Consumers are expected to spend more than $11 billion on virtual reality (VR) technology over the next few years, data analysis company IHS Markit reports.
The new analysis and forecast claims installed base of VR headsets will jump from 4 million in 2015 to 81 million in 2020. mainly fueled by high-end VR headsets, low-end VR headsets that use smartphones for their displays.
That same year, consumer spending on VR headsets are forecasted to reach $7.9 billion and spending on VR entertainment will hit $3.3 billion.
IHS analysts predict a polarization of two main VR markets. Lower volume premium VR headsets — such as Oculus Rift or HTC Vive — and higher-volume cheaper smartphone VR headsets like Google Daydream View.
“While the VR headset installed base will escalate significantly to 81 million by 2020, we predict that expensive, higher-end headsets will dominate content monetization,” said Piers Harding-Rolls, director of games analysis at IHS Technology in an official statement.
Consumer spending on VR headsets will be $1.6 billion in 2016, bolstered heavily by the launch of high-end headsets from Oculus, HTC and Sony. This will drive average sales price of all headsets to close to $85 from $26 in 2015. The average selling price is expected to climb sharply once again in 2017 to $191 as high-end headsets sell more, the IHS Technology report said.
Meanwhile, consumer spending on VR entertainment is forecast to hit $310 million in 2016, growing to $3.3 billion in 2020, as the high-end headsets gain more traction.
“A $3.3 billion VR entertainment market by 2020 will represent less than 1 percent of overall entertainment spending worldwide,” Harding-Rolls said. “There is certainly more to be done in terms of premium content for VR platforms and it will take time to deliver on the potential of the technology.”
IHS Technology forecasts Samsung’s Gear VR to have the largest installed base out of all the major branded headsets in 2016 with 5.4 million.
However, the launch of Google’s Daydream View — Google’s next generation smartphone VR headset — will slowly disrupt Samsung’s dominant market position in the smartphone VR market.
IHS Technology forecasts that Google Daydream View will become the most popular headset for VR by 2019. Google will overtake Samsung’s Gear VR due to broad industry support, a compelling $79 price point and the delivery of a premium smartphone VR experience.
IHS Technology claims Sony’s PlayStation VR will outsell Oculus Rift and HTC Vive combined in 2016, but will also be supply-constrained as the company plays it safe on stock inventory.
In 2016, IHS Technology forecasts PlayStation VR will sell 1.4 million headsets and will generate $134 million in spending on VR entertainment, with the PC-based headsets generating $69 million.
Crucially, PlayStation VR comes to market at a cheaper price point than the PC competition and is addressing a much larger audience of PlayStation 4 consoles than VR-ready PCs. The installed base of PS4s will reach 53 million by the end of 2016, compared to 16 million VR-ready consumer PCs.