A new study by Juniper Research has found that the revenue from virtual reality hardware, including headsets, peripherals and 360° cameras, will reach more than $50bn by 2021.
This revenue prediction is ten times that of the estimated $5bn in sales this year.
The new research, Virtual Reality Markets: Hardware, Content & Accessories 2016-2021, suggests that this rapid growth in the market will come out of the high prices for console and PC units in combination with a large-scale adoption of virtual reality by smartphone users.
Triggered by Playstation VR’s launch this month, and Microsoft’s Project Scorpio next year, virtual reality hardware for consoles is predicted to account for over 50% of VR hardware revenues, but will only make up 27% of shipments.
The principle divide expected by Juniper is likely to fall between PC and console investment. While mobile users may well adopt the technology on a wide scale, the requisite low cost of headsets for smartphones is going to prevent that side of the market from dominating revenue.
Instead, the higher quality experiences offered up by PCs and consoles are likely to take the lead in justifying premium prices. The split is going to come from the current shape of the PC market and the high investment amounts required for entry into the top tier of PC experiences.
“Some of the most popular VR titles are currently priced much lower than traditional AAA games, sometimes as low as half the price”, remarked research author Joe Crabtree.
“In the several months since the launch of PC-based VR this year, consumer expectations are likely to have changed to expect shorter, cheaper games. When AAA publishers release to PC, they may have trouble selling with traditional AAA prices, while console users have no such habit to break.”
If accurate, the predictions made by the study are very promising for the future of VR. The high revenue from the PC and console market is not entirely unexpected and makes sense given the high cost of units for the devices but the amount of money, if accurate, suggests a more solid future than was necessarily expected.
Perhaps more important, if not as profitable, however, is the research’s expectations around the mobile market. One of the main obstacles that virtual reality faces is adoption on a scale beyond enthusiasts; a challenge emphasised by the same high unit costs that are likely to make it the most money.
The trend Juniper suggests is that low cost ‘holder’ headsets will allow a lot of users to give VR a try without having to worry about the price of the device if they don’t like it. And while consumers dipping in and out could pose a problem to developers, the promising element is that the more people give the technology a go in one format, the more likely we are to see a wholesale acceptance and interest among consumers.