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Forecast: VR Market Will Reach $162 Billion by 2020

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The virtual and augmented reality industry is just starting to take off. According to research from the International Data Corporation (IDC), worldwide revenues for the augmented reality and virtual reality (AR/VR) market is forecast to grow from $5.2 billion in 2016 to more than $162 billion in 2020.

More than half of the revenue will come from VR/AR hardware sales.

As VR hardware continues to compress in price and powerful smartphone based systems like Samsung’s Gear VR and Google’s mobile VR Daydream platform gain steam, it’s expected that 50% of worldwide revenues will be generated by VR/AR hardware sales according to the report.

AR/VR software revenues will also get off to a quick start, growing more than 200% year over year in 2016, but will quickly be overtaken by services revenue in the middle years of the forecast, as logistics and manufacturing demand even more enterprise-class support.

The forecast also reports that revenues for VR systems, including viewers, software, consulting services and systems integration services, are forecast to be greater than AR-related revenues in 2016 and 2017, largely due to consumer uptake of games and paid content. After 2017, AR revenues will surge ahead, hitting critical mass in healthcare delivery and product design and management-related use cases.

Most revenue through 2020 will come from the US.

The US, Western Europe, and Asia Pacific (excluding Japan) are projected to account for three-quarters of revenue for VR and AR. The United States will pull well ahead of the other two regions by 2020.

It’s an exciting time for the VR industry, but at the same time these are early days for consumer adoption. Many consumers have yet to even experience more accessible VR headsets like Google Cardboard or Gear VR — leaving quite a bit of head room for growth.

We can expect smartphone based VR headsets to at first lead the charge, many of which will be easier on consumer wallets. But in order to reach mainstream adoption of stand-alone headsets, it will be up to developers and hardware manufacturers to continue building more engaging ecosystems of content that will entice non-early adopters into the mix. At the same time, expanding capabilities of existing mobile headsets will create new use cases and appeal to an even greater audience. One example of this being Samsung’s latest addition of a USB Type-C connector to their new Gear VR headset, which opens up possibilities for additional peripheral devices like motion controls or positional tracking sensors.

So with the race to get VR headsets into the hands of consumers and newer device entrants like Google Daydream rumored to launch in “weeks,” who’s been fairing the best when it comes to social conversation online?

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HTC Vive most talked about headset on social media.

According to the latest Adobe 2016 Gaming report, HTC Vive has been rising above the competition. The social conversation listening report shows a decrease in online mentions from Q1 2016 to Q2 2016 for Microsoft Hololens, Playstation VR and Oculus Rift — but a 115% increase in people talking about the Vive.

The research analyzed 20 million social mentions on sites like Reddit, Facebook, Twitter, Instagram and YouTube, as well as from 2.5 billion visits to retail gaming and gaming-related websites over 2015 and 2016.

On a broader level, the same Adobe report shows that virtual and augmented reality devices have seen “phenomenal” growth in social conversation, with a 548% rise in Twitter mentions since January last year.

About the Scout

Jonathan Nafarrete

Jonathan Nafarrete is the co-founder and editor-in-chief of VRScout.

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