Though there is strong interest in and momentum behind the virtual reality market, the tipping point on mainstream adoption is still years away, Greenlight VR found in a new 10-year outlook on the emerging sector.
The research firm sees the total number of VR headsets on the market, including mobile VR devices (such as the Samsung Gear VR and tethered head-mounted displays (such as the Oculus Rift and HTC Vive) growing from 2 million this year to 136 million in 2025.
Of the two categories, mobile VR headsets are poised to dominate the market, Greenlight VR found in the just-released 2016 Virtual Reality Industry Report.
Mobile VR headsets (not counting Google Cardboard units) will rise from 1 million this year, to 122 million in 2025, while tethered VR headsets increase from 1 million in 2016, to 13.6 million in 2025, Greenlight VR said in a forecast co-authored with Road to VR.
Though Oculus dominated the early headlines for tethered VR products, the Sony PlayStation VR “may outstrip the competition,” the report said, citing Sony’s relatively lower price, large PS4 install base, and its access to media assets and longstanding studio relationships. With that factored in, Greenlight VR expects Sony to sell 3.1 million PS VR units by 2018, representing more than half of the market for head-mounted displays.
Greenlight VR said its optimistic overall on the market for VR and augmented reality, but anticipates a slow but steady adoption ramp because of some specific obstacles, including competing standards for positional tracking, uncertainty about the sector’s technology and ecosystem, and challenges faced by developers to monetize their creations.
“We believe the VR hardware market and related ecosystem will take another 6-8 years to reach a tipping point of hyper growth along the adoption cycle,” Greenlight VR noted in the report. “Unlike smartphones, where there was a stronger need for consumers to have these devices, the use cases that will drive broad consumer adoption are still early in development.”
The study also focused on the prospects for VR developers. Though some will focus on multiple VR genres, developers are gravitating most heavily toward games (41%), followed by non-gaming entertainment (37%), education 33%, virtual travel (22%), social networking (17%), corporate training (22%), and healthcare-related apps and services (17%).
Regarding business models, 15% of developers expect to base them on sales (with a basic “freemium” version), 13% on sales with no basic freemium version, 9% on subscription models, 7% on “micro-transactional” sales whereby customers make purchases within the content, and 4% are looking at ad-supported approaches. About 41% expect to pursue a mix of one or more of those options.
“There are disruptions unfolding and exciting new markets being created, but just not in the timing, structure and size you might expect, given the attention the industry has been attracting in the last 12 months,” Clifton Dawson, CEO of Greenlight VR, said in a statement. “While we forecast a slower adoption curve over the near term, we’re encouraged by the depth of progress being made by large and small companies. We are optimistic that the industry will overcome its challenges, which currently exist all along the value-chain and are structural, technical, and human in nature.”