The United States may have unrealized opportunities to accelerate the broad benefits of virtual reality (VR) technology. Mainly seen through the lens of international competition, US efforts to organize and stimulate the virtual reality industry have been relatively limited. In addition, the lack of focused support and attention could risk spawning various threats from competing nations.
Although virtual reality has been widely used in the entertainment industry, it has a wide range of potential applications that span various economic sectors, with relevance to public and national security interests. These applications include law enforcement training, empathy training, military situational awareness, health treatment, data analytics, counterterrorism, travel, cultural awareness. , etc. VR doesn’t just entertain people; it ultimately helps save lives. But, as evidenced by the relatively low adoption rates, the industry has yet to reach its potential. One of the reasons for this lack of more widespread use is that many consumers are unfamiliar with the technology and unaware of the usefulness it provides outside of the entertainment industry.
The lack of stimulation of the virtual reality industry is compounded by the significant and growing competition from China. Chinese President Xi Jinping expressed great appreciation for the value of virtual reality, noting that “new technologies such as artificial intelligence and virtual reality are developing by leaps and bounds” and “the combination of the economy virtual and real economy will bring revolutionary changes. to our way of working and living.
The fact that China sees virtual reality as a central and important technology should turn heads in the United States. Americans could easily look into the past to see why it would be a mistake not to foster growth with this technology.
In the late 1990s and into the 2000s, analysts missed the fact that the foundational foundations of the technology platforms of companies like Facebook and Google had the ability to expand past applications limited to entertainment and utilities. lightweight, and dramatically reshaping the world. Facebook got its start as a somewhat unimportant platform exclusively for students. As the company began to outperform its competition, most political analysts and investors initially ignored it. For all intents and purposes, social media seemed like an insignificant entertainment problem outside of the investment paradigm. Google was similar in this regard. People were certainly interested in Google’s financial growth, but their potential impact on social structures and policies was minimal.
Like social media, virtual reality could have a substantial impact on the global economy in several sectors. Thus, providing leadership in this area could be important both in terms of economics and public policy. As the United States has a rapid advance in VR development and applications, there could be three main reasons for concern regarding competition from China. First, Xi Jinping shows a keen interest in this technology, which can have substantial implications in terms of development and adoption. Appearances such as photo ops at Chinese virtual reality facilities are a strong sign of its support for this technology, ensuring continued investment and public interest in virtual reality. The structure of the Chinese government gives Xi a unique ability to choose technologies as focal points and quickly mobilize relevant sectors of the economy. Xi’s attention has already produced two strategic public-private industrial partnerships to organize the industry, and this has spurred the inclusion of virtual reality in notable policy initiatives such as Made in China 2025 and the 13th Five-Year Plan.
Additionally, China has issued policy guidelines specifically for virtual reality. Second, China, which already has a large domestic market, has sparked interest in the technology by creating more than 3,000 VR arcades across the country, which could help drive demand for more serious applications. , as users get used to VR hardware. The advantage of the size of the domestic market is compounded by China’s ability to achieve wide distribution at relatively low prices. Third, China has an efficient system to organize its industrial base and establish supply chains. China has developed what it calls “VR Cities”, also known as “VR Cities”. So far, two cities have been chosen as VR cities, both in the early stages of development. Each VR city will employ a multitude of VR applications in a variety of fields such as medical, education, business, design and entertainment. In addition, the city will have industrial parks that will connect different points of the VR supply chain.
Of particular importance is the efficient organization of supply chains for emerging technologies, which has become evident during the boom in the commercial drone industry. The United States once led the industry, but Chinese company Da Jiang Innovations now dominates it, controlling more than 70% of the global commercial drone market. Part of this dominance is due to the construction of industrial parks that bring together several components of the supply chain, especially parts that would otherwise come from distant and disparate locations. As a result, a prototype drone that takes two weeks to manufacture in the United States can be produced in a single day in Shenzhen, the center of China’s attempt to organize technology supply chains. In turn, this consolidated process provides a cost advantage of 50% to 60% when it comes to manufacturing components. This is a deadly combination for competitors, and the VR Towns China set up could serve the same purpose.
These three concerns could lead China to dominate the United States when it comes to VR technology. The large domestic market and adoption rates create a high demand for content and material, which will drive the market. Xi’s personal attention likely ensures that there will be enough resources, especially labor and capital, to fuel the industry. Finally, industrial parks make it possible to shorten the lead times for prototypes and reduce costs. If China can generate more demand for Chinese products and provide those products at lower prices and faster rates, then it will compete with the United States in this sector more aggressively and be able to reap the benefits more efficiently.
Given the potential value of VR as a tool and growing competition from China, the United States could devote more energy to advancing VR in a coordinated manner. The United States does not lead industrial development like China does, because it is not a “command economy.” However, the United States forged public-private partnerships by establishing research institutes for different industries. The manufacturing industry is a perfect example. The National Network for Manufacturing Innovation, also known as Manufacturing USA, is a series of interconnected research institutes that use public-private partnerships to drive the development of innovative manufacturing technologies. This network was created through the efforts of several federal agencies, including the Department of Defense and the National Science Foundation, and supported by a significant financial investment. The creation of a research institute with increased capacity to organize supply chains between companies could allow the United States to better compete internationally with virtual reality capabilities. More importantly, such a partnership could encourage US developers and distributors to visualize the future of the virtual reality industry as a whole. Otherwise, America risks missing out on an opportunity to excel internationally with valuable and widely applicable emerging technology.
William Shumate is Associate Policy Researcher at the non-profit, non-partisan RAND Corporation.
Tim Marler is a Senior Research Engineer at RAND and Professor at the Pardee RAND Graduate School.