Virtual reality companies – a golden opportunity for Aussie investors

Wilson Zhang 16 January 2017

virtual reality main body image

There may be a shortage of Australia VR companies to invest in right now, but VR is tipped to be the next revolution after the smart phone.

Virtual reality (VR) has been referred to as the Holy Grail that multiple industries have been waiting for. As such, VR developers present a great opportunity for all Australian investors. Unfortunately, there are very few VR companies currently listed on the ASX, although Aussies can always invest in the many other tech giants who are currently spending top bucks on VR development.

What is VR?

Virtual reality, and its cousin augmented reality, is the digital simulation of a hyper-realistic environment that users can interact with in real time. VR has been predominantly used in the gaming and entertainment industries, but has the potential to be employed across almost every other industry, including education, training and retail. For example, VR may have a prominent future in real estate and Alzheimer’s Australia has demonstrated VR’s utility through an app called EDIE, which simulates how people suffering from dementia experience the world.

The next Holy Grail

Many believe that virtual reality marks the fourth revolution in digital technology, after computers, the Internet, and smartphones. It has already stormed the gaming industry, which has an annual worth of $110 billion. At this year’s E3, the largest gaming convention in the world, you could find a VR booth around almost every corner. Research suggests that by 2020, the virtual reality industry will be worth more than $150 billion.

Whilst the number of Australian game developers is currently limited, video games present a highly profitable export opportunity for Australia, with the average developer earning over 90% of their revenue from the international markets. Research has further predicted that by 2020, 2.5 million Aussie households will own a VR headset. Australia’s potential has been recognised by the company Deloitte, which acquired the Melbourne media rendering and virtual reality studio Kids Neon just this September. We have talked to many international game developers about their VR ambitions, including developers for Deus Ex, Mr Robot and Gran Turismo.

Almost every tech company around the world is engaged in a race to develop a VR operating system and is fighting to claim the world’s virtual reality ‘real estate’. Chris Curran, chief technologist at PwC, reports in his 2016 Global Digital IQ survey that out of more than 2000 IT and business leaders, 10% are heavily investing in augmented reality and 7% are investing in virtual reality. This figure is expected to grow exponentially year by year and reach 24% and 15% respectively by 2020. The more prominent players include Google, Microsoft, Facebook, Samsung, Sony and HTC. Even Apple has been quietly acquiring VR companies and is rumoured to be launching a VR headset with the next iPhone. Entertainment and game developer companies in China are also making substantial investments in VR hardware and software.

Cosmo Scarf, co-founder of VRLA, an industry leader in VR explains that virtual reality provides an immersive experience which can’t be found in any of its predecessors. You can enter into any world you dream of and interact with it in whatever way you desire.

If you are confident about VR and are interested in taking advantage of the boom, you can invest in these international tech giants through Australian online share trading platforms.

VR developers in Australia

Many developer companies in Australia are still in their startup and early stages. Nonetheless, developers, such as Humense which has its headquarters in the inner west of Sydney, have successfully scored funding from major global tech brands.

Earlier this year, Humense landed a deal with CRCM/Youku Global Media Fund. The private venture fund, a joint venture between Alibaba and CRCM Venture Capital, has invested an undisclosed amount in Humense.

Humense’s technology focuses upon providing a human-to-human communication medium to its users, allowing them to connect with each other “face-to-face” in real time. Differentiating itself from the VR platforms that are currently on the market, Humense’s VR platform also allows users to walk around the generated virtual landscape. Despite only being founded in 2015, its three young co-founders have the ambitious vision to enable every person on the planet to see another person through VR technology.

If you would like to invest in developers that are listed on the ASX, you have a couple of choices. The Australian-listed GoConnect Ltd (ASX ticker GCN) has declared through Go Green Holdings that it will incorporate VRCC as a subsidiary company based in Hong Kong. VRCC says their main focus is to leverage the already mature smartphone market in China. This market is estimated to grow to one billion users by 2020. Currently, one of VRCC’s major projects is a celebrity curated virtual reality shopping experience. VRCC says that the goal of this project is to become the leader in VR retailing within the next year.

The US-based developer, Strata, is currently working on raising pre-IPO capital and is set to become ASX’s first VR software company in the first half of 2017. At this stage, the company is aiming to obtain $3 million from private investors. Strata is a pioneer in 3D modelling software and its products have been used by many global brands, including Apple and McDonalds. The IPO is planned for June 2017 and is expected to raise another $15 million. John Wright, chief executive officer of Strata, states that virtual reality will find the most potential in corporate training and education. Strata’s initial software will be competitive with the Oculus Rift and HTC’s Vive and is expected to list with the ASX ticker “S3D” in 2017. You will be able to invest in Strata’s IPO through one of our many online share trading providers.

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2 Responses

  1. Default Gravatar
    RustyAugust 11, 2017

    Hi people, do we have any digital REIT on the ASX?
    They are quite big and growing in the States
    Thank you

    • Staff
      JonathanAugust 11, 2017Staff

      Hello Rusty,

      Thank you for your inquiry.

      A-REITs (Australian real estate investment trusts) are managed funds that give investors an option to property assets, which is in ASX.

      As a managed fund, this is pooled investment from different investors for large-scale development, which is not usually available for individuals due to its costs. It is the fund manager who decides which properties to pick and how to administer them on the fund. The usual property options are:

      – Industrial trusts invest in warehouses, factories, and industrial parks
      – Office trusts include medium- to large- scale office buildings in and around major cities
      – Hotel and leisure trusts invest in hotels, cinemas and theme parks
      – Retail trusts invest in shopping centres and similar assets
      – Diversified trusts invest in a mixture of industrial, offices, hotels and retail property.

      You may visit ASX website to know more about this fund or consult a fund manager.

      Hope this helps.

      Cheers,
      Jonathan

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