VR revenue forecast to top $50 billion by 2021

New research forecasts revenues from virtual reality (VR) hardware – including headsets, peripherals and 360º cameras – could exceed $50 billion by 2021, some 10X more than sales in 2016.

Much of the growth will come on the shoulders of smartphone users, as their adoption increases, and general uptake in the sector is expected to increase as Sony’s new PlayStation VR launches later this month, fueled further by the expected launch of Microsoft’s Project Scorpio in 2017. Both offer compatibility with the Oculus Rift and strike a balance between computing power and cost, according to Juniper Research.

While revenue growth initially will be slow and driven by lower cost “holder” headsets that enable smartphone VR, more advanced (and pricier) platforms — like the Google Daydream – are projected to produce more moderate revenues in the short term.

The bright side, of course, is that low-cost headsets will allow consumers to trial VR.

To develop more fully, the market will need to move on from the PC-based VR content that currently dominates.

“Some of the most popular VR titles are currently priced much lower than traditional AAA games, sometimes as low as half the price,” said research author Joe Crabtree. “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. When AAA publishers release to PC, they may have trouble selling with traditional AAA prices, while console users have no such habit to break.”
Investment in the VR space has been growing. Content company Jaunt recently raised $65 million, VR broadcaster NextVR raised $30.5 million, while Icelandic game company CCP and 3D mapping tech company Matterport both raised $30 million each in funding. Juniper estimates funding for VR projects in 2015 topped $490 million.

This year also has been a busy one for VCs interested in VR, with Mindmaze raising $110 million in their second round of funding and NextVR having raised a further $80 million in funding. Juniper expects the total VR funding raised in 2016 to reach over $640 million.

What it means to pay-TV operators

Pay-TV service providers also are sticking their corporate toes in the VR waters; in fact, both Comcast and Time Warner are investors in NextVR to the tune of more than $30 million.

That’s in addition to the investments they’re making in 4K/UHD, which will go hand in hand with VR as it moves along through gaming and into entertainment, like sporting events and, well, anything.

Already, some studios have gamified movie trailers as they look to increase engagement in big budget releases, and increasingly are weighing how to integrate the technology into the content that 3D – which failed miserably – was supposed to re-energize.

Those efforts eventually will come to TV screens where operators hope to leverage their ongoing investments into increased bandwidth.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn