VR to hit $70 billion by 2020 - Report

Research firm TrendForce puts next year's market at $6.7 billion, skyrocketing over next five years

Virtual reality hardware and software will be a $70 billion annual industry as soon as 2020, according to TrendForce. The research firm shared its analysis of the market today, saying VR hardware will bring in about $20 billion five years from now, with software accounting for about $50 billion.

Of course, the market is nowhere near that yet. With high-profile launches from Oculus, Sony, and Valve/HTC planned for early 2016, TrendForce expects next year to see VR generate $6.7 billion in revenue, with most of that coming from the hardware side given the technology's pricey initial buy-in costs.

"These explosive growth projections actually do not sufficiently reflect just how hot the VR industry is right now," said TrendForce wearable device analyst Jason Tsai. "The figures do not include the value of non-commercial uses of VR technology. For example, the industry is currently pushing the development of free software and do-it-yourself apps. While these projects do not immediately generate revenue for the developers, they have a vital role in the promotion market growth and innovations."

TrendForce believes social media will provide a strong platform for VR applications, as the sharing of user-generated VR content will help encourage adoption of the technology.

"The development of the VR industry is not solely based on wearable devices launched by major hardware vendors such as Sony, Oculus and HTC," Tsai said. "Much of the growth drive also comes from independent developers that contribute innovative apps to the VR industry. Their market value is not often reflected in the data. Since making apps does not have a high entry barrier, there has been a proliferation of non-commercial software made by students, independent developers and content providers. Instead of being guided by immediate commercial interests, they aim to attract consumers' attention with innovative products."

The company is the latest in a series of research firms to offer a prognostication of the burgeoning market, but TrendForce's outlook appears significantly rosier than that of its peers. In April, Digi-Capital predicted that VR revenues would only grow to $30 billion annually by 2020, dwarfed by augmented reality's $120 billion. In September, Juniper predicted an installed base of 30 million VR headsets globally, with retail revenue from headsets surpassing $4 billion. And in October, IHS projected a VR installed base of 38 million headsets by 2020, with annual hardware spend at just $2.7 billion.

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Latest comments (5)

Carl Hudson Studying Computer Science, University of Adelaide6 years ago
..and during all this, Nintendo wants to launch another game-box with (likely) the same old ip's on it.. My money is on VR.
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Nick Parker Consultant 6 years ago
VR will be multi functional, multi sector so these TrendForce estimates do not reveal the opportunity for the games industry. I'd prefer to look at those sources, specifically IHS, in the final paragraph and ignore the hardware values, as installed bases (volumes of headsets in homes as an addressable market for games developers) will be more relevant.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.6 years ago
Over hype. A bubble being inflated before it's even launched.

Carl, you are allowed to put money on both. It's OK. Though I see little of what relevance your post has to do with this.
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Shane Sweeney Academic 6 years ago
I see a slow yet permanent burn for VR. I see a splash of hard core gamer adoption but don't see it coming close to the Wii, but certainly one day. But within 5 years? Hmm.

I am however yet to be convinced of a killer app for VR outside of gaming until we start to hit portable AR.

Edited 1 times. Last edit by Shane Sweeney on 8th December 2015 1:13pm

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Julian Williams Founder, WIZDISH Ltd.6 years ago
Pretty well everyone I know who has tried the Vive or CV1 (or is the latest EV1?) has been convinced. These are no toys.
I was expecting just an incremental improvement over the DK2 but they are nothing like that and I think this is why we are seeing some optimistic projections. Time will tell if they're over-optimistic as that will depend on how quickly the tech improves and the quality of the content available.
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