The market industrial solutions VR/AR in Russia the Research of TAdviser

Introduction

Subject, technique and structure of a research

For a research the direction which is still not too widely lit in business focused and IT editions – award enforcement, based on technologies virtual (VR – Virtual Reality) and added (AR – Augmented Reality) of reality was selected from the industry.

Industries to which attention was paid during the research are those which show interest in solutions based on VR/AR and within several years move to real life application of such solutions in production processes – an oil and gas sector, petrochemistry, metallurgy, the mining industry, power.

The technique of a research assumed work in two formats:

• documentary research: studying of available analytics, publications on the websites of the identified market participants, news in profile editions, etc.;
• field survey: poll of market participants (mainly, customers/users of solutions VR/AR), direct contacts with the famous subject VR/AR specialists.

The studied analytical materials (see links in footnotes) included, generally the western sources since relevant Russian analytics on the matter exists very little.

The basic facts, trends, qualitative and quantitative forecasts published in the studied materials are given with comments of experts of TAdviser in sections "Analytics of the market" and "The general trends of the market".

The companies for field survey were selected as from among those who already openly "lit" the activities in this direction, and those who conduct works without publication of the received results so far. Were sent to provide all of them short questionnaires with a request information on a current status of their projects in the direction of VR/AR and plans for the next 2-3 years.

Information obtained in a survey result is combined with information collected from the open sources and additional materials provided by the companies. Results of processing of this information and key quotes of speakers from the companies are presented in the section "A situation with solutions VR/AR in Russia".

Feature of the conducted research is also that TAdviser for the first time made an attempt to estimate the Russian market industrial solutions VR/AR from the financial point of view, based on VR/AR projects economy model (the section "VR/AR projects Economy"). Results of assessment of the current market size and the forecast till 2022 are presented in the section "Market assessment".

Shortly about an object of research

The audience of TAdviser does not need to explain that such VR and AR - terms are widely known and rather popular for a long time not to begin each publication about them with an explanation that they mean. However, the format of a research assumes that basic terminology of data domain and data domain should be accurately designated – in order to avoid false interpretations.

Let's use for determination of the basic concepts classical formulations of Gartner Group ^[1]:

Virtual reality (Virtual Reality, VR) provides itself the three-dimensional environment generated by computer means which surrounds the user and reacts to his actions naturally, is normal using immersive (providing complete effect of presence) wearable (HMD - head-mounted devices/displays) displays. Controllers of recognition of gestures or portable manual controllers provide tracking of provisions/movements of hands and a body, and may contain also means tactile (or touch) a feedback. Space based (room-based, CAVE – computer-aided virtual environment) systems provide three-dimensional perception when moving on the big areas or can be used by several participants at the same time.

Augmented reality (Augmented Reality, AR) is use in real time information in the form of the text, diagrams, audio and other virtual expansions integrated with objects of the real world and provided using a wearable display (HMD – a helmet or points of virtual / augmented reality) or the projected graphic imposings. Presence of elements of "the real world" distinguishes AR from virtual reality (VR). AR aims to improve interaction of users with the environment, but not to separate them from it.

The solutions VR/AR market represents rather motley picture – along with the large IT companies and integrators which are present at the market not one decade (and included in the product portfolios and VR/AR services when the economic potential of these technologies became clear and obvious), the services offer absolutely young companies and startups which at once relied on these technology directions.

The Russian market of suppliers of solutions VR/AR in many respects repeating trends and dynamics of the western market (with rather small time lagging) is presented in the section "Developers and software suppliers for VR/AR".

Analytics of the market

In general, the situation with analytical maintenance of the market industrial solutions VR/AR (especially for Russia) is far from ideal. When certain popular scientific (with a considerable distortion in popularity and in consumer segment of the market) hype concerning VR/AR constantly is present at media, news about industrial solutions appear infrequently – as a rule, in the form of press releases of the companies advancing the practices (often – the level of technology startups, is more rare – in the form of complete solutions from the large IT companies and system integrators).

Western sources

During operation over this overview experts of TAdviser studied rather large amount of the western analytical materials devoted to solutions VR/AR both from the technology point of view and in terms of projections on sizes of the market of solutions VR/AR in general and its separate segments, turning on also a subject of this overview – industrial solution VR/AR. On the relevance (publication time) these materials were, generally in the range of 2017-2018 (the "freshest" materials on date of publication belong to December, 2018 and even by January, 2019), however, a big difference in market forecasts that one-and-a-half-year that experts did not detect two-three-months prescription. In essence, all estimates on market sizes are based only on sales forecasts of HMD devices and the accompanying software applications. Assessment on sales of services of implementation, integration, maintenance of VR/AR-applications without which any serious IT project does not do in all analytical materials are absent.

Gartner Group

And the least engaged from the commercial point of view in the market for a long time the researches Gartner Group are recognized the most authoritative. For this reason we will begin the overview and citing the western sources with the materials Gartner.

Two last on time of the publication of the diagram of "Hype Cycle for Emerging Technologies" (2017-2018) are given in Fig. 1. The absence of VR on the diagram of 2018 attracts attention.

The position of analysts of Gartner consists that the VR technology as such should not be present at the diagram of hype any more for the developing technologies because it reached a maturity in terms of expectations of users and implementable opportunities and by that stopped being developing (emerging). Graphically it means that the VR technology came to "the plateau of productivity" and, having passed it, left to the right "for the horizon". But, instead of VR on the diagram there was a Mixed Reality technology (the mixed reality, MR) which, by estimates of analysts, is on the descending trajectory branch after "a pica of the overestimated expectations", moving towards "a failure of disappointments" and having the forecast for achievement of a maturity of 5-10 years. However, according to specialists of one of the Russian companies which are actively working at the VR/AR market for Russia such terminological replacement is obviously premature – customers only just began to get used to terms of VR/AR and to distinguish them so, change of names can affect perception by customers of new technologies and their readiness to purchase the solutions which are based on these technologies not in the best way.

Comment of TAdviser: According to experts of TAdviser, the diagram of 2017 displays a picture of perception VR/AR technologies, more relevant for Russia, than the updated option of 2018.

Gartner about Virtual Reality technology

Immersive VR-applications are more advanced, than other types of graphic modeling, and exit time for "the plateau of productivity" from two to five years will be approved with awareness, acquaintance to technology and the general perception by consumers and more traditional "consumer" application in business.

The VR technology can support a broad spectrum of applications for modeling and training, including special trainings and response to extraordinary events. VR can also reduce design cycles due to joint work and expand possibilities of the user interface for scientific visualization and education. The enterprises will be won thanks to the immersive VR interfaces helping to increase efficiency of accomplishment of tasks or to cut down the expenses connected with design of a new product or can improve understanding of information using advanced technologies of graphic visualization and modeling.

As of 2017 analysts of Gartner estimated a technology maturity as insufficient (in the original the term "adolescent" - teenage is used) and the more so it is surprising that in a year the level of a maturity of technology was estimated as sufficient to bring VR out of the list of the developing technologies.

Gartner about Augmented Reality technology

The current state of AR technology best of all is suitable for specialized solutions. Now AR should fight against mismatch of expectations of customers to the overestimated marketing promises (suppliers promise the solutions which are beyond the current opportunities of technology and the equipment), weak implementations (for example, the solutions delivered without profound knowledge in the development area, integration of workflows or compared with business of the importance and requirements) and lack of standards (functional compatibility, content production, frameworks, etc.). More perfect and simple hardware in use in combination with more convincing options of use are necessary for achievement of further progress. Based on the analysis of Gartner and industry news, it is possible to claim that B2B AR continues to gain steam as more and more enterprises realize the value of use of AR in the workflows and other processes. Growth in sales of HMD reflects rough deployment of pilot projects.

Using sensors of devices, the AR technology works as digital expansion of feelings of users and serves as the interface for people in the physical world. It provides the digital filter for expansion of a user space with relevant, interesting and/or useful information. AR connects the digital and physical world. It has an impact both on internal, and on the solutions focused outside. For example, internal application of AR can provide value, strengthening training, improving maintenance and joint work. In the outside world the AR technology offers brands, retail sellers and marketing specialists an opportunity to freely integrate physical campaigns with the digital assets. Thus, AR is widely applied in many markets, including games, industrial design, digital commerce, marketing, the mining industry, engineering, construction, power and municipal services, automotive industry, logistics, production, health care, education, a customer support and service on places.

ARtillry Intelligence

The ARtillry Intelligence company as it is possible to guess it by its name, is a specialized analyst of the VR/AR market and one of the few whose most relevant reporting materials on time can be found in open or half-open access on the Internet.

Report of ARtillry company ^[2] is of interest to this research not so much in terms of estimated forecasts of global market of VR/AR in terms of money (which cannot practically be correlated to realities of Russia in any way), how many from the point of view of recorded trends on change of a ratio between consumer ("entertaining") VR/AR and solutions of industrial orientation:

• In the next 3-4 years (and for Russia this term should be increased up to 4-6 years) the steady trend of increase in a share of corporate VR/AR-applications in comparison with applications of consumer orientation will be observed. At the same time growth rates of a segment of corporate VR/AR will be significantly higher than growth rates of consumer segment;
• On the horizon of 2020-2022 of the application of industrial orientation will bypass consumer applications on volumes of segments of the market and will continue to increase, a separation from them;
• In a corporate segment of the market in value term of an AR-application will be significantly (practically – much) to advance VR-applications;
• Within a corporate segment of AR the largest volume (more than 40%) will be occupied by applications of industrial orientation, and some of the most popular educational applications will lower today the share approximately to 4-5%.

CapGemini Research Institute

The most relevant on time of the publication and the most corresponding to scope of a research of TAdviser is the report of CapGemini Research Institute company "Augmented and Virtual Reality in Operations: A guide for investment"^[3] – it is published in September, 2018 and became available on the Internet already when work on this research was in an active phase.

The report is based on the broad poll of representatives of the industrial companies of three industries (automotive industry, mechanical engineering, power supply and utilities in housing and public utilities) held within May-June, 2018 in six countries / regions - the USA, Germany, France, Great Britain, China and the Scandinavian countries (Sweden, Norway, Denmark, Finland). Total number of respondents was more than 700 people (on one representative from each company), the representation on the industries was approximately equal. Annual revenues of the companies participating in poll are in range from $500 million up to $10+ billion. Materials of the report CapGemini repeatedly will be quoted further in this overview – where the provided data will be most relevant to cases in point.

Russian sources

The Russian analytics and news publications on the VR/AR market, in general, and in the direction of the industrial focused solutions, in particular, do not indulge the interested readers either a variety and volumes of publications, or frequency and regularity of their emergence.

Sources of 2016-2017.

From the most noticeable (though, already too enough remote in the past) the Russian analytical materials it is necessary to call:

• the research of Institute of modern media (MOMRI) "The market of virtual reality in Rosii-2016" published at the beginning of 2017;
• poll of MOMRI in cooperation with Croc company and the Vesti Economy portal.

Based on materials of the mentioned poll, TAdviser also created the list of the industries concerning which the research of practical application solutions VR/AR was conducted.

From regularly published media the VC.Ru resource more or less constantly pays to the subject VR/AR attention – there is a special section devoted to these technologies, but also it has certain "distortion" towards consumer applications.

At the same time in one of sources experts of TAdviser did not manage to detect estimates of the Russian VR/AR market in terms of money.

To some extent it is also possible to consider as analytical material a poster card "The market of augmented and virtual reality in Russia for 2016", (ADVR) prepared by Association of augmented and virtual reality. It is interesting to note that this material was detected lying in open access on Google Drive by search on the Internet of materials for this research, but on the ^[4] the link to this material was not.

Unfortunately, later option of such material was not found – most likely, it was not updated any more. This poster is of interest not only as a historical artifact, but also as demonstration of market situation of VR/AR in Russia which for last two years essentially did not change:

• Bulk is made by the small companies, design studios and startups;
• In the market the companies creating VR/AR-applications and content of consumer and entertaining orientation prevail;
• Industrial solutions VR/AR (which is also found not at once on the card) belongs to a segment only several companies (and by the way, on the card one of the most famous Russian developers in the field of VR/AR – Unigine company is not detected at all).

A number of the companies provided on the card for last two years left the market, some changed names (and even not once). For obvious reasons on the card the companies created only in 2017-2018 are not provided.

It would be logical to expect that the card poster will be added by the help text containing, at least, short data on each of the companies provided on the card. However, no references of existence of such text were revealed. It is necessary to hope, something ADVR, or the invited researchers in the near future will update the card and will supply it with the informative description.

Report of KPMG (January, 2019)

Already during completion of work on this overview, in January, 2019, the Russian-language report of KPMG 'Digital Technologies in the Russian Companies'^[5] was published^[6]. And though the report is devoted to the whole group of digital technologies (to some extent crossed with the list of end-to-end digital technologies appearing in documents of the National program "Digital Economy of the Russian Federation", but not completely identical to the last), in it also rather interesting data relating to VR/AR are submitted.

Statistics of KPMG concerning VR/AR technologies:

• In the list of the used VR/AR technologies for popularity take the penultimate (7th) place.
• In an industry section most actively VR/AR are used in a segment of the IT companies (40% of respondents), metallurgy (33% of respondents), in a telecom and the oil and gas industry (on 25%)

It is also worth noting that the popularity of VR/AR as technology trend (according to KPMG) considerably concedes in Russia to popularity of VR/AR on a global scale (according to Gartner) – in Russia VR/AR are in the eighth place from eight, and in the world – in the sixth place from 10.

Only 21% of the participating companies polled by KPMG noted that they are going to implement solutions using VR/AR technologies in the next 2 years. Most likely, such rather low share means that (or have no convincing feasibility statement at the order) what specific benefits can provide for business of the solution based on VR/AR do not understand the company yet.

Industrial solutions based on VR/AR technologies

VR/AR technologies allow to perform reengineering of the existing processes and to transform a value creation chain. The main directions of use VR/AR in the industry:

• Design and assembly: digital modeling of construction and transactions of the equipment, testing and change of digital model before implementation "in metal";
• Training in the immersive environment: immersion of the worker in the virtual environment allowing to make decisions in a safe and/or digital situation;
• Checks and quality assurance: fast, careful monitoring and control using visualization tools and informing;
• Repair and service. use of visualization and informing in real time, for the purpose of support of accomplishment of problems of service or repair.

According to the analytical report of CapGemini company, the most popular spheres of implementation of solutions VR/AR are repair and service of industrial equipment; on the second place there are a design/designing and assembly.

Treat the most demanded solutions VR/AR types:

• Complex simulators and exercise machines for training of operators and repairmen of difficult technology equipment;
• Exercise machines and simulators of a military/a special purpose (aviaexercise machines for pilots, "the virtual battlefield");
• Applications of remote presence (remote examination, telemedicine);
• Applications of architectural, design and scientific visualization;
• The geomodelling applications which are applied in the extracting industries (oil and gas production, mine developments).

Scenarios of use

Experts of TAdviser grouped the list of the main business scenarios of use of VR/AR technologies from the report of CapGemini, having complemented them with links to the Russian companies in which are already used in the pilot or industrial modes In Tab. 1 the main scenarios of use of VR/AR technologies are provided in the industry. Designations of the reached benefits:

+++ - High extent of implementation of a factor of benefit / the Most important benefit reached in the scenario;
++ - Essential extent of implementation of a factor of benefit;
+ - The factor of benefit is implemented at the level, sufficient for practical application.

Tab. 1. Business scenarios of use VR/AR-tekhnologiysokrashchenny ^[7]

Scenario of use	Tekhn.	Saving of time  ↓	Decrease in errors ↓	Complexity of transactions ↓	Increase in an eff-ta ↑	Increase in a bezop-ta ↑	Increase in a proizv-ta ↑	Cost reduction ↓	' Examples in Russia'
Digital instructions for assembly/dismantling and configuring of the equipment. Use of assembly instructions in learning process.	AR	++	+++	++	+		++		SIBUR (plans)
Virtual trainings on assembly / dismantling, repair and hardware maintenance	VR				++	++	++		Gazprom Neft, Severstal, SIBUR, the Russian Railway
Virtual trainings on work in the conditions of the increased danger. Virtual trainings on behavior in extreme situations and accident elimination	VR		+++			+++		+++	Gazprom Neft, Severstal, SIBUR (plans), MMK
Implementation of the Removed Expert mode for the purpose of the help and the leadership in actions of an operations staff	AR	++	+	+	++	+	++		Gazprom Neft, SIBUR
Imposing of the machines given in real time on real parts.	AR				++	++	++		Gazprom Neft, SIBUR (plans)
Comparison of physical and virtual versions of the equipment.	AR	++	++		++			++	Gazprom Neft
Watching help videos and digital guides Visualization of historical records of maintenance and submission of recommendations about the carried-out tasks	AR	+++	+++		++	++	++	++	Gazprom Neft
Visualization of the infrastructure project from the different points of view Visualization of specific components and functions behind physical borders of the equipment	AR			++	++	++	++		Gazprom Neft, SIBUR, Severstal (plans)
Visualization of 'the digital double" for the purpose of simulation of the real environment	VR/AR	+			++	+	++		Gazprom Neft, SIBUR,
The preliminary concept of design which is completely created by means of VR	VR	+			++	++	++	+++	Gazprom Neft
Remote interaction between different locations for the purpose of viewing the same design data and permission of conflict situations	VR/AR	+++			++		++	+++	Gazprom Neft
Electronic borders of dangerous zones	AR		++			+++
Virtual survey of the production site	VR	++			++	++	++	+	Gazprom Neft. Evraz, MMK, SIBUR
Change of a foreshortening at visual inspection of the equipment	VR				+	+	+		Gazprom Neft

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Source: CapGemini (processing and addition – TAdviser)

Examples of the applications which are based on the corresponding scenarios from Tab. 1 are presented in Tab. 2.

