1CONFIDENTIAL AND PROPRIETARY © 2017 by Frank N. Magid Associates, Inc. Any duplication, reproduction or usage of this document or any portion thereof without the written consent of the firm is prohibited.

WHERE INNOVATIVE RESEARCHFUELS LEGENDARY BUSINESSES

VR & AR – Consumer Perspective, Industry StatusFrom Here and Now to There and Then

2

THE HERE AND NOW

CONSUMER PERSPECTIVES AND BEHAVIORS, CURRENTLY AVAILABLE EXPERIENCES

3Market size

11.6

5.1

4.7

4.1

3.2

2.6

1.6

1.4

0.7

6.9

1.2

1.5

0.8

0.8

0.8

0.5

0.5

0.3

0 2 4 6 8 10 12 14

Video games

Healthcare

Engineering

Live events

Video entertainment

Real estate

Retail

Military

Education

Market in billion U.S. dollars

2025 2020

Note: Worldwide; 2016Further information regarding this statistic can be found on page 30.Source: Goldman SachsID 610112 8

PROJECTED SIZE OF GLOBAL AUGMENTED AND VR MARKET SEGMENTS 2020-2025FORECAST SIZE OF THE AUGMENTED AND VIRTUAL REALITY (VR/AR) MARKET WORLDWIDE IN 2020 AND 2025, BY SEGMENT (IN BILLION U.S. DOLLARS)

4Brands & platforms share

4,326

745

420

261

243

0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000

Samsung Gear VR

PlayStation VR

HTC Vive

Google Daydream

Oculus Rift

Unit shipments in thousands

Note: Worldwide; 2016Further information regarding this statistic can be found on page 78.Source: SuperData ResearchID 705476 38

GLOBAL VIRTUAL REALITY HEADSET SHIPMENTS BY BRAND 2016

VIRTUAL REALITY DEVICE UNIT SHIPMENTS WORLDWIDE BY VENDOR/BRAND IN 2016 (IN 1,000S)

5

A THIRD OF AMERICANS 18-64 HAVE USED A VR DEVICE

Magid VR/AR Consortium Tracker wave 2.

6

7

8

9

10

Content is King, but there is unlikely to be a moon landing moment to get the masses engaged.

It is likely to be a progression of many different exceptional VR content experiences rather than one—and location-based VR access will likely help the acceleration.

11

READY PLAYER ONE – IS IT GOING TO BE THE CATALYST WE’VE HOPED FOR?

12

WHERE WE ARE NOW – HOLOGATE

13

14

15

16

The Acceleration Study

A unique 8-month qualitative research initiative tracking the journey of VR Early Adopters from selection to purchase to usage over time.

17

WHO DID WE TALK TO?

• Taylor K., Plural, LA• Samsung Gear• Loves podcasts &

multitasking

• Brendan B., Millennial, ATL

• PS VR• 2 Kids & 2 dogs

• John P., Xer, NYC• Oculus Rift• Lifelong gamer

3

18-24

25-34

35+

5114

713

1818

WHAT ARE THEIR DEVICES?

TETHERED MOBILE

• Requires Samsung Galaxy S6, 7 or 8 phone

• Participants (6)Bin J.John-Michael P.Michelle W.Rebecca S.Robert L.Taylor K.

• Requires Google Pixel, Samsung S8, Moto Z or Huawei Mate 9 Pro phones

• Participants (2)Kat K.Mirandah R.

• Requires High-end PC

• Participants (2)Amber H.Steven D.

• Requires High-end PC

• Participants (3)Christopher L. John P.Kit N.

• Requires PlayStation 4

• Participants (6)Andrew C. Brendan B. David G.Jose H.Karley P. Marvin T.

19

VR Seen As Accessory

Across the board participants describe their VR headsets less as independent devices and more as accessories to their existing phones, consoles or PCs. This was true of both console and tethered users.

