From January to August of 2022, Helsinki XR Center conducted an interview study of the Finnish XR industry: its the current state, challenges and possibilities. This article covers the main points of the study in English. The full HXRC report can be downloaded in Finnish below.
From January to August of 2022, Helsinki XR Center conducted a study of the Finnish XR industry. The goal of the study was to get an overview of the current state, challenges and possibilities of the XR businesses in Finland, such as:
- the current state and future prospects
- ways of developing business
- effects of the COVID-19 pandemic
- needs related to technologies, know-how and recruitment
- quality of networks
XR (eXtended Reality) refers to a number of immersive technologies, covering virtual, augmented and mixed realities. These technologies are used in anything from art to education, from healthcare to heavy industries.
HXRC conducted interviews with representatives from 42 companies across these fields. Over half of them were working exclusively with XR. About 25% of companies were mainly doing other business, but dabbled with XR, for example in prototyping. For the remaining 20%, XR constituted some part of the business.
This is an English-language summary of the key points on company information, and interesting highlights of the report. The full version is available in Finnish through the links below. For additional information on the study, please contact [email protected]
Size: Out of the 42 companies, half were micro companies employing 1–5 people and a quarter were small companies employing 10–25 people. A few were large companies with XR divisions within them.
Turnover: The yearly turnover of 32 companies (excluding large companies) totaled at 6 857 000 €. The smallest turnover was about 10 000€ and the largest 800 000€ a year.
Employees: Not counting the large companies dealing primarily with other industries, the companies employed a total of 455 full-time employees. 330 of them worked in the Uusimaa region and 125 elsewhere in Finland.
Gender: 34 companies knew their employees’ gender distribution, amounting to 76% men and 24% women. The divide was slightly more even in the Uusimaa region.
Industries: Education, industry and culture were the largest of sectors the companies made solutions for. Other industries included healthcare, the entertainment industry, construction, sales and marketing, and tourism.
Effects of COVID-19: 20% of the companies felt like the COVD-19 pandemic actually had a positive impact on their business – likely due to the rise of solutions for communicating remotely. 40% did not see a big change or had a balance of both positive and negative impacts. Another 40% felt the negative effects, largely due to not being able to present their solutions to customers at expos and other real-life environments – customers are not yet familiar enough with XR technologies to imagine these solutions without the use of VR headsets or AR tools.
Future prospects: Despite COVID-19 and other challenges, all interviewees believed that the XR industry will develop in the future – they believed that customers and investors now have better knowledge of XR and are more interested in investing in XR solutions compared to pre-pandemic. 10% were still cautious about the prospects of their companies, but the other 90% believed that their companies will see good growth and development.
Challenges: The companies faced various challenges when growing their companies, the main ones being challenges in recruitment and finding professionals, challenges in finding investors, and the underdeveloped market consumers don’t have much knowledge about. There were also problems with scaling, technologies, uncertain income, and market positioning.
International expansion: Half of the respondents were interested in expanding their business abroad, and half had already done so. One respondent was happy working within Finland.
Events: 90% of respondents had participated in industry events. The events were seen as beneficial for networking, expanding knowledge about XR, visibility, and getting new leads or customers.
Higher education collaboration: 90% of companies had already collaborated with higher education institutions, and 93% were interested in doing so in the future. The most interesting way of doing this was collaborating on projects, development or research. Respondents were also interested in taking in interns or doing recruitment, providing classes or courses in schools, or having institutions as customers.
Recruitment needs: 90% of companies had recruitment needs. The most sought-after skills were coding and sales and marketing. There was also a need for graphic skills, AV knowledge, design, and company management.
Client acquisition: 98% of companies were interested in acquiring new clients. The most common ways of doing this were using direct marketing, utilizing networks or current contacts, and events. Often potential clients were the first ones to make contact.
Peer collaboration: Most companies were interested in some sort of collaboration between companies in the field – mainly general networking. Collaborative projects were also interesting, but respondents mentioned preferring to collaborate with companies not in direct competition with them, for example one company providing hardware and the other creating software.
Networking: Most companies saw great benefits in networking. To help companies find each other, institutions and investors, we are launching our XR Network – a platform for networking within the ecosystem.
Events: Since companies largely see industry events as beneficial, HXRC will keep organizing them, now returning to live events.The highlight of 2022 will be Match XR, where various SME companies will have the opportunity to exhibit their products and services.
Technological facilities: Since 95% of respondents were interested in a service providing XR technologies (with main interest being in the latest VR headsets) for testing and loaning, HXRC will map out these needs and aim to provide these technologies. We will also offer space for Finnish XR companies to present their products and services.
Mentoring: 64% of respondents were interested in being mentored, and 55% in offering mentoring. HXRC will continue to act as a facilitator in these connections.
This study was conducted as a part of two HXRC projects: AXE4 (Assisting XR Entrepreneurs Forward) and VTS (Virtual Trade Show). The projects are funded by the Helsinki-Uusimaa Regional Council and the European Regional Development Fund. Helsinki XR Center is a part of Metropolia University of Applied Sciences’ RDI unit.