Tab. 2. Examples of implementation of scenarios of use of VR/Arsokrashchenny ^[8]

Scenario of use VR/AR	Example of implementation of the scenario
The preliminary concept of design which is completely created by means of VR	Engineers and designers of the European carmaker use VR for effective collective interaction when studying configuration of the projectible car without physical prototyping. Result – significant reduction in cost of design and designing.
Visualization of the digital version of the equipment in the production environment for the purpose of display of an end product	The European aviation consortium uses VR for integration of digital models on production Wednesday, providing for collectors access to an airplane 3D model in a production process. Result – reduction of time necessary for control of assembly works, from three weeks to three days.
Visualization of 'the digital double" for the purpose of simulation of the real environment	Researchers of large-scale electrotechnical and machine-building concern use virtual sensors (full-function computer models of real sensors) for studying of features of their functioning on condition of possible placement in the engine. The AR technology provides for users a possibility of observation of exact model of the engine and its internal device with simultaneous imposing of the image of the demonstrator explaining features of operation of the modelled equipment.
Virtual trainings on assembly / dismantling, repair and hardware maintenance	The personnel of the large European power company holds trainings using VR helmets on performing procedures and operations for development of skills on service, repair and replacement of the equipment, increasing efficiency and increasing security. Result – work performance improvement, risk reduction for personnel.
Remote interaction between different locations for the purpose of viewing the same design data and permission of conflict situations	Designers and designers of large car maker will organize virtual meetings on discussion of the project of the new car, being in different geographical locations on considerable removal from each other. Result – economy on traveling expenses, timely access to up-to-date information on the project, development acceleration.
Digital assembly instructions and to configuring. Use of assembly instructions in learning process	The American aircraft manufacturing corporation equipped assembly crews with the AR points providing a possibility of viewing wiring layouts of electric cables directly on site of execution of operations and without the need for the addressing paper documentation. Result – reductions of time of installation works for 25%, decrease in errors at installation to zero.
Virtual survey of the production site	In the large energy company of VR technology and real production data are used for fast and safe inspection of the working equipment. Result – reduction of risk of getting injured by personnel, the help in identification of the place of failure or accident.
Implementation of the Removed Expert mode for the purpose of the help and the leadership in actions of an operations staff	Technicians of the automobile company uses the AR points projecting step-by-step instructions and art works in sight of working, at the same time allowing removed experts to watch the executed transactions and providing a necessary assistance from them. Result – reduction of time of problem solving in service up to 40%.
Digital representation of design	The large automobile company successfully completed the proceeding about a year the project of development of the new concept car, having provided for designers and designers an opportunity for work with digital representations of design and components of the car as if it were fragments of the real car. Result – reduction of time for the analysis and discussion of design, reduction of time of development.
Watching help videos and digital guides. Visualization of historical records of maintenance and submission of recommendations about the carried-out tasks	Workers of one of the leading automobile companies take the picture of defects before correction, use help videos in a repair production process, add own comments and video as instructions for the subsequent contractors of similar transactions.
Visual imposing of digital data about a status and an operation mode of the equipment on matching components of the equipment	In the company servicing a difficult pipeline equipment, an AR layer is used for information display about the proceeding processes and instructions on control of valves and switches and also for the indication of optimal adjustments of controlling units of the equipment. Result – risk minimization and the informed decision making.

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Source: CapGemini (transfer – TAdviser)

As each of scenarios is characterized by two key parameters – complexity of implementation and the reached benefits, – the most interesting analysis result of CapGemini is the matrix of ranging of scenarios in space of coordinates "Complexity – Benefits" which can the good tool for decision making about deployment of solutions of different types in specific conditions organizatsiiv the report of CapGemini ^[9].

All possible scenarios of use of VR/AR were distributed on four quadrants of a matrix, according to their relative complexity for implementation and the provided business benefits (see Fig. 2). Quadrants defined categories of priority of implementation:

• "It is obligatory to implementation" (Must do): the scenario provides double advantage – high benefit and rather low complexity of implementation;
• "It is necessary to implement" (Need to do): the scenario provides big benefit, though with high complexity of implementation;
• "It is possible to implement" (Can do): low complexity and the low provided benefit;
• "Implementation depending on circumstances" (Do case-by-case): high complexity and low benefit.

AR-applications in general are considered as more profitable, though more difficult for implementation, in comparison with options of use of VR. On average, only 23% of the organizations implement scenarios of use with high benefit and low complexity ("It is obligatory to implementation").

This option of use can be considered as option of initial level which perfectly is suitable for early design stages when process is not based on exact drawings of a CAD yet, therefore, it has smaller complexity.

It looks a little strange, but least of all companies (20%) implement the scenarios relating to a quadrant "It is obligatory to implementation" - to use option which is 'low hanging fruit'; whereas the greatest share of implementations is in the category "It Is Necessary to Realize" which is characterized by high benefit, but also having high complexity.

VR/AR projects economy

As well as any implementation project of IT solution, the project based on VR/AR technologies has in the structure costs traditional components – the equipment, software and services in integration. However, there are two more components specific to VR/AR projects – content of VR/AR and scenarios of representation/use of content.

Depending on type of the implemented solution, both the total cost of the project, and a ratio of costs between separate components can significantly differ (see Tab. 3).

Tab. 3. A ratio of categories of cost in the different VR/AR projects types ^[10]

Project type	Equipment	SOFTWARE	Integration	Content	Scenarios
A personnel training on work with the difficult equipment	50%	10%	5%	20%	10%
The complex VR exercise machine for extreme trainings (The center of training of astronauts)	10%	5%	5% (R&D)	65%	15%
Emergency elimination exercise machine	40%	10%	10% (R&D)	30%	10%
System of distance learning	2%	10%	28%	45%	15%
Virtual models of industrial and infrastructure facilities	25%	5%	0%	55%	15%

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Source: Croc

From the table it is visible that in all types of projects considerable (and it is frequent – prevailing) cost portion is made by costs, specific to applications of VR/AR, – development of content and the application scenario.

Rather often to development of these specific solutions VR/AR components – content and scenarios – the companies integrators attract on the terms of outsourcing of narrow-purpose specialists – designers and programmers of graphics. Now to have such specialists in permanent staff of the companies integrators it can be economically unprofitable since the implemented projects do not create a steady flow of requirements from customers yet.

The same note remains correct and for the companies users considered below the practician of implementation of VR/AR projects by forces. Often, creating own competence centers on VR/AR, the company are preferred to be given on work outsourcing, connected with content and scenarios of VR/AR-applications.

The cost of projects depends on type of the project and on the planned nature of use of solution VR/AR in an industrial scale.

According to information obtained from specialists "CROC Immersive technologies", pilot implementation of one of the most labor-consuming types of the project - the VR exercise machine - it is characterized by the following parameters:

• Development team number (including managers) – 7-8 people;
• Project deadline – 5-6 months;
• Project cost – to 10 million rubles.

This assessment is confirmed by the news published in the middle of 2018^[11]:

"Gazprom Neft — SM", the operator of business of oils of Gazprom Neft, in partnership with HTC and Modum Lab start a pilot project on creation of digital educational programs using the immersive technologies providing complete effect of presence at virtual environment. For the first year of action of the program it is going to train about 12 thousand specialists of the partner companies and distributors of products "Gazprom Neft - SM". The company invests over 20 million rubles in the project.

The cost of scaling of the project to industrial level depends on features of the solution and model of deployment. So, for example, if the pilot was executed based on one large division or the separate enterprise in holding structure, and scaling assumes deployment of drawing candidate solution on several standard points of implementation, then the total cost of industrial option can be received by multiplication of the reduced cost of "pilot" (it is necessary to exclude the cost of once performed works from it) by the number of points/platforms of deployment.

If industrial implementation assumes increase in volumes of content of VR/AR-applications (increase in number of scenarios, complication of scenarios and visual model, etc.), then the cost of industrial implementation will increase in proportion to the number of these specific developments.

For example, for type of the Emergency Elimination Exercise Machine project the cost of development of content is 30% of the budget, and the cost of the scenario – 10% (we accept the pilot's cost for such project – 10 million rubles).

Then adding of one new content (model of virtual space of emergency) will cost 3 million rubles, and one new scenario – in 1 million rubles. Taking into account that for each block of content there can be several scenarios, scaling of such solution on 5 platforms with 3 scenarios for each platform can cost 30 million rubles.

These quantitative estimates (the pilot – 5-10 million rubles, industrial deployment – 20-50 million rubles) will rather well be approved with the known real costs of the large companies for projects with VR/AR use becoming from time to time.

Efficiency evaluation of the implemented solutions

According to CapGemini, the effect of implementation of solutions VR/AR, on average is at the level of 10-15% of economy, and in some cases can exceed 20-25%.

At the same time survey participants of CapGemini noted that at full-scale implementation economic effect not less than 10% was fixed in 75% of the projects which are based on VR technologies (at point implementations or within pilot projects such effect was noted only in 59% of cases).

For implementations based on AR a difference between full-scale and pilot implementations even more impressive: 76% - for full-scale projects, 35% - for projects of local/pilot scale.

Unfortunately, the Russian companies participating in poll of TAdviser on questions of efficiency of the implemented projects gave very streamline answers, without specific digits.

Situation with solutions VR/AR in Russia

During the research the group concerning which there was information that they experiment with VR/AR was defined or even already have the implemented solutions of an industrial scale. The short questionnaire was sent to all such companies, and it was practically succeeded to receive answers from all – or in the form of an interview (the most interesting of these interviews already began to be published in TAdviser), or in the form of laconic comments.

The analysis of the received answers and the additional information collected from open sources is given below.