20

AFTER 4 MONTHS USAGE WANED, BUT EXCITEMENT REMAINED HIGH

Almost All Users Very/Somewhat Satisfied With Their VR Purchase

21

MOST USERS VERY/SOMEWHAT LIKELY TO PURCHASE AGAIN

22

VIRTUAL REALITY MARKETING REVENUE IN CHINA 2017-2021FORECASTED VIRTUAL REALITY MARKETING SECTOR REVENUE IN CHINA FROM 2017 TO 2021 (IN BILLION YUAN)

Note: China; 2016Further information regarding this statistic can be found on page 8.Source: Greenlight Insights; iResearchID 736663

0.1

0.3

0.6

1.2

2

0

0.5

1

1.5

2

2.5

2017* 2018* 2019* 2020* 2021*

Rev

enu

e in

bill

ion

yu

an

2

23

ANNUAL GROWTH OF THE VIRTUAL REALITY MARKETING SECTOR IN CHINA 2017-2021FORECASTED ANNUAL GROWTH OF THE VIRTUAL REALITY MARKETING SECTOR IN CHINA FROM 2017 TO 2021

Note: China; 2016Further information regarding this statistic can be found on page 8.Source: Greenlight Insights; iResearchID 736646

233%

180.2%

102.1%

84.8%69.9%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

2017* 2018* 2019* 2020* 2021*

Year

-on

-yea

r ch

ange

2

24

THE THERE AND THEN

WHAT CAN WE EXPECT TO SEE IN THE COMING 24-MONTHS

25

26Verticals & segments

0.6

2.3

6.6

12.8

0

2

4

6

8

10

12

14

2014 2015 2016 2017

Spen

din

g in

bill

ion

U.S

. do

llars

Note: Worldwide; August 2014; forecastFurther information regarding this statistic can be found on page 35.Source: Socintel360ID 548285 14

AUGMENTED REALITY AD SPEND WORLDWIDE 2014-2017

AUGMENTED REALITY (AR) ADVERTISING SPENDING WORLDWIDE FROM 2014 TO 2017 (IN BILLION U.S. DOLLARS)

27Verticals & segments

725.4 884.011,255.17

3,345.66

6,218.23

10,598.08

15,497.53

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2016 2017 2018 2019 2020 2021 2022

Rev

enu

e in

mill

ion

U.S

. do

llars

Note: Worldwide; 2016 to 2017Further information regarding this statistic can be found on page 37.Source: TracticaID 608990 16

CONSUMER AR APP MARKET REVENUE WORLDWIDE 2016-2022GLOBAL REVENUE OF THE CONSUMER MOBILE AUGMENTED REALITY APP MARKET (STANDALONE/EMBEDDED) FROM 2016 TO 2022 (IN MILLION U.S. DOLLARS)

28

AR AND RETAIL

IKEA – VISUALIZE FURNITURE PLACEMENT AND BUY ON THE APP

MODIFACE – AR MAKE-UP COMPANY THAT RECENTLY PARTNERED WITH MAC

29

Grocery Shopping with AR

30

THE WALKING DEAD ENCOUNTER – WITH MOUNTAIN DEW

Encounter Next Gen – “Our World” Trailer

31

Think VR and AR, not VR vs. AR.

Each have their own strengths and use cases– AR brings data and things to you and VR takes you away to anywhere in the world and beyond. AR has more immediate applications, a newly available mass audience. VR will be a slower ascent, but offers escape, immersion and unprecedented engagement.

32

33

AMAZON AND AR

34

HEALTH – WELLNESS, MEDICINE, FITNESS

KOLIBREE – AR TO ENCOURAGE CHILDREN TO BRUSH THEIR TEETH

UNIVERSITY OF SF – JUNE 2017 RESEARCH ON VR AS A VIABLE SOURCE OF EXERCISE

35

Location Based VR

Cruise Ship VR Experiences Chinese VR Amusement Park

36

NEW REALITIES OF TRAVEL

HOLOLENS TRAVEL EXPERIENCESYOUTUBE 4K VR VIDEO EXPERIENCE OF THE MALDIVES

37

MAGIC LEAP – MIXED REALITY

38

SANSAR

INTRODUCTION TO A NEW WORLD DETAILED FASHION DESIGN AND COMMERCE IN SANSAR

39

MIKE BLOXHAMSVP Global Media and Entertainment,MAGIDmbloxham@magid.com

DEBBY RUTHSVP, Global Media and EntertainmentMAGIDdruth@magid.com