What a VC Sees In Augmented Reality

In a conversation with VentureWire, DCM's general partner Honda shed light on the burgeoning field of augmented reality, and described the fast-moving technology scene in Japan. Here’s an edited excerpt of this interview from The Wall Street Journal.

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What a VC Sees In Augmented Reality

In Opinion October 04, 2010

Osuke Honda, a general partner with Menlo Park, Calif.-based venture firm DCM, says he has been traveling back and forth between Japan and the U.S. all his life. He spearheads many of DCM’s investments in Japanese companies from the firm’s office in Tokyo, and this week participated in a $12 million Series B funding for augmented-reality company Tonchidot Corp.In a conversation with VentureWire, Honda shed light on the burgeoning field of augmented reality, and described the fast-moving technology scene in Japan. Here’s an edited excerpt of this interview.Q: Augmented reality has obvious potential for advertising and social networking. What can you tell us about augmented reality, and where it’s going?
A: Augmented reality is a very powerful interface. The thinking is that the second wave will be all about social, and location-based. One direction we should consider is incorporating image-recognition. You’re shopping at a store, and you see that your friend bought the same shoe for a different price. For Tonchidot, we have a concept called SOLAR, social location-based augmented reality. Tonchidot is going to enhance the mobile social game.In gaming, we see a third wave as 3-D and the intersection of the virtual and the real. Combining social location technology with this third wave becomes really powerful.Q: You do a lot of investing in mobile technology. How is Japan different from the U.S., in terms of smartphones and consumer behavior?
A:The biggest difference is that Japanese consumers have been exposed to 3G phones for the past 10 years. Ninety percent of feature phones have GPS, and have for about the last five years. Consumers have been exposed to high-performance devices and mobile social games for years. The carriers in Japan adapted their payment plans. It’s all-you-can-use Internet for a flat fee. They did this about five years ago, and it really boosted mobile usage.

Q: So, if Japanese consumers are a bit further along, what are they doing with mobile devices that we are not doing here? What can we learn by watching Japan?
A: Fundamentally, there’s not a huge difference. U.S. users are on the PC. Japanese users are on mobile. But what users want does not differ that much. They want a fun experience. Japanese users are more used to location-based services, and they’re more trained to pay for content. Today, in Japan, we see more social apps. There is much more virality than in the past. In social mobile games, there are two major players, DeNA and GREE. DeNA has a market cap of about $4 billion.(read the full interview)

 



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