Magic Leap's new reality and Meta's Luxexcel buy

Hi all! I hope everyone's having a nice, enjoyable end to 2022. It's been good to rest up a bit after the end of my first grad semester, and Vector Media Club supporters should keep an eye out for reviews landing in their inboxes soon. On to the newsletter!

The path ahead for Magic Leap

On Monday, The Telegraph's Matthew Field broke the news on Magic Leap's 2022 raise of $450 million, a development that has seen Saudi Arabia's Public Investment Fund take majority control of the Florida-based AR company. As of last month, the PIF can now appoint four members out of Magic Leap's eight-person board of directors.

This isn't all that surprising given how Magic Leap has fared since the release of its first AR headset. In early 2018, the PIF put $400 million in Magic Leap, making it one of the startup's biggest investors prior to the debut of the Magic Leap One Creator Edition later that year. Then came the largely underwhelming response to the headset, a report of terrible sales a year later, and mass layoffs in early 2020. After spending the better part of a decade hyping up its AR tech, it looked like Magic Leap was near collapse less than two years after releasing its first headset. Attempts at a sale didn't pan out, so a takeover could have been plausible then.

Of course, Magic Leap started course corrections in 2020 and raised more money along the way. Soon after securing a $350 million lifeline, founder Rony Abovitz was replaced as CEO by Peggy Johsnon, who has overseen Magic Leap's full-on enterprise pivot and the launch of the Magic Leap 2. In October 2021, Johnson announced a $500 million raise at a $2 billion valuation from existing investors. Whatever role the PIF took during this period, the advent of a partnership with Aramco between those raises suggests Magic Leap's backers in Saudi Arabia remained proactive in making connections.

So, Magic Leap's now got a bit more money ($300 million of it in debt) to put behind its tech, and the Magic Leap 2 has been out of early access since September, sparking a few questions. How strong of a showing does Magic Leap 2 need to have next year if the startup hopes to raise again soon? What happens if concerns recently flaring over Twitter spill onto other Saudi tech investments? Will we see Magic Leap take any new leaps in 2023?

On that last, wide-open question, my mind goes back to part of Johnson's recent 2022 wrapup post. "We have also received an incredible amount of interest from across the industry to license our IP and utilize our patented manufacturing process to produce optics for others seeking to launch their own mixed-reality technology," Johnson wrote. "The fact that companies are asking us to do this doesn’t come as a surprise. It highlights just how hard it is to develop and manufacture AR hardware–and that our years of experience have provided us with a competitive advantage in this market."

Though I only used the headset for a very limited pre-release demo, I did come away convinced that Magic Leap 2 represented a decent step forward for the company's optics. Could we see Magic Leap license or manufacture for others? Maybe if there were signs pointing to AR component prowess leading to big deals that investors with sway at Magic Leap might follow…

Oh right–we've been seeing signs like that for years now, and today brought us another one.

Another piece of Meta's glasses puzzle?

Belgian newspaper De Tijd confirmed that Meta bought Luxexcel, a company specializing in 3D printing prescription lenses that should be familiar to anyone who has been following the AR glasses space for a while. The deal price has not been disclosed.

I came to the news Wednesday by way of Karl Guttag's blog post about the deal. Guttag added that he had heard a rumor about a Luxexcel buyout "as far back as June 2022," which he noted could mean that the deal was underway or completed sometime before the worst of Meta's woes this year.

In any case, Luxexcel has been on a short list of component-makers that I thought could either get bought or sign into an exclusive partnership for a while now. For AR, Luxexcel's main claim to fame is that it has developed and demonstrated methods to 3D print lens enclosures that encase and protect an embedded optical waveguide while also providing vision correction. In 2021, Luxexcel demonstrated the tech with diffractive waveguides from WaveOptics, and a year later it returned to show off a demonstration developed with reflective waveguides from Lumus.

The Luxexcel pitch–that this 3D printing approach is an ideal and scalable way to get waveguides into prescription glasses–is not the only proposed path to get to displays that would work for a consumer-ready AR product. Meta's interest in it may point toward complementary technologies it wants to use in upcoming glasses, or it may be more of a defensive move (either way, I'm interested to see if Meta skips past clip-in prescription lens inserts by the time it starts testing AR glasses more openly).

Remember, we've already been seeing this with waveguides and projectors. Snap bought WaveOptics and Compound Photonics, Google bought MicroLED startup Raxium, and Meta (then Facebook) moved to lock down Plessey's display tech before Apple could, and so on. Don't forget about the North acquisition either.

Regardless of whether you think this much consolidation before AR glasses have really emerged as a strong device category is a good trend or not, this move makes for something of a fitting end to this year in immersive tech. As much of the industry puts hope behind mixed reality while also bracing for Apple's overdue entry, and after all we've seen happen to Meta including the regulatory pushback, we're back to a familiar story of a big company hoovering up a smaller one in the race to put AR glasses on our faces. How long it will be until one of these deep-pocketed buyers assembles something it's ready to sell is anyone's guess.

More news:

• According to NPD Group, sales of VR headsets in the United States declined 2% in 2022, and analysts CCS Insight project a 12% drop in VR and AR device shipments year over year. [Jonathan Vanian / CNBC]
• Sony is researching wireless VR solutions and has more PS VR 2 titles to announce, says Senior Vice President of Platform Experience Hideaki Nishino. [Famitsu via Mixed Reality News]
• Bigscreen released an update adding "full native" support for watching Disney+ and Amazon Prime Video (among others) in its social VR streaming app. [Ian Hamilton / UploadVR]
• Somnium Space revealed what it's calling its "final design" for the open source VR1 headset, a PC-tethered device it plans to show off at CES next month. [Official blog post]
• Shiftall announced that it will bring a new SteamVR compatible, Lighthouse-tracked controller design to CES. [Shiftall via Brad Lynch]
• Worth reading: this exploration of VRChat's lively club scene from Tom Faber of The New York Times.
• Don't have New Years Eve plans? Well, you could always pop on your Quest 2 and see what the Shaquille O'Neal-hosted Horizon Worlds "Shaq'tacular Spectacular" event looks like on December 31st.