SuperData Expands Market Research Scope & Forecast of $40 Billion VR Market
SuperData expands research scope of $40B virtual reality market, lowers short-term growth and adds hardware forecasts. SuperData Research, the leading provider of market intelligence on playable media and digital games, has adjusted their VR market forecasts.
The firm anticipates the total market for VR content to reach $40 billion by 2020E. Over the next five years, SuperData expects the number of households that owns at least one VR device to increase nine-fold.
hardware + software revenue in $ billions
Pre-orders of VR devices have made headlines in recent months, as the Samsung Gear VR, Oculus Rift and the HTC Vive all sold out upon release. Taking into account this greater-than-expected appetite for the new technology, in combination with recent announcements from key industry stakeholders, SuperData now predicts the total market revenue will reach $40B over the next five years, a CAGR of 61.3%. Mobile will lead with 16.8M devices sold and PC initially lags at 2.0M until high processor requirements and prices decrease.
Playstation VR sales are currently forecasted to reach 2.6 million by the end of this year after anticipation heightened once Sony announced a big reveal at this year’s Game Developer Conference.
“After conversations with key hardware and software companies, we are confident that our forecasts have been adjusted to more accurately reflect the VR market’s potential,” said SuperData Director of Research and VR lead Stephanie Llamas. “As expected, mobile device adoption will be highest due to accessibility to hardware, lower price points and forced adoption. This will be the key audience for entertainment, the second largest segment, while VR gaming’s $6.9B market in 2020E will mostly center on PC and console.”
The monumental interest gathering this year suggests that VR will eventually reach 195 million households by 2020E, mirroring similar growth trends of media hardware like color TV and computers. According to Llamas: “John Riccitiello’s “gap of disappointment” — an initial lull in adoption that eventually grows an increasing rate — helped us understand VR