Customers and projects

According to experts of TAdviser, most the Russian companies which test now or was already passed to commercial operation of solutions VR/AR, it is more correct to call not customers (that means existence of the second party – contractor/integrator of the project), and autonomous (in sense of self-sufficiency) developer users of solutions VR/AR. Practically all companies which participated in a research and answered questions of TAdviser confirmed that they make experiments in the field of VR/AR, substantially, by forces of own specialists organized in special competence centers.

Such competence centers or have rather narrow specialization and are concentrated on the VR/AR technologies directions, or are a part of the complex divisions focused on solving of tasks of digital transformation, "the Industries 4.0". Such centers exist in the following companies:

• Gazprom Neft is the Center of VR/AR technologies, the Center of digital innovations;
• SIBUR – Center of transformation "Industry 4.0";
• MMK - Expert advice "MMK Industry 4.0";
• Rosatom is the Center of digital transformation.

In more detail in the direction of VR/AR it is told about the organization of work of competence centers below (see the subsection "Mechanisms of Implementation VR/AR Projects"). Concerning the versions which are tested/implemented by solutions VR/AR it should be noted that all solutions which are almost revealed in Russia got to the stated above matrix of business scenarios (see the subsection "Scenarios of Use"). It makes sense to emphasize here the fact that for the present a range of solutions in Russia of significantly already full range of solutions given in a matrix – it gives hope for expansion of further actions in this direction.

Gazprom Neft

The Gazprom Neft company actively studies several years possibilities of industrial use of VR/AR technologies. The first publications about experience of the company in this direction appeared at the beginning of 2017 - then many media published materials about pilot implementation of VR solutions on platforms of subsidiary of Gazprom Neft - "Gazprom Neft of SM".

As of the end of 2018 30 potential scenarios of application VR/AR in Gazprom Neft were identified, from them 5 scenarios were implemented in the status of Research and Development projects:

• Development of the platform for training in the environment of VR;
• Carrying out pilot acceptance of engineering model in the environment of VR;
• Application of AR for control of operation of the equipment;
• Automation of warehouse processes by AR;
• Comparison of a 3D model of an object under construction to a physical entity on site constructions.

In 2019 the following projects are planned to implementation

• Development of the platform for management of VR content and scenarios of training;
• Trial operation of the solution "Removed Assistant" and development of the concept of its implementation in production;
• Integration of VR rates with mathematical models and computer training complexes;
• The organization of a holographic video conferencing with the 3D display - content;
• Certification of personnel using VR-applications.

Severstal

In Severstal projects on VR technologies are mainly kept regarding training. It is about virtual exercise machines for training of production personnel and also for working off of skills of working specialties for which it is difficult to collect demos stands, but which require the maximum immersion. Some projects are already started in industrial use.

We are going to expand application of VR in the field of trainings, design of buildings and constructions on production sites, we also think of creation of digital doubles in virtual reality, we see a number of competitive innovations. Besides, we will continue to keep track of technologies in the field of augmented reality. Here we see the greatest perspectives of their application in the field of assistance to accomplishment of repairs of the equipment. In terms of the horizons, we expect to implement AR on target devices approximately within 2-3 years, on VR – to implement all projects approved on 2019 and to expand use within 1-2 years. Sergey Kolbasov, the chief of the department on development of new technologies

SIBUR

In the SIBUR the VR/AR direction develops within the Center of transformation "the Industry 4.0".

in the field of AR technologies we began with their application for quality improvement of work on maintenance and repairs at the plants. We implement tools for remote consultation of field specialists – the mechanics, mechanics performing works with connection of external experts – equipment suppliers or our internal experts from other plants. Further we consider the possibility of use of the AR equipment as the interface for "hints" with a binding to the equipment on different tags, implementation of functionality with formation of scenarios, including, for remote training of specialists in the course of carrying out repairs. The second scenario of use of VR – working off of actions during the work with dangerous reagents and also when studying bases of industrial security and work in dangerous conditions – for example, on gas dangerous productions, is on the ball, etc. We defined for ourselves a set of the most reasonable scenarios of application of VR, and in 2019 we are going to start development of the simulator for work with dangerous reagents.

Already during a research there was news about big VR – the project implemented in the SIBUR by forces "CROC Immersive technologies"^[12]:

the Center of virtual reality Croc ("CROC Immersive technologies") developed digital model of industrial complex of the SIBUR — ZapSibNeftekhim. The project is aimed at personnel training quality improvement, growth of efficiency of industrial security and optimization of operation of the equipment. Development on the basis of immersive technologies will become a basis for further development of initiatives of the petrochemical company of management of lifecycle of the enterprises and digitization of production. The digital model represents visualization of the industrial complex under construction located in the Tobolsk petrochemical cluster of the SIBUR. In it in accuracy production processes, constructions and infrastructure, including installation of pyrolysis, capacities for production of different grades of polyethylene and polypropylene are recreated. The high level of detailing allows to see practically any process or an object. At an initial stage the digital model will be used by specialists of the corporate university during training of new employees, to solve problems of visualization of production capacities and processes, to be applied in the field of labor protection and industrial security. As the tool the digital model will help to develop plans of evacuation for a comprehensive view of the enterprise or can be used in use industrial assets for optimization of production chains. Further the hardware and software system will be used for broader spectrum of problems of digital transformation of ZapSibNeftekhim.

In more detail about development of VR/AR technologies in Sibur see in Alexander Leus's interview to TAdviser.

Magnitogorsk Iron and Steel Works (MISW)

We came to understanding that AR and VR technologies are effective, first of all, in the field of training as with their help it is possible to create long term habit to work in certain situations with very high extent of approach to reality. With respect thereto, we begin to apply VR technologies, coming from tasks of labor protection and training of employees. Other important project on implementation of this technology was initiated by service HR. His key idea is creation of virtual model of all plant, and the purpose - implementation of the innovation approaches to training of workers. One of the directions of this project – creation of conditions for effective adaptation of new employees by use of virtual work places. Besides, ample opportunities for immersion in production processes of all enterprise in general open.

Other companies

Concerning a number of the large companies were detected in open sources of mentioning that the companies make experiments with solutions VR/AR, however, some detailed official data on such experiments were not succeeded to receive:

• The Rosneft company experiments with VR/AR for projects of construction of underground/underwater pipelines in the Far East;
• The Russian Railway studies possibilities of technology of virtual reality in educational process in the centers of professional qualifications now. Solution VR/AR are considered also for application at construction of high-speed backbones;
• In EVRAZ holding of the VR solution, are generally used for promoting of the enterprises, involvement of candidates for work and for primary acquaintance with working conditions;
• Research and pilot projects in such companies as SUEK, ALROSA, Pipe Metallurgic Company are conducted.

According to TAdviser (including as well through references as the clients from vendors and the developers specializing in the VR/AR area), practically all companies of the industrial, oil and gas, mining, power industries in a varying degree are interested today and experiment with VR/AR technologies – just many of them prefer not to advertize results of these experiments so far in any way.

Mechanisms of implementation VR/AR projects

During the research of TAdviser to all participants questions of mechanisms of initiation of projects, managements of the course of their implementation and verification of their results were set. One of questions was:

How at your enterprise decisions on implementation of VR projects are made - who studies concepts of projects, who is a stakeholder / the actual customer how decisions on financing scales are made (pilots / complete implementations)?

Most the companies which participated in poll and gave informative answers reported that projects in the direction of VR/AR (as, however, and in other modern directions of application of IT) are implemented with involvement of specially created organizational structures – competence centers.

Gazprom Neft

In Gazprom Neft all activities in the direction of VR/AR are coordinated by the VR/AR Center Technology Competences (CTC) working on model of internal integrator (see Fig. 3).

TsTK defines potential scenarios of use solutions VR/AR, selects from them the most priority for implementation, will organize pilot operation for check of applicability and efficiency evaluation of the selected solutions, coordinates transfer of the decisions made in commercial operation. Besides, TsTK provides support of pilot implementations in the main business blocks of the company.

Project implementation order rather traditional:

• Usually everything begins with Research and Development, following the results the prototype is developed, then – MVP and circulation becomes. Customer / product owner is defined already at a Research and Development stage. On passing of each stage the collective decision on transition to the next stage is performed;
• The budget of "pilots" fluctuates from 500 thousand rubles to 5 million rubles. The efficiency is calculated separately for each project (the project cost is higher, the requirements to efficiency evaluation are higher);
• There is no overall total score of the budget on VR/AR – it does not make sense. Assessment is conducted on separate projects at the implementation / beginning of use. (Comment of TAdviser: Judging by available information, there is not only no overall assessment of the budget, but also any threshold restrictions – if the project is estimated as deserving pilot check, funds for it are always allocated).

MMK

On MMK in 2018 the expert advice "the MMK Industry 4.0", headed by the CEO of PJSC MMK Pavel Shilyaev is created. Implementation at the enterprise of the innovative technologies, including technologies of augmented and virtual reality falls within an area of interest of council. Structural divisions of the company, in turn, reveal ways of the most effective application of VR/AR of technologies and initiate a project startup in which act as customers. Within strategy implementation on implementation and commercialization of the innovative solutions of the Industry, also, creation based on MSTU of Nosov R&D-центра (research and development center) and technopark Kvantorium of Magnitogorsk where competences on 3D - modeling are concentrated, in general, and to technologies of virtual reality, in particular became 4.0 important step. Joint work of divisions of PJSC MMK and the innovative companies of the city allows to reveal most precisely requirements of production, to develop and implement the projects corresponding to requests.

