HITS Connections

The Seattle area is turning into a major center for augmented reality (AR) and virtual reality (VR) technology innovation, the economic development organization Washington Interactive Network (WIN) said Oct. 11, citing a new report, commissioned by WIN, by research company Community Attributes.

Several companies from the Seattle area touted AR and VR at the Immerse Summit Oct. 11 in Bellevue, Wash., including software company Envelop VR and Pluto VR, which was started by PopCap Games co-founder John Vechey.

The number of interactive media (IM) businesses in Washington has grown from 150 in 2007 to 423 in 2016, according to the report, which attributed that expansion to two key driving factors: growth in the industry itself that has resulted in the establishment of new businesses, and increased participation in WIN that has led to improved measurement of the number of active IM companies in the state. Since 2007, the total number of IM businesses has increased by more than 180%, or a compound annual growth rate (CAGR) of 12% between 2007 and 2016, according to the report.

Between 2013 and 2015, total employment in Washington’s IM cluster showed CAGR of nearly 16%, according to the report. In the same time frame, employment at IM companies grew, while the number of companies participating in the cluster grew. Helping to generate that growth was the fact that IM employment in the state’s largest firms — Amazon and Microsoft— increased from an estimated 6,400 employees in 2013 to an estimated 13,000 in 2015. In addition to experiencing strong growth, those large companies are increasingly participating in IM activities, including AR and VR, according to the report. “This is exemplified by the rapid growth” of Amazon Game Studios through the purchase of Double Helix Games and Twitch in 2014, as well as Microsoft’s development of the HoloLens holographic wearable device and continued development of its Xbox video game console product line, the report reads.

Another major factor in the growth of the cluster between 2013 and 2015 was an increased number of firms located within the state, it said. Google and Facebook are among the companies located in Washington, the report pointed out. Google has been a major VR player, as has Facebook through its $2 billion purchase of Oculus Rift in 2014. Total employment at Google reached 1,400 people in Washington in 2014, according to the report. Although a large percentage of those employees are focused on Google’s web and cloud services, that company is increasingly participating in the mobile and entertainment markets, which are both key areas of growth within the IM cluster.

Between 2013 and 2015, the number of companies participating in WIN has grown sharply, according to the report. Since 2013, 93 new companies joined WIN, self-identifying as IM companies, the report said. More than 40 of the 423 total companies are working or providing services in the AR and/or VR fields, including Envelop VR, Microsoft, Amazon, Oculus and VREAL, the report went on to say.

Total employment in small and mid-size employers in the IM cluster grew from 8,300 in 2013 to 13,000 in 2015, CAGR of more than 25%, it said. A large portion of that growth was attributable to the 93 new firms participating in the cluster, it said.

Between 2011 and 2015, revenue in Washington’s IM cluster increased 6.1% annually, according to the report. Revenue grew from $16.9 billion in 2011 to $21.4 billion in 2015.

The popularity of the Niantic-developed mobile game “Pokemon Go” has been “one of the largest breakthroughs” for AR in the casual game and social media markets, WIN said in a news release. Although Niantic is based in San Francisco, the company received licensing rights to make the game from Nintendo, whose North American division is headquartered in Redmond, Wash. Nintendo is mulling over the use of VR in its games also, president Tatsumi Kimishima said earlier this year. (https://www.google.com/search?q=company+president+Tatsumi+Kimishima&rlz=1C1TSNO_enUS506US617&oq=company+president+Tatsumi+Kimishima&aqs=chrome..69i57.353j0j8&sourceid=chrome&ie=UTF-8)

There is a “deep talent pool” in video game development in the Puget Sound region, Kristina Hudson, WIN executive director, said in the news release. “A lot of investment dollars are flowing” to AR and VR, she added.

In addition to the 20,800 estimated people employed at Washington IM companies, there are an additional 2,400 freelance workers there, WIN said.