Virtual reality is poised to explode in 2016 (FB)
BI Intelligence
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This could be the year of virtual reality.
Estimates predict that smartphone-powered VR headsets such as the Samsung Gear VR and standalone devices such as the Oculus Rift (though to a lesser degree) will gain significant traction for the first time in 2016.
Strategy Analytics notes that adoption would likely be slow at first thanks to high costs and low consumer awareness, but the firm expects VR headsets to generate up to $895 million in revenue this year.
Premium devices such as the Oculus Rift, HTC Vive, and Sony PlayStation VR will represent most of the revenue but only a small portion of the shipments. Early adopters would likely look to these devices and because of the higher price points, these headsets would make up 77% of the total revenue in 2016. This revenue share would represent 1.7 million units, or 13% of 12.8 million VR devices shipped.
On the flip side, the smartphone-powered devices such as the Samsung Gear VR will account for 87% of all VR devices shipped but just 23% of the revenue. The accessibility of these devices, which stems from their frequent bundling with new smartphones, means they would act as a natural entry point to VR for many consumers who might be unsure about testing the waters of the VR market.
But consumer awareness is expected to grow exponentially in 2016, which would help spur shipment growth. The smartphone-powered devices are expected to rule in terms of adoption in the next few years because the standalone devices often require consumers to purchase a high-end gaming PC to power them. The HTC Vive, for example, costs $800, but a PC that can run the device would cost an additional $1,000.
The VR market is poised to take off, but there is still plenty more to learn about the world of virtual reality hardware.
BI Intelligence, Business Insider's premium research service, has compiled a detailed report on virtual reality hardware that provides proprietary forecasts for VR headset shipments and revenue and estimates average selling price over the next five years. The report also takes a look at the different types of VR headset technology now on the market, discusses which categories will win out, and looks at several use cases for VR headsets, including gaming and other.
BI Intelligence
Here are some key points from the report:
- Virtual Reality (VR) headsets are debuting on the consumer market and set to launch an advanced and immersive content platform. We estimate shipments of VR headsets will grow at a swift 99% compound annual growth rate between 2015 and 2020.
- VR shipments will create a $2.8 billion hardware market by 2020, up from an estimated $37 million market this year.
- VR headsets are a fairly low-cost consumer electronics category, and this will help drive adoption. The devices will be priced similarly to smartwatches and also need to pair with another standalone computing device.
- Demand for VR headsets will be fueled by gaming on both mobile and console devices. There are 1.2 billion gamers worldwide, including nearly 1 billion mobile gamers alone. This creates a direct, addressable market for VR headsets.
- Beyond gaming, VR will be an important platform for streaming content and even shopping. Oculus has already experimented with Story Studio, a platform for VR movie creation. In addition, many consumers claim the VR experience will drive them to shop more online rather than in stores.
In full, the report:
- Forecasts annual shipments of VR headsets between 2015 and 2020.
- Sizes the market for VR headset shipments by revenue and anticipates how the VR headset average selling price will trend.
- Breaks down VR headset shipments by category, including traditional VR headsets, smartphone-mounted VR headsets, and gaming-console headsets.
- Pinpoints the gaming console market as a key driver of demand for VR headsets.
- Discusses the opportunity for VR content creation in gaming, streaming video, and shopping.
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