Severstal

Severstal also prefers to manage by forces of own specialists.

We in the company find a lot of time for acquaintance to digital technologies and their promoting. For all digital projects without fail there is a business customer and the expected effect of their implementation. When the customer has some idea, we implement it in uniform Agile to a command, we always show all opportunities of technical means which we have. All projects are executed within an investment program. We try to raise at ourselves competences on VR and AR. We see in it big perspectives and we want that in Severstal there was one of the best industrial the practician on these technologies. Now in a command on VR/AR within management on development of new technologies in us 6 people work, and we are going to increase its number. At this stage of development of technology it is more economic to have the highly professional command. At the same time we, of course, will attract players from the market at stages of replication of technology.

In more detail about development of VR/AR technologies in Severstal see in Sergey Kolbasov's interview to TAdviser.

SIBUR

Unlike above-mentioned survey participants, in the SIBUR pragmatically approach use of resources, and if necessary address external contractors.

The initiative goes from two parties – from technology divisions, and from functional customers - the plants. From the second the task which needs to be solved often arrives, and technical divisions offer as it can be done. If its solution is crossed with VR technologies, further there is a study of the technical and economic questions including assessment of economic effect of implementation. Based on this calculation the decision on expediency of the investing in development and deployment is also made. All digital instruments in the SIBUR pass through such filter. All effects should be expressed in a numerical equivalent. We aim at the mixed model. Internal specialists are necessary: for example, for the translation of language of developers into business language, into petrochemistry language. Therefore we create at ourselves expert division. At the same time we do not plan creation of full-scale studio of development of computer graphics since it is not our core business.

Suppliers and solutions VR/AR integrators

The second party of the Russian solutions VR/AR market – equipment suppliers, software and services, - on total revenue of which it is normal and the market is estimated, today it is rather difficult to consider as fully created mechanism which principles of functioning are clear, and results of work are observable and measured. More likely, in full accordance with an object of research, it is possible to call this market virtual since it forms from separate components of other, more traditional segments of IT-Business, and the financial flows which are present at this market not always represent results of sales, and often are venture investments. The companies which are present at just emerging market industrial VR/AR products and services are divided into 4 groups:

• IT companies and system integrators (both traditional diversified companies, and specialized integrators solutions VR/AR);
• Software developers and the equipment for VR/AR (many – the level of startups);
• The developers of solutions of a special purpose on legacy technologies who are gradually migrating towards modern VR/AR;
• The industry scientific research institutes and CB (practically all reorganized into joint stock company and the joint-stock company) which were a part of the state and private industrial holdings. Consider this group of the organizations as full-fledged market participants are impossible since they receive fixed assets on the activity and project implementation from parent structures. Such organizations are connected with "external" IT market only through purchase of a computer hardware and specialized software (the Unigine type, for example). But these organizations create really working pilot and industrial samples solutions VR/AR today. Unfortunately, activity of these organizations is almost non-public.

Tab. 4. The main market participants industrial solutions VR/AR from suppliers ^[13]

Name of the company	Year obr.	Beginning of work with VR/AR	Main customers	Features of activity in the direction of VR/AR
IT companies and integrators
"CROC Immersive technologies"	1992	2012	SIBUR, Gazprom Neft, Center of training of astronauts of Gagarin, General Electric, DeLaval, Mosoblgaz,	Business unit of Croc IT company, one of the market leader of information technologies. The projects "CROC Immersive Technologies" are focused on use of immersive technologies (virtual and augmented reality) in the industrial industries.
VE Group (VEE Group)	2002	2004	NAMI, the Rostov NPP, S-PB the Polytechnical University of Peter the Great, JSC Centre tekhnologii sudostroyeniya i sudoremonta	Specialized integrator on VR and 3D-visualization. The majority of VR solutions – based on technologies of the previous generation. VR Concept software developer based on whom solutions are distributed by the company of the same name. Perhaps, the main part of business of the company in 2017-2018 migrated on new legal entity – VR Concept company.
IRISOFT	1991	2007	SPMBM Malachite, NPF TsKBA	The group specializing in creation of complete solutions for the systems of design and product lifecycle management systems at the enterprises of different industries. In the field of solutions VR/AR – the 3D system - designing and prototyping. Software (Windchill, Pro/Engineer, TechVuz), and own developments is used as western
Software developers for VR/AR and suppliers of solutions VR/AR
Unigine	2005	2005	Almaz-Antey concern, SRC Energy, Kronstadt Group, TomskNIPIneft, Mosgorgeotrest, large number of foreign clients.	The developer of one of most popular 'engines' of VR competing with leaders of the world market. Sells software licenses for the projects implemented by integrators. Independent project implementation at customers is not mentioned.
VR Concept (VE Group)	2011	2015	Public information on customers is not revealed	The company is created by natives of VE Group (the major shareholder – the former chief executive of VE Group). It is focused on sales of the packaged software in the field of VR – tools for virtual prototyping. Actively participates in a startup community, positioning itself as a startup though, already has rather serious total revenue for 2015-2017.
The world 3D (United 3D Labs)	2009	2009	Lukoil, Transneft, Gazprom Neft, Metalloinvest, Sollers, Rosatom, Novatek, Rusnano	Russian 3D - the studio specializing in creation of interactive projects, augmented reality and virtual reality. More than 400 projects in 10 years, including, industrial orientation declare accomplishment. Revenue for 2017 rather large for the Russian VR/AR market – nearly 67 million rubles
Rubius Group	2008	2008	Is announced a total quantity of clients – more than 250. However, there are no specific names of customers on the website	The Rubius company is founded in 2008 in Tomsk. Specializes in the development area of the engineering software in the Russian and foreign markets. At the moment the company totals more than 100 employees. A main product in the field of VR/AR - the Platform for creating applications 3D - visualization of Rubius 4D. Revenue from sales in 2017 – more than 78 million rubles.
Startups and residents Skolkovo *
Modum Lab	2017	2017	Gazprom Neft, BIOCAD	One of the youngest companies in the VR/AR market. Received good investments on start. Came to pilot projects with Gazprom Neft. Participates in Consortium NTI at DVFU
Tengo Interactive	2014	2014	The Russian Railway, Lukoil, Rosatom	Small digital-studio from Yekaterinburg, develops solutions for VR training and VR exercise machines
Eligovision	2005	2005	Roskosmos, Norilsk Nickel, Avtodor State company, Gazprom Neft, MUEC	The Russian hi-tech the company which is engaged in developments in the field of interactive 3D visualization and the software. A flagship product – EV Toolbox, according to the statement of the company, the first and still only tools of augmented reality developed in Russia. Revenue in 2017 – more than 30 million rubles
HoloGroup	2016	2016	Novatek, UralChem, Uralkali, Enel Russia	HoloGroup is the Russian company developing products and solutions for the mixed reality. (MR – Mixed Reality). HoloGroup implements projects in the fields of education, constructions, medicine, the holographic presentations and excursions. One of the first companies which began application development for the Microsoft HoloLens device. Positions itself as competence center only in the field of the mixed reality. Revenue for 2017 – 16.5 million rubles

-1 XLIFFService: Sequence contains no elements

' 'TAdviser 2019

* Comment of TAdviser: A number of the companies which are present at the VR/AR market at Russia are not included in the table since their activity in the direction of industrial solutions VR/AR was not revealed

"CROC Immersive technologies"

In group of the IT companies the leading position in the direction of industrial solutions based on VR/AR technologies is taken by the Center of virtual reality of Croc company ("CROC Immersive technologies"). "CROC Immersive technologies" are included into the state the specialists providing a full stroke of development and deployment of solutions VR/AR – from creation 3D - diagrams and scenarios before design of infrastructure, information security support, integration with external systems, technology consulting.

In a solution portfolio of the company there are following developments:

• virtual trainings and the multiplatform systems on personnel training to safe behavior on production;
• specialized software "The removed assistant" for operation of units and work with the equipment by means of receiving the qualified support from expert center in real time for the purpose of decrease in errors of technicians when working in operation and in assembly production;
• solutions for quality improvement of service maintenance of the equipment by personnel, quality improvements of carrying out inspection control, quality improvement of educational process and also some other paramount tasks within optimization of production and technology processes of the enterprise.

Today "CROC Immersive technologies" already implemented projects for such companies as:

• JSC Mosoblgaz - development interactive 3D - the simulator for work on gas-distributing substation;
• The center of training of astronauts of Yu.A. Gagarin - the virtual simulator for working off of regulations of joining of the spaceship with the ISS;
• SIBUR Holding is development of an interactive 3D model of a production cluster ZapSibNeftekhim;
• General Electric Health Care is interactive visualization of industrial digital solutions of the company;
• Gazprom Neft is consulting and study of architecture of implementation of VR solutions in business processes of the enterprise.

"CROC Immersive technologies" cooperates with the largest Russian and global manufacturers of the equipment and software products in the field of VR/AR.

