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VR hardware will grow to $50 billion by 2021 - Juniper

Research firm expects gaming to drive new tech, with consoles accounting for half of all VR hardware revenues

Oculus Rift, Vive, and PlayStation VR may not have set the world on fire just yet, but analysts are still big on virtual reality. In a "Virtual Reality ~ Virtually Here" whitepaper released today, Juniper Research forecast that the VR hardware market--including VR headsets, peripherals, and 360-degree cameras--would grow to more than $50 billion by 2021.

"This rapid growth will arise from a widespread adoption of VR by smartphone users, and the high unit prices commanded by headsets for PCs and consoles," the report said. "The market will be triggered by the launch of PlayStation VR this October, and Microsoft's Project Scorpio in 2017 - offering compatibility with the Oculus Rift."

Juniper noted that the biggest hurdle for VR is the cost of the hardware. While the company believes smartphone-based VR headsets will dominate in terms of units sold and mainstream adoption thanks to price, it believes the mobile revenue share of the VR market will slide from 15% this year to 7% in 2021. Meanwhile, console VR is expected to outperform its PC counterparts because the cost of adoption will be lower, partly because consoles are much cheaper than VR-capable PCs at the moment, and partly because console VR headset makers can offer the hardware at a lower cost and make the money back on software sold through their closed ecosystems.

"We expect 2017 to be the biggest year for console-based VR revenue growth, as there are several units coming into the market which are not feeling the impact of price competition," Juniper said. "This means we will see a rise in [average selling price] across both 2017 and 2018 as the newer models come into the market, and only adjust to each others' presence over the course of a year or two, insulated to a degree by ecosystem lock-in."

Juniper also expressed some concern about price erosion in the PC VR market.

"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," research author Joe Crabtree said. "When AAA publishers release to PC, they may have trouble selling with traditional AAA prices, while console users have no such habit to break."

$50 billion isn't the largest number being tossed around for the VR industry, but it is still quite bullish. In August, IDC projected worldwide VR/AR revenues of hardware and software to total $162 billion in 2020. However, the firm expects AR to account for the lion's share of that number, with hardware making up about half of the total revenues. While that might suggest VR hardware topping out around the $40 billion range, IDC didn't specifically break down its numbers and Juniper's projections include an extra year for the industry to grow.

Juniper's numbers also seem bullish by comparison in the near-term, as the firm estimates that 2016 will see $5 billion in VR hardware revenues generated worldwide. In January, Superdata projected that 2016 would see VR hardware and software revenues combine for $5.1 billion, but scaled that back twice before ultimately settling on a combined projection of just $2.9 billion.

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Latest comments (4)

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.2 years ago
So, expect between 50-75% of this figure (if that much). Seems every projection provided for VR/AR, mobile, eSports, etc...has been high to the point of absurdity. It will be great, but expectations that put it above things like the global box office and all major league sports in just 4 years should be restrained.
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Jordan Lund Columnist 2 years ago
From $0 to $50 billion in 5 years? Seems like an overly ambitious projection.

Before it can reach the point of a stable industry, there has to be a certain level of wash-out. Remember when "set top boxes" and "CD ROM" was the big thing? Sega CD and NEC TurboGrafx/DUO sure, but there was the 3DO, the CDi, the Jaguar CD, the Pioneer LaserActive, the Tandy Viz, the Apple Pippin, the Commodore CD32, and so on.

There will be something similar with VR. It looks like ViewMaster is already dead.
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The roller-coaster of VR/AR speculation just goes to prove the questionable nature of this kind of speculation. It is sadly lacking from the media to do follow-ups of the accuracy of this kind of coverage - especially as their headlines are normally used as click bait to generate views.

Just one example of the questioning of this kind of 'wild' speculation on the VR scenes worth is its constant omission of the Out-of-Home entertainment element - especially as we see great investment in 'VR Arcades' across the international scene - but a basket of embarrassments from some media to reveal it is a thing - a thing they all have failed to report!

Edited 1 times. Last edit by kevin williams on 5th October 2016 10:43am

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Nick Parker Consultant 2 years ago
I'm not really interested in market value sizes that include hardware to measure long term performance. Hardware volume, yes as that provides an addressable market figure on which to target games development. Hardware value resonates more with retailers and the actual device manufacturers. I need more VR games software market (size and tie ratios) clarity.
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