The virtual reality (VR) and augmented reality (AR) headset market is forecast to grow at a compound annual rate of 58% over the next five years, with total headset device shipments expected to reach 99.4 million in 2021, according to data from the International Data Corporation (IDC).
In 2016, a total of 10.1 million VR headset devices were shipped. The IDC expects that figure to increase almost ten-fold in four years’ time.
Ramon Llamas, research manager with IDC’s Augmented and Virtual Reality team, said that “2016 marked an important step for the AR and VR headset market with product finally arriving in end users’ hands and on their heads.”
What’s expected to significantly help drive demand in the future is the potential benefits that AR and VR will offer enterprise users, as well as the promise of immersive experiences for consumers in the form of gaming and content consumption.
The IDC notes in its report that, for enterprise users, AR and VR are expected to raise productivity, “allowing workers to see and interact with data, like a building blueprint or the organs of a human being, instead of viewing a static image on a screen.”
For consumers, content creators are already exploring ways of offering “as-if-you-were-there” experiences, such as virtually attending a concert or sports event from the comfort of one’s home. The gaming industry is also creating more virtual experiences for players to explore and engage in using a VR headset.
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Worldwide AR and VR Headset Market, Shipments by Category, Market Share, and 2016 – 2021 CAGR (shipments in millions) |
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Segment
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2016 Shipments
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2016 Market Share
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2021 Shipments*
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2021 Market Share*
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2016 – 2021 CAGR*
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| Commercial | 2.0 | 20.1% | 38.3 | 38.5% | 80.0% |
| Consumer | 8.1 | 79.9% | 61.1 | 61.5% | 49.9% |
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Total
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10.1
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100.0%
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99.4
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100.0%
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58.0%
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| Source: IDC Worldwide AR/VR Headset Tracker, March 16, 2017
* Forecast data |
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AR expected to generate more revenue than VR
Although AR headsets have shipped fewer units compared to VR headsets, the IDC expects AR headsets to generate more revenue over the five-year forecast period compared to VR.
The value of AR headsets is forecast to grow from $209 million in 2016 to $48.7 billion in 2021, while the value of VR headsets is expected to grow from $2.1 billion in 2016 to $18.6 billion in 2021.
“With all the technological enhancements, there will be a wide range of products and price points,” said Jitesh Ubrani senior research analyst for IDC’s Mobile Device Trackers. “VR setups already range from sub-$100 to more than $1000 and though it’s too early to tell, the low-cost experiences may prove to be inhibitors rather than promoters of the technology as they can potentially disappoint first time VR users.
“On the other hand, due to the sophisticaltion of the hardware, most AR headsets are expected to cost well over $1000,” continued Ubrani. “This makes the technology far less accessible to consumers intially, though that’s probably for the best as the AR ecosystem and wide social acceptance are still a few years away.”
Augmented reality provides the user with information about things in their field of vision. Virtual reality, on the other hand, refers to pretend places, i.e. virtual environments, where the user can interact and do things.