Work on projects is based on the basis of methodology of detection of business needs which allow to reduce costs on start of the project and to receive tangible, qualitative result for the subsequent implementation and scaling. The full stroke of projects includes audit of readiness of business of clients for implementation of immersive technologies, creation of architecture of future project and the detailed scenarios, development of the platform, interface and implementing solution in business of the client and continued support.

Any project we begin CROC with immersion in business of the client. Working with large industrial enterprises, we accumulated good experience, understanding of needs of the industrial sector and the main scenarios of use of immersive technologies on production. We help the companies to train employees in safe behavior at production through working off of emergency, abnormal and dangerous situations through involvement using computer simulation and virtual reality. Practically at all largest enterprises programs of implementation of tools of the Industry 4.0 started now and there is an urgent need in increase in level of industrial security. In particular, training using VR exercise machines is demanded. Virtual environment helps to fulfill any scenarios: from actions of employees in emergency situations before studying of regulations of service of industrial equipment. The training VR tools are already used in petrochemistry, the oil and gas, extracting and energy companies. In a number of the largest industrial companies of Russia platforms of augmented reality and the solution of assistingovy reality are now tested. Being guided by this demand, we developed and we test a prototype of the industrial solution Remote Assistant – the removed assistant on the basis of AR technologies for remote technical support of production personnel and transfer of instructions in real time. We carried out the detailed analysis of the world market of producers of platforms, the equipment and the software, tested products and compared their technical parameters that allows us to provide now to our clients a transparent picture about quality and readiness of today's tools for implementation in a real manufacturing sector.

VE Group

Virtual Environment Group (VE Group, Vee Group LLC) — the specialized Russian system integrator in the 3D area - visualization and the systems of virtual reality. The company was founded in 2002 as research group at MIPT.

VE Group specializes in development and deployment of the professional systems of virtual reality: CAVE (room of virtual reality), CADWall, panoramic VR systems. The basis of the majority of VR solutions of the company is formed by the technologies of the previous generation of VR developed long before emergence of helmets and glasses of virtual reality.

The projects implemented by VE Group:

• Complex of virtual reality like CADWall for the headquarters of construction of the Rostov NPP (2013);
• The MAI aviation exercise machine and the exercise machine for working off of air refueling of RAC MiG (2013-2014);
• Creation of the Center of virtual researches of JSC TsTSS (2013-2014)
• Complex of virtual prototyping of NAMI (2014);
• Creation of the 3D system - visualization for the Supercomputer center at the St. Petersburg state polytechnical university of Peter the Great (2015-2016);
• Creation of the center of virtual reality for GPS Ministry of Emergency Situations St. Petersburg University (2015-2016)

Despite quite impressive list of the projects sold by VE Group company and authority in the solutions VR/AR market, the current business situation in the company raised certain questions at experts of TAdviser. By data SPARK-Interfax, revenue of VE Group it was significantly reduced in 2017 in comparison with 2016 (27.7 million rubles against 40 million rubles the previous year); there are no data on business activity of the company in 2018 – neither in SPARK-Interfax base, nor in the register of government contracts of EIS in the field of state procurements.

Startups and residents Skolkovo

General VR

General VR positions itself as the international integrator of industrial 3D/VR/AR/MR solutions having examination in the field of application solutions including integration of VR/AR of solutions with PLM a circuit.

The main focus of activity — the solution in the field of the virtual, added and mixed reality for the industries of power, metallurgy, chemistry and petrochemistry, mining companies and a MIC. In addition to industrial developments the company has solutions for builders, travel agencies and corporate universities. Modum Lab

Modum Lab is an example of the young company in the field of VR/AR which managed to find quickly enough for proposed solutions of big customers in the market. The company is founded by owners of biotechnology company BIOCAD in 2017.

On July 4, 2018 the "Gazprom Neft — Lubricants" company announced start in partnership with HTC and Modum LAB of a pilot project on creation of digital educational programs using the immersive technologies providing complete effect of presence at virtual environment. For the first year of action of the program it is going to train about 12 thousand specialists of the partner companies and distributors of products "The Gazprom neft-SM". The company invests over 20 million rubles in the project.

"Veterans 3D and VR"

There is the whole group, standing alone in the modern market of industrial VR/AR (or even – so far away from this market). These are the companies which began to be engaged in a subject of virtual reality when it was not still a general popular trend and when this concept, from the technology point of view, meant absolutely other. Absolutely not casually all these companies are related to defense sector of the industry – outright or closely cooperate with it.

Now all these companies upgrade the solutions, transferring them to modern platforms of VR/AR. Each company has the market niche, they should not compete with each other, and any of new participants of the market of VR/AR will hardly be able to apply for their positions.

At the same time revenue of each of these companies is measured by billions of rubles and even if to accept that VR/AR projects share in this volume does not exceed 20%, they are capable to add very powerful (if not to tell – prevailing) a part to the total amount of the VR/AR market. However, on anything, except prestige of the market this revenue will not affect, but these digits can play in marketing – to offer the products and services much more conveniently, being a part of the market with multi-billion turnover, than small "rynochka" for several hundred millions of rubles at most. Kronstadt group

The Kronstadt group is the Russian hi-tech company specializing in the development and production of the knowledge-intensive products and solutions necessary for creation, mastering and safe operation of difficult technical means in air at the sea and on the land.

Key business competences of Group are among:

• Development and production of the modern end-to-end training systems and other automated training aids: creation of cabins/bridges of the imitated means, production of simulators and electronic components, software development of all levels (modeling, the system of visualization), integration of separate technical means of training into unified virtual training environment for interaction working off, equipment of training training centers.
• Creation of digital three-dimensional content, creation of interactive solutions with visualization, a soundtrack and elements of interaction with audience, creation of the large-scale installations integrating natural objects with virtual space.
• Development, production and integration of full-flight exercise machines of airplanes for professional training of pilots of civil aviation: creation of complex exercise machines of airplanes of level D (ICAO Level 7), complex exercise machines of airplanes without the system of mobility (ICAO Level 5), procedural exercise machines, the automated training systems, exercise machines of technical operation, exercise machines for stewards.

Rusbitech

NPO Russkiye Bazovye Informatsionnye Tekhnologii (Rusbitech) is the enterprise performing the licensed development, production and implementation of the end-to-end training systems of new generation, information and automated systems, decision making support systems, domestic software tools of the general and special purpose, development and creation of information security tools and telecommunication means. The priority direction in all types of activity is accomplishment of state orders for the benefit of federal executive authorities.

In recent years Rusbitech created several software products using both more traditional means 3D are visualization, and new VR technologies:

• "Iris T" – the unified system of three-dimensional visualization (USTDV) intended for display of virtual three-dimensional scenes, three-dimensional objects and special effects. Systems capabilities allow to reproduce processes and the phenomena, to use the landscapes repeating real sections of the area.

It is applied to development of virtual exercise machines and interactive systems where three-dimensional visualization in real time is required. Is controlled as internal commands, and on signals from the external modeling systems. Meets the high requirements to the accuracy of simulation and photorealness of the image.

• "3D well" – the system of panoramic projection of the image. The output data is the three-dimensional situation generated by USTW "Iris T" and other systems of visualization.

Main scopes of a product:

• sharing with virtual exercise machines (individual and group);
• demonstration information representation;
• situational centers and conference halls;
• exhibition stands.

Developers and software suppliers for VR/AR

In Fig. 4 the main software developers for VR/AR are provided. For the Russian market the fact that, at least, two companies from provided are Russian – Unigine and VR Concept is of particular importance. Actually, today in the market of software for VR/AR of the Russian developers it is much more, but most of them did not leave from a stage of startups yet.

For VR/AR it is necessary to refer to category of software developers also developers integration VR/AR modules to CADPLM//BIM-to systems. Usually such integration are developed by either developers of systems sources, or the specialized commands working at the party of integrator (own or hired). As a separate segment of the market you should not consider such developments, probably, as practically all of them are made within complex projects.

Unigine

The Yunidzhayn company is created in 2005 in Tomsk by specialists from the Tomsk State University. More than 10 years of research and development were led to creation of the original 3D platform - visualization of UNIGINE which is not conceding to the leading world analogs. Now the company continues its development and also proposes in the world market the advanced solutions for business in the field of visualization, scientific research and creation of the systems of virtual reality.

The main engineering command which is engaged in researches and development is in the city of Tomsk — one of scientific centers of Russia with a set of the technical universities.

Among clients of the company, in addition to end users, there are also solutions VR/AR developers offering in the market own products based on "engine" Unigine.

VR Concept

The main software product of the company – VR Concept software - is packaged simple software for solving of tasks of virtual prototyping, allowing to visualize different 3D and engineering data in the systems of virtual reality: as professional, for example, CAVE, CADwall, a dome, and the household helmets of virtual reality which are connected to the computer, for example, HTC Vive or Oculus, plus - a possibility of joint work between such VR systems far off.

Funds and associations

One more party of the market which is a little away from the main financial flows, but has a certain impact on the market in the conceptual plan - it is the funds and associations showing activity in the direction of new technologies. For the VR/AR market the main representatives of this group of market participants are the Internet Initiatives Development Fund (IIDF), Association of augmented and virtual reality (ADVR/AVRA), Skolkovo Foundation, the National Technology Initiative (NTI).

