We’d love to hear your thoughts and questions in the comments below.  Also, we lost some formatting when importing the deck to Slideshare, so please excuse any irregularities…

To be clear, we don’t have any loyalties or ties when it comes to the technology we use – we’re not tied to any proprietary platform or the like. Our goal as an augmented reality software developer is simple: Build an amazing, easy to use experience for both our clients and their shoppers. And the fact is that today, and for the foreseeable future, that means developing in Flash. Here are two key reasons why we’re not currently on the HTML5 bandwagon:

1. No Official Webcam Support – Obviously, the camera is a key component for any augmented reality experience.
2. No Digital Rights Management Support – Do you want people to steal your content/code? We don’t.

Now, I’m confident that as the technology/market matures these issues will be worked out, but we’re talking a few years out from now, not today. And that’s where our focus lies, in creating experiences that work today (for as many people as possible).

What about your experiences? Are you developing in HTML5, or are you waiting too?

And it’s not just 2012.  ”The apparel and accessories category will lead ecommerce sales growth throughout the forecast period”, which runs through 2016.

The reasons for these gains?  Well, eMarketer principal analyst Jeffrey Grau notes that “Retailers continue to increase the scale of their ecommerce operations, particularly by investing in online sales platforms that display products and convert shoppers more effectively; apparel sales have benefited more than any other category. Apparel has become an online success due largely to easy and free returns, innovative visualization tools and the presence of customer reviews.”

More data proving that innovative visualization tools help drive online apparel sales?  I must say, it’s great to see 3rd party data supporting our findings.

• Average time spent – 76.1 seconds
• Click through to the landing page for more information after completing the interaction with the advertisement - 71.6%

A player is unable to dodge a paint can and loses 1,000 points

Partnering with Mattel, AttentionUSA and several other amazing companies we let fans of all ages step inside Barbie’s Dream Closet and actually see what they would look like in some of her most famous outfits. It was just over a week ago that the Dream Closet came to life as both a New York Fashion Week event and a website, but I’ll let Mattel’s press release provide more context, rather than recreate the wheel:

The Barbie® Dream Closet New York Fashion Week Experience

Debuting at the famed Lincoln Center, Barbie® will unveil a larger-than-life installation of her ultimate Dream Closet complete with 24-foot tall, jewel encrusted doors leading into a two-story, 9,000 square-foot set with multiple dressing vignettes. The New York Fashion Week installation will transport fashionistas and fans in the area inside Barbie’s fantastical wardrobe complete with augmented reality technology “mirrors” that allow users to literally doll themselves up in Barbie’s most iconic, playful and glamorous outfits from the past five decades. Live models also will “dress the set” adorned in high-luxe looks on loan from the Albright Fashion Library, an exclusive couture library that includes styles from Oscar de la Renta, Alexander McQueen, Gucci, Moschino, Chloe, and Burberry.

BarbieWow.com: A Global Fashion Destination for Fans of All Ages

BarbieWow.com opens its online doors on February 9th as the brand’s first single, global digital destination. The pink portal will transport fans in more than 30 countries inside Barbie’s Dream Closet with unique brand integrations and new media channels of “sharing and trending” that will turn raiding Barbie’s wardrobe into real-time, globally-shared experiences.

Once inside her Dream Closet, girls of all ages can explore a world of endless fashion, accessories and imaginative play, through interactive activities such as a design studio to dress up Barbie® and augmented-reality “mirrors” to dress up themselves using the doll’s favorite fashions. In partnership with top digital and style destinations Polyvore, Pinterest and Rent the Runway, girls can take inspiration from Barbie to create real-life looks and designs that are all their own. The site also features a section titled “Behind Pink Doors,” where top fashion influencers share stories behind meaningful pieces from their personal closet as an example of the transformative power of fashion.

To date, over 530 stories have been written about the Dream Closet, including pieces by The Wall Street Journal, CNET, PSFK and the Associated Press.  And while it feels fantastic to get that sort of coverage, it’s reactions like the ones below that make the late nights worth it. Also included below is a rough cut of some video taken during the Fashion Week event.  It documents two young women’s reactions as they use The Webcam Social Shopper for the first time.  Just like they would in a store, the young women start to honestly discuss what look works and doesn’t work (for them).

 A Young Woman Using The Dream Closet At Fashion Week

A Young Woman Reacts To The Webcam Social Shopper (Credit: WSJ)

A Young Barbie Cheerleader (Credit: BumpToBean)

  Two Young Women Using The Dream Closet ( Rough Cut Video)

 ”17% of our visitors are using this and they are converting two to three times more.”

Now, that’s a great stat, but when you couple it with data we’ve previously noted in this blog…

• Online retailer Banana Flame saw a 50% improvement in conversions on the “add to cart” button after integrating WSS (more Banana Flame data here).
• WSS is proven to help young women make more informed purchase decisions – “Seeing it on helped me decide” (Link)

… it becomes a trend.  It shows that augmented reality can provide real value for people, which subsequently provides real value (i.e. ROI) for businesses.

The average time spent with the Anthem Blue Cross ad is 76.1 seconds, Seventy-seven percent of consumers run through all three tools, and 71.6% of consumers click through to the landing page for more information after completing the interaction with the advertisement. (source)

Not bad numbers for an ad huh?

Below is a little visual walk-through of the experience…

As you can see, the space is starting to heat up.

We’ll try to update this list regularly, so please feel free to add anything I’m missing in the comments.

