VR Headset sales grow faster than expected as awareness grows and content improves

Ben Wood, chief of Research at CCS Insight

Global sales of dedicated virtual reality (VR) headsets will grow to 21 million units by 2020 — a tenfold increase over 2016.

However, the augmented reality (AR) device market, although growing, is taking longer than expected given its primary focus on business use

So says CCS Insight in its latest global forecast for virtual reality (VR) and augmented reality (AR) devices, which indicates a positive outlook for these nascent markets.

Sales of smartphone VR devices, including products based on Google’s Cardboard design and more advanced devices such as Samsung’s Gear VR headset, have exceeded CCS Insight’s earlier expectations. The company now predicts that 14.5 million smartphone VR headsets, worth over $500 million, will be sold in 2016.

Ben Wood, chief of Research at CCS Insight, commented, “Virtual reality has clearly captured consumers’ imagination, particularly those that have had a chance to try it. The affordability of basic cardboard headsets makes virtual reality easily accessible to smartphone owners, and the explosion of 360-degree content is taking awareness to new levels.”

This view is backed up by other market data points. In May, Google revealed that its Cardboard application has been installed over 50 million times, up from 25 million installs in January 2016. In July, Oculus VR disclosed there were more than 1 million monthly active users of the Oculus-powered Samsung Gear VR, and this month it was announced that more than 250,000 360-degree videos have been uploaded to Facebook.

Wood continued, “The momentum of 360-degree content is palpable and that’s driving sales of VR headsets. All major content providers are piling into this area, and user-generated content is poised to explode as more affordable 360-degree cameras come to market. We envision a world where ‘surroundie’ photos and videos become the next big thing, especially as 360-degree content can be so easily shared with more than 1.7 billion Facebook and YouTube users.”

Dedicated VR headsets like the Oculus Rift and HTC Vive are also performing well. CCS Insight estimates that approximately 2 million of this type of device will be sold in 2016, rising to 21 million in 2020.

Wood commented: “Although it’s early days for dedicated virtual reality, it’s a promising market. HTC and Oculus VR struggled to meet demand when they launched their products and we expect a further wave of sales when Sony launches the PlayStation VR headset.”

CCS Insight estimates that the total VR device market will be worth $1.5 billion in 2016, rising to $11 billion by 2020. Dedicated VR headsets will play a critically important role, accounting for 85% of total market value despite being only 23% of volume, as low-cost smartphone VR products sell in their millions.

In contrast, the market for augmented reality devices is progressing more slowly than expected. CCS Insight believes this can be attributed to the primary focus on enterprise solutions and the relative immaturity of the technology.

Although there are numerous very promising field trials underway, mass deployments remain elusive. As a result, CCS Insight forecasts sales of about 200,000 units in 2016.

However, the potential for AR technology is clear and this is reflected in CCS Insight’s forecast of 7 million unit sales in 2020, with a market value of $3.8 billion.

Wood commented, “We expect augmented reality technology to evolve quickly and the experience to improve dramatically. It’s little surprise that companies such as Microsoft and Google are placing such big bets in this area”.

He continued, “The added dimension of the Pokemon Go craze has undoubtedly raised awareness of the potential for augmented reality. That can only be positive for the technology.”

Comment on this article below or via Twitter: @IoTNow_ OR @jcIoTnow

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