IIDF

The most noticeable public activities of IIDF in the direction of VR/AR were mentioned in 2017. At the end of February, 2017 the big seminar presentation of the Accelerator of IIDF on a subject "Startups in spheres of VR and AR took place: the perspective directions and expectations of big customers"^[14]. Within this seminar, according to listeners, the performance of Vladimir Vorkachyov holding at that time a position of the head of krossblokovy projects of Department of management systems Block of logistics, processing and sale of Gazprom Neft company was of the greatest interest.

In the middle of 2017 it was announced that the IIDF starts the multilevel program of development of startups with solutions in the field of VR/AR which start is tied to a set of projects in a profile track of the Accelerator. It was declared that to the startups which entered a portfolio of Fund, the IIDF will provide access to examination of the technology and industrial companies interested in VR solutions and also will provide with all opportunities of the new VR laboratory. The most perspective graduates of an accelerator could apply for investments of IIDF at the rate to 30 million rubles and integration of the solutions into production processes of the large companies interested in solutions based on AR and VR.

In particular, it was declared that within partnership of the Accelerator of IIDF with Gazprom Neft company, startups will be able to work on platforms of two technoparks of Gazprom Neft in St. Petersburg and Omsk, to get acquainted with experience of the colleagues who already implemented VR solutions on production and after startups undergo acceleration in IIDF and will prove, working based on technopark, Gazprom Neft will be able to make the decision on application of the most perspective products in the company.

However, one and a half years later after above-mentioned activities the subject industrial solutions VR/AR in IIDF practically disappeared from the agenda. Why so occurred, V. Vorkachev explains to Gazprom Neft (the quote from an interview^[15] the Rusbase project in April, 2018):

Startups are aimed at fast start, receiving fast profit at the minimum labor costs. It well works during creation, for example, of mobile applications. Many try to earn from it. As soon as you begin to speak about "serious", difficult areas, in our case — about the oil industry, there are difficulties because of specifics of this sphere. It is very difficult business including because we are engaged in creation of different products, and very difficultly to organize everything. If to break the first barrier, other problem appears — at all our openness and desire to help startups there is a number of obligatory office work processes which need to be followed. We deal with continued production and the raised hazard class. Any stop of production can lead to serious effects. Here startups face two factors. First, we ask them attentively and to deeply study a subject. And secondly, requirements which further we begin to show at product introduction, above, than on average in the market. In such conditions it is heavy to startup "shoot" in 2–3 months. Often work within half a year, sometimes even is required year.

According to experts of TAdviser, the above-stated quote delivered near earlier announcement from IIDF enough clearly explains the fact that in the considered market the young companies which do not have support from big customers are still especially not noticeable. Same also the tendency of the large companies to formation of own competence centers on VR/AR which are, in fact, internal startups mentioned above speaks.

Association of augmented and virtual reality (ADVR/AVRA)

Association of augmented and virtual reality (ADVR/AVRA) – the non-profit organization created in 2015. At the beginning of the Association overview it was already mentioned as the developer of the card poster devoted to the Russian VR/AR market as of the end of 2016.

The mission of Association (it is quoted in the text on the website of AVRA):

"The association is urged to combine efforts of industry members, to designate the key directions of development of technologies, to give support in their development and monetization and also to conduct the international educational activity. Our purpose — an output of domestic AR/VR industry to the leading positions of the world market"

Implementation of a mission is supposed through solving of tasks in a number of the directions which are also designated on the website:

• Consulting and legal support of members of Association;
• Training and personnel;
• Integration to the world market;
• Market research;
• Consolidation of the industry;
• Regulation and standards;
• Thematic actions;
• Promoting of technology;
• Communications with authorities.

Unfortunately, on the website of AVRA there is no information on what companies are members of Association. There is also no reality about what results are achieved in the solution of the designated tasks - the last of the few news are dated 2016. And information on the main annual action of Association – AVRA DAYS – is published on other website on which from the website of Association there is no link.

According to experts of TAdviser, today (if to judge by public information) AVRA is only the specialized organizer of thematic actions for VR/AR and does not conduct any other a little noticeable activity.

NTI and Digital Economy program

The National Technology Initiative (NTI) is a state program of measures for formation of essentially new markets and to creation of conditions for global technological leadership of Russia by 2035.

NTI includes system solutions by determination of key technologies, necessary changes in area of regulations and rules, the working measures of financial and personnel development, mechanisms of involvement and remuneration of carriers of necessary competences. The choice of technologies is made taking into account the main trends of world development, proceeding from a priority of the network technologies concentrated around the person as the end consumer.

Activity of NTI is based on the basis of a so-called "matrix of NTI" representing the conceptual model integrating key concepts are the markets, technologies, institutes of development and infrastructure.

VR/AR are included into the list so-called end-to-end (universal, held for use in all industries) digital technologies (STsT) both in a matrix of NTI, and in the federal draft "Digital Technologies" of the National program of "Tsifrovaya ekonomika Rossiyskoy Federatsii" (NP TsE).

Experts of TAdviser note that at the moment in the published materials there is a certain mismatch between a matrix of NTI and the passport of the federal project "Digital Technologies" of NP TsE regarding interpretation of VR/AR as end-to-end technology. Within a matrix of NTI VR/AR technologies are united in the single unit with neurotechnologies while they in the STsT NP TsE list of neurotechnology are combined (as of June, 2019) with artificial intelligence technologies (AI), and VR/AR technologies are considered separately from them.

Development of all of STsT – both within NTI, and within NP TsE - is based on the basis of the Competence Centers (CC). For NTI such centers were defined in 2017; for the block of neurotechnologies and VR/AR as such center Far Eastern Federal University (DVFU) is selected. Within NP TsE two head Central Committees are determined by all by STsT – Rosatom State Corporation and Rostec Group; specifically Rosatom is responsible for all activities on STsT VR/AR.

In March, 2019 the Rosatom state corporation held a series of competitions on the right of development of "road maps" (RM) on all 9 STsT, designated in the federal project "Digital Technologies". Winners of tenders acquired the right of development of recreation center on certain STsT and afterwards had to become operators of implementation of these recreation centers.

Tender for development of recreation center on VR/AR technologies was won by the NTI DVFU Center, having closed thereby on itself activities on VR/AR technologies both within NTI, and within NP TsE.

It is interesting to note that for a victory in tender the winner had to lower the offer on the cost of works to 1 ruble (winners even in 6 tenders "went down" in price up to 1 kopek).

Preliminary versions of all "road maps" were submitted in May, 2019 at the traditional forum TsIPR-2019 which took place on May 22-24, 2019 in Innopolis. Final versions of "road maps" should be approved no later than September, 2019.

According to experts of TAdviser, the activities occurring recently connected with implementation of NP TsE should influence positively market development of VR/AR in Russia – already in the nearest future there has to be a document containing a reality regarding approaches of the state to VR/AR development (so far in all published materials according to the Digital Economy program of such reality is not present).

But certain concerns to experts are caused by that circumstance that the mismatch mentioned above in interpretations of VR/AR according to versions of NTI and NP TsE is not eliminated at the level of fundamental documents of two programs yet. The NTI DVFU center still contains in the name "neurotechnologies and VR/AR" though, in informal conversation with TAdviser the representative of the Center reported that in the nearest future repositioning of activity of the Center for bigger coordination with STsT VR/AR focus admitted to NP TsE is planned. Should be corrected and activities of the DVFU Center – in them the emphasis on industrial use of VR/AR will obviously appear.

However, not really clear in this situation is a fate of a grant in 400 million rubles which the DVFU Center received based on a victory in grant competition which was held the Ministry of Education and Science of the Russian Federation, ASI and RVC in 2017. This grant was selected for works during 2018-2021 in the VR/AR direction in interpretation of NTI of that time, i.e., with a bias towards neurotechnologies and medical application of VR/AR.

Main problems and risks of VR/AR projects

As in character all VR/AR projects are mainly IT projects, all classical problems and risks of IT projects which are well familiar to all specialists and customers are inherent to them, and there is no need them here to list and consider.

In the poll of MOMRI mentioned in the section of "The analyst of the market" published at the beginning of 2017 the main are listed – according to customers – an obstacle to implementation of VR/AR technologies and assessment of criticality of each of obstacles on a scale from 1 (is not an obstacle) to 5 (very strong obstacle):

• High implementation cost – assessment of criticality 5;
• Technical restrictions, high complexity of implementation – assessment of criticality 3;
• Unevident advantage of implementation of similar technologies – assessment of criticality 3;
• Unwillingness of specialists to implement and apply new, "not rolled" technologies and techniques – assessment of criticality 2;
• Management resistance – assessment of criticality 1.

In two years which passed since holding poll, the list of obstacles did not change, just factors included in the list traded places a little, having reflected, on the one hand, progress in technologies, and on the other hand – increase in culture and readiness of customers for experiments in this direction.

According to experts of TAdviser, today the list of the main obstacles looks as follows (as decrease in criticality of a factor):

1. Deficit of qualified specialists As with any new technology, at the time of formation of the increased demand for the solutions which are based on this technology in the market deficit of specialists – as in the companies which are engaged in promotion and implementing solutions and for set in staff of customer companies is observed. In a case with VR/AR the main deficit is made by developers of contents/scenarios and special software. Even at formal presence in the market of necessary resources (design studios, startups) they can be unsatisfactory to special requirements of customers – see above V. Vorkachev's quote about a bad experience of work with startups.

