The explosive popularity of Nintendo and Niantic’s GPS-based mobile game “Pokemon Go” around the world, including South Korea, has thrust into the spotlight the core technology behind the game -- augmented reality.

What exactly is augmented reality? It's a technology that overlays (or augments) digital images onto a person’s view of the world, merging one’s physical reality with digital imagination. In the case of “Pokemon Go,” the app utilizes gamers’ real-world locations to make Pokemon characters appear on their smartphone screens at different places.

Though they sound similar, AR fundamentally differs from virtual reality, which completely immerses users in computer-generated worlds via a VR headset, transporting them out of the real world and into the virtual.

Until recently, it was mostly VR that had been widely touted as the core technology of the future, including in Korea. The explosive popularity of “Pokemon Go,” however, suggests that AR’s interactive characteristic makes it a more promising technology that may have wider mainstream appeal than VR could ever achieve.

“AR has been garnering the new spotlight as it allows users to interact with diverse aspects of the physical world in various ways (unlike VR, which diverts users from their reality),” Korea’s Electronics and Telecommunications Research Institute said in a report released in February 2016.

“Whereas VR isolates users from the real world, AR merges the real world with virtual imagery to offer information rooted in reality. Given such real-life links, AR has potential for wider applications in fields including advertising, tourism, medical services, manufacturing, games and more,” ETRI said.

Given their inherent differences, the AR consumer market is forecast to hit $90 billion by 2020 while the VR consumer market will reach $30 billion by then, according to Digi-Capital, an AR and VR M&A advisor. It predicts the scale of the AR industry will surpass that of VR by 2019.

AR development status

Though the recent hype surrounding AR seems sudden, its concept has been around for decades. The notion of blending virtual graphics with physical reality was first envisioned in 1990 by Boeing researcher Tom Caudell, who coined the term “augmented reality” to describe a digital display that guides electricians in installing electric cables and fuselage inside aircrafts.

Public interest in AR briefly peaked in 2013, when Google released its Google Glass -- eyeglasses that displayed information directly in the user’s field of vision. Priced at around $1,500, the premium device, however, largely fell short of public expectations and failed to go mainstream.

Then came the unprecedented success of “Pokemon Go,” shedding light on the immense market potential of AR when appropriately merged with the right content, like Nintendo’s Pokemon.

Today, global tech giants such as Google and Microsoft are mainly at the forefront of AR technology development. In fact, the maker of “Pokemon Go,” Niantic, was a start-up spun off from Google just last year.

Google’s biggest AR project thus far has been Tango -- a vision technology that allows mobile devices to map out indoor spaces in 3-D and track the location of the device within that space. The tech giant has also invested in U.S. start-up Magic Leap, which is said to be developing a headset that overlays digital 3-D graphics onto a user’s view of the real world.

Microsoft is continuing to upgrade its HoloLens AR headset to improve its 3-D graphics and functions, while Apple, which has been quietly acquiring AR-related start-ups from last year, recently confirmed that the company is also working on AR.

“(The success of ‘Pokemon Go’) shows that AR can be really great, and we have been and continue to invest a lot in this. We’re high on AR for the long run,” Apple chief executive Tim Cook said during the firm’s quarterly earnings call Tuesday.

Korea’s place in AR

Considering that AR is expected to become the next big thing in tech, where does Korea stand in terms of AR development? Local analysts say the country lags behind its foreign counterparts in AR business, despite possessing relatively strong AR technologies of its own.

According to a recent report by Hyundai Research Institute, there were roughly 619 AR-related patents filed in Korea annually from 2010 to 2014. However, only 12.4 percent of the patented technologies were translated into commercial services during that period, the institute said.

“AR is a technology that already has a sizeable foundation here,” said HRI researcher Jeon Hae-young. “What we need now is not investment for R&D, but structured support in bringing such technologies to market.”

The AR gaming sector is an unexplored realm for Korea as well. “No Korean game companies are likely to release an AR-related game in the near future,” NH Investment Securities analyst Ahn Jae-min said, while suggesting companies currently preparing VR games may soon turn to AR.

For now, the most noteworthy player in Korea’s AR development business is SK Telecom, which since 2010 has been building its AR and VR technology platform T-Real. Last year, it partnered with Google’s Tango for a joint project to make diverse 3-D images appear in the real world.

Earlier this week, SKT entered a partnership with Israeli 3-D sensor processing developer Inuitive Ltd. with aims to enhance its imaging technology for AR solutions. In October 2015, it signed a similar deal with U.S. sensor solutions firm Leap Motion.

“With our AR, VR platform T-Real, we’re seeking to help new companies develop AR-based games and apps and nurture the growth of the local AR industry,” SKT spokesperson Huh Jae-seok said.

By Sohn Ji-young (jys@heraldcorp.com)