5bn internet users, 3.6bn mobile broadband users and 1.6bn with TVs globally," Ma said. By the early 2020s, the analyst believes 250-300 million users will be using the technology, with the potential to capture 75 percent of leisure time, and 50 percent of leisure dollars. "Future reality could be transformative for the education, entertainment, financial services, gaming, health care, leisure, media and retail industries. AR/MR will ultimately impact every sector and company by transforming how they communicate, design, manufacture, and sell products," she said. The analyst explains that more than 50 percent of organizations are already testing the technology to boost productivity, reduce costs and increase accuracy, among other uses. For this reason, "artificial reality is becoming the next Silicon Valley battleground," Ma points out, noting that $2 billion in venture capital investments have already been deployed in the space in the past 12 months. — CNBC's Michael Bloom contributed to this report.

Albert Gea | Reuters

"Augmented and virtual reality is breaking into the public consciousness through wildly popular consumer-focused technology such as 'Pokemon Go,' while even more profound commercial opportunities evolve in the background. The eventual convergence of AR [augmented reality] and VR [virtual reality] devices could push the nascent market to become the next electronic platform, and replicate the volumes reached by TVs, PCs and smartphones," wrote thematic investing strategist Beijia Ma.