Manifestation in the VR/AR market and so-called "effect of SberTech" is not excluded - when the large company having almost unlimited financial potential "vacuums" the personnel market and buys up the necessary specialists, offering them salaries 1.5-2.5 times higher than the market. Of course, so far VR/AR technologies concede on demand to technologies of a fintekh, but absolutely to you it is not necessary to dismiss this risk - especially for the companies with small staff of specialists.

2. Technical restrictions of the equipment and software During pilot projects customers quite often find out that the equipment and software of solutions VR/AR not always conform to requirements imposed by conditions of real production. So, the points used in a prototype of the interactive assistant were rather brittle, their battery had limited capacity, and points were not integrated with the individual protection equipment used in metallurgical production.

3. Implementation cost If to proceed from a profile of potential customers of the discussed solutions, then it is possible to claim unambiguously that for most of them implementation cost is not a restraining factor for making decision on the beginning of a pilot project (taking into account discussion of the cost of projects given in the section "VR/AR projects Economy").

However, transition from "pilot" to large-scale deployment can already restrain for cost reasons.

4. Lack of the convincing feasibility statement for project implementation It is not so much a factor obstacle, how many reality of the last years – already for a long time projects are not implemented "on hype". Pilot projects are initiated with rather modest budgets (sometimes – and practically without budgets, on enthusiasm of the developer beginners interested in receiving the solvent customer), and industrial implementations are developed only when the efficiency and payback of the solution is proved by practice.

5. Resistance of conservatives both among the management, and among personnel It is a factor, not specific to VR/AR projects, and it is rather – traditional, well-known and clear risk of any IT projects. Respectively, methods of minimization of negative impact of this factor too are known long ago.

Market assessment

Features of the market and approach of TAdviser to assessment of its volume

Feature of the Russian market industrial solutions VR/AR (which can be considered as the market still only virtually) is the fact that it only is in a stage of formation and represents one big space of experiments. In the market the approach typical for the venture industry prevails – certain hypotheses are formulated, volumes of pilot investments are defined, teams on model of startups are formed (like those can be considered also corporate competence centers on VR/AR, and the relevant divisions in the companies integrators, and "net" startups).

Any specific amounts invested in projects and announced publicly or remaining unnamed should be considered as investments, but not as the income of specific suppliers.

The complexity in assessment of the market is also that VR/AR projects represent conglomerate of different components (see the section "VR/AR projects Economy"), the cost of each of which can vary very strongly depending on project type. Besides, a part of the projects executed by forces of internal competence centers in general cannot be identified as belonging to VR/AR while about it does not appear publicly – because in observed "space" of corporate purchases such project can look just as purchase of a high-performance computer hardware or digital projectors (which are used not only in VR/AR).

For assessment we will give data from poll of KPMG as a reference point (with the clause that KPMG gives an assessment on all block of digital technologies where also VR/AR enter):

• In 2019 more than 36% of the companies are ready to invest in project implementation on implementation of new technologies more than 100 million rubles a year;
• The most large-scale investments plan the companies of the telecommunication and bank industries and also metallurgy;
• Another 22% of the polled companies are going to invest from 30 to 100 million rubles in digitalization;
• 15% of respondents are ready to spend from 10 to 30 million rubles;
• 27% of the companies budgeted digitalizations for 2019 less than 10 million rubles.

Taking into account that about 100 companies participated in poll of KPMG, the above-stated data give (only totally on selection of respondents) assessment of the cumulative budget of digitalization about 5-5.5 billion rubles. Considering what a range of industry distribution of survey participants was very wide (in particular, the companies of an oil and gas industry made 7%, metallurgy – 8%, transport – 11%) it is not necessary to be surprised to rather modest digits dialed by VR/AR technologies. And because of such industry distribution, financial estimates of KPMG are not suitable for objective assessment of the market of industrial VR/AR.

Actually, in assessment of KPMG data approximately till 15-20 the companies relating to a cluster most "VR/AR - focused" - are considered while in the Russian Federation of such companies about 100 (including 10-15 largest state corporations, 5-10 companies which are real or potential users of VR/AR are a part of each of which).

The approach to assessment of the VR/AR TAdviser market constructed, proceeding from the following assumptions:

• An initial assessment of market size is given for 2018 – on the basis of the known data and realistic hypotheses. Specific parameters of assessment for 2018 are described below, in the subsection "Calculations for the Russian VR/AR Market";
• As annual average growth rate (CAGR) for estimates on the horizon of 2018-2022 the minimum CAGR value used in forecasts of the western VR/AR market for the same (or close) a time frame is accepted. CAGR values for the western VR/AR market are published below, in the subsection "Growth Parameters for the Western VR/AR Market".

Growth parameters for the western VR/AR market

Estimates of the western analysts on the VR/AR market in general and on its separate segments quite strongly differ not only concerning forecasts for 2-3 years ahead, but also even on already ended periods.

So, CapGemini gives in the report (issued in the fall of 2018, but with reference to the report of IDC of 2017) assessment of total amount of the market of XR for 2018 at the level of 17.8 billion dollars. The ARtillry Intelligence company in the report issued in the spring of 2018 is more careful in estimates: the overall outlook by 2018 – 6.14 billion dollars, from them is the share of a corporate segment only to 1.78 billion dollars, and, all types corporate solutions VR/AR, and not just industrial enter this amount.

Considering that ARtillry Intelligence is rather conservative in the estimates and forecasts and also the fact that specialization of the company is the analytics on the VR/AR market, the decision to use in assessment for the Russian market the parameters published by ARtillry Intelligence was made.

Assessment for a segment of corporate AR-applications:

The Segment of corporate AR-applications will grow from 671 million US dollars in 2017 to 29.6 billion US dollars in 2022 that makes 113 percent cumulative annual growth rate (CAGR). It does this segment by the largest split [16] in 2022. Such market size will be caused by broad application of AR-applications on all business verticals; and also the application pattern providing use throughout the day and clear model of an investment payback (for example, due to increase in production efficiency).

Assessment for a segment of corporate VR-applications:

The Segment of corporate VR-applications will grow from 374 million US dollars in 2017 to 3.35 billion US dollars in 2022 that makes 55 percent cumulative annual growth rate (CAGR). Despite considerable value, it will be the smallest in volume segment considered in this forecast.

From two above-stated quotes for us two forecast indicators of CAGR – 113% for AR-applications and 55% for VR-applications are important. In the further calculations we will use smaller of these indicators as a general meaning of growth rate for the Russian VR/AR market. According to experts of TAdviser, such assumption is quite acceptable since according to scenarios of use of VR/AR the Russian market already practically does not concede western (there are already all most popular options of application VR/AR), and acceptance as calculated parameter of the smallest of the estimated values CAGR reflects natural lag of the Russian market from western.

Calculations for the Russian VR/AR market

When forming a design model, analysts of TAdviser proceeded from the following facts and assumptions:

• One of leaders of use of VR/AR – the Gazprom Neft company - publicly announced 5 pilot projects implemented in 2018 and 5 more projects planned for 2019. At the same time successfully implemented pilot projects are planned to deployment commercially both within Gazprom Neft, and in other subsidiaries of Gazprom company;
• Public assessment of annual costs for pilot of VR/AR projects in Gazprom Neft makes about 25 million rubles (5 projects on 5 million rubles). At the same time there are all bases to consider that not all costs made by Gazprom Neft in the direction of VR/AR are public, and real costs can be 1.5-3 times more than the stated amount. It is also necessary to consider assessment from vendors of solutions VR/AR which on the basis of the experience estimate the average cost of a pilot project for the companies of scale of Gazprom Neft at 10 million rubles;
• Commercially Gazprom Neft does not announce the planned costs for deployment of solutions VR/AR, but estimates of experts of TAdviser (see the section "VR/AR projects Economy") show that the cost of one full-scale project can be about 50-100 million rubles. Thus, cost estimation of only one Gazprom Neft on VR/AR makes about 40-50 million rubles in 2018 and for the next years (taking into account transfer of pilot projects to full-scale) can reach 100-150 and more than one million rubles;
• The companies which conduct experiments with VR/AR approximately at the same level (both on functionality, and on budgets) as Gazprom Neft, publicly there are not less than 10 (at least, 3-4 times more companies which do not do the activities in this direction publicly known). Thus, the total score of costs for projects in the direction of VR/AR in 2018 makes 1.2-2 billion rubles. For forecast calculations till 2022 we will accept as original value average value from the specified range – 1.6 billion rubles.

Proceeding from all listed above calculated parameters and assumptions, industrial solutions VR/AR in 2022 can make the forecast of volume of the Russian market:

• Pessimistic assessment - at annual average growth rate of 55% (the minimum assessment, according to the western forecasts, for VR projects) – 9.2 billion rubles (growth for 4 years – by 5.8 times);
• Optimistic assessment - at annual average growth rate of 85% (an average between the western projections for VR-and AR-applications, respectively) - 18.7 billion rubles (growth for 4 years – by 11.7 times).

You look also Virtual reality

Notes