Virtual Reality Revenue To Reach $21.8 Billion By 2020

The year 2016 will be the make or break year for the second coming of consumer virtual reality (VR), according to this new report. Facebook and Sony are both set to release the much-anticipated Oculus Rift and Project Morpheus headsets, respectively, by which time HTC’s Vive head-mounted display (HMD) will have been on the market for a while. A number of lessons have been learned since the 1990s when consumer virtual reality last generated this much hype, with huge strides having been made on the comfort of HMDs, creating a convincing level of immersion, the emergence of standards, and the development of compelling content.

Virtual Reality

The stakes are high for VR given the huge amount of money invested in the industry by some of the world’s biggest companies, says principal analyst Craig Foster. Getting users to experience virtual reality technology firsthand, and therefore truly understand its potential, remains a challenge, but the emergence of mobile VR solutions is helping. Even so, some observers strongly believe that anything requiring the user to wear a cumbersome device will ultimately fail. Consequently, industry players continue fine-tuning their products so as not to muddy the water for all involved.

The report anticipates that these efforts will bear fruit in the coming years, and that combined revenue for head-mounted displays (HMDs), VR accessories, and VR content will increase from $108.8 million in 2014 to $21.8 billion worldwide by 2020, with a compound annual growth rate (CAGR) of 142%. As adoption begins to reach a critical mass, the market intelligence firm forecasts that the industry’s revenue mix will quickly shift from hardware sales to content. Content sales will represent more than one-third of total VR revenue by 2017, and will quickly grow to nearly two-thirds of all virtual reality revenue by 2020.