The early stages of extended reality : An analysis of the opportunities and challenges faced by early stage businesses within the extended reality (XR) industry

Abstract: In recent years, the extended reality (XR) industry has witnessed remarkable growth, revolutionizing various sectors. The potential of XR to reshape industries and create new business opportunities has captured the attention of entrepreneurs and investors alike, leading to the emergence of numerous early stage businesses venturing into this exciting field. Despite the promising prospects, the XR industry remains in a dynamic and evolving state, presenting both opportunities and challenges for early stage businesses seeking to establish themselves within this competitive landscape. This master thesis aims to explore the experiences of early stage businesses within the extended reality (XR) industry, with the goal of understanding the opportunities and challenges they encounter in the current period of study, spring 2023. The study takes a qualitative research approach, employing observations of early stage XR businesses and semi-structured interviews with professionals within the industry and academia of XR. The analysis is based on thematic analysis applying Disruptive Innovation theory and Adoption Curve Theory combined with Gartner’s Hype Cycle. Together with existing literature the analysis creates a picture of the current opportunities and challenges that exists in the XR field, visualized in a prototype of a 3D mind map. These range from areas such as recruitment, financing and technology development to user adoption, ethics and inclusion. They reflect what businesses are facing in early stages of a relatively new industry as well as some of the political, economical and sociocultural factors. Some of the opportunities are high potential to transform and disrupt industries and markets, creating new ways of interacting in virtual worlds as well as new revenue streams. Some of the challenges are low adoption, funding issues and competition with leading players. Ultimately, the research provides valuable insights of the XR industry which could be used when making strategic decisions for professionals and stakeholders.