• Ditto Picks Up $3 Million From August Capital, Others For Its Virtual, 3D Eyeglasses Sales Site (Link)
• Total Immersion gets $5.5M to expand augmented reality (Link)
• Layar Augments Reality With $14M in New Funding (Link)
• Tonchidot Raises $12 Million Round B, Expands Augmented Reality/Social Gaming Platform SoLAR Globally (Link)
• EU backs ST-Ericsson to deliver augmented reality (Link)
• Google, Apple Making Augmented Reality Cool Amid CES (Link)
• Microsoft And TechStars Launch Kinect Accelerator For New Kinect-Based Startups (Link)
• Qualcomm opens submissions for its $200,000 Augmented Reality Developer Challenge (Link)
• Blippar raises seed funding from Qualcomm for mobile augmented reality technology (Link)
• Gamma III structures first round funding of Mobilizy GmbH (Makers of Wikitude) (Link)
• HP Acquires Control of Autonomy Corporation (Makers of Aurasma) (Link)
• Augmented Reality App Maker CrowdOptic Scores $500,000 In New Funding (Link)
• More funding news in Poland: augmented reality game ShootAR is backed by IIF (Link)
• 110 Stories: Augmented Reality Twin Towers iPhone App (Link)
• GoldRun Scores Funding for Mobile Discovery/AR App (Link)
• DARPA’s next-gen wearable display: augmented-reality, holographic sunglasses (Link)
• AR Developers Ogmento Raise $3.5M for Augmented Gaming Apps (Link)
• With $1.2M Of Seed Funding, A SoMoLo App For Augmented Reality Fans: Wallit (Link)

So, without further ado, let me give you a run down of our thinking on 3D Virtual Fitting Rooms:

THE GOOD

1. Depth Sensing Cameras – The cameras these executions are using are cutting edge and offer (developers) some huge opportunities to create compelling motion/gesture based user interfaces, and overall more sophisticated augmented reality user experiences. A depth sensing camera’s functionality is simply leaps and bounds more advanced than the average person’s webcam… it’s not even close. To borrow a Larry Miller quote: “It’s the difference between shooting a bullet and throwing it.”
2. Powerful Hardware Systems – When we’re looking at In-Store 3D Virtual Fitting Rooms, developers are able to control the hardware that’s powering the experience. That means they can create significantly more powerful applications since they don’t need to build software for the hardware the average user has at home (like we do). This is definitely a benefit.
3. Foot Traffic – These types of systems are pretty novel, and initially people will be interested in playing around with them. So if you’re one of the first stores to utilize the tech, you’ll probably generate a bit of extra foot traffic, and a bit of buzz.

THE BAD

1. At Home Hardware & Penetration – All of these 3D Virtual Fitting Rooms claim to work in people’s homes. And technically, that’s possible. They can be made to work in a home, but I’m going to get right to the point: do you have a depth sensing camera at home? Probably not. In short, that means you can’t use the 3D Virtual Fitting Room.  The fact is PCs and connected TVs are a few years away from having depth sensing cameras integrated natively, so realistically your only opportunity to have a depth sensing camera at home is to own a Microsoft Kinect.  So, let’s assume you have a Microsoft Kinect at home — after all, as of March there were already 10 million units sold. First off, as we discuss consumer reach, is should be noted that that number pales in comparison to the PC numbers Intel noted recently: over 1 million computers are sold daily and there are 1.5 billion in use. Second, Microsoft hasn’t announced details around commercial licenses for the Kinect. And that’s important. Will a retailer have to pay 50 grand to create Xbox applications? Will Microsoft take 30% of sales and kill any margins? Will they even allow a third party shopping application on X-Box Live or will they “reject” them when submitted? These are all questions that today we don’t know the answers to. So, if only a minority of people even have potentially compatible hardware, and those that do have no ability to access the software… how can people realistically use a retailer’s 3D Virtual Fitting Room at home?
2. Content Is King, And There Is No Content – This one will be quick: Manufacturers/Retailers don’t have 3D assets of their clothing items, and as of today 3D assets for augmented reality are cost prohibitive to produce. And without clothes, it’s not a very compelling “fitting room” is it?
3. “Fit” Just Can’t Be Done – Even if retailers could create perfect looking 3D assets in a cost effective manner, these alleged “3D Virtual Fitting Rooms” can’t accurately portray fit (i.e. where a garment would actually bunch, hang, or bulge on a person’s very unique body), or provide shopper’s with the tactile feedback that’s such a key component of the “promise of fit”.
4. What’s The Value-Ad For The In-Store Shopper? – Question: What exactly does the spate of 3D Virtual Fitting Rooms add to the current in-store shopping experience? It’s new… and different, sure. But does it truly help the shopper shop? Once they get past some initial “wow factor”, will it continue to add to the shopping experience? I mean, the actual dress is three feet away on a hanger. If they’re at home, I get it.  It can help them to better visualize what the item might look like on them.  But why would a shopper that’s in a store prefer to “hold up” a digital dress, rather than feel and interact with the real deal? They made the effort to leave their homes, and come to a store. Why would they then opt for an experience they could pretty much have at home on their laptop?

As I’m sure you can guess, in my opinion the “bad” outweighs the “good” for today’s crop of 3D Virtual Fitting Rooms. The technology is incredibly powerful but I think that the realities of the current marketplace make this technology an unwise investment for retailers.  To be honest, if a retailer has the luxury of being on a development timeline that lasts a few years and can afford some R&D, then my advice would change. But with budgets being tight, if a retailer wants to make an impact today, I think it’s way more prudent for them to start with a 2D experience online. It’ll cost less; will be easier to produce/execute; will be usable by significantly more of their shoppers; and, already has data to support its effectiveness.

As always, I’d love to hear your thoughts below…  And you can find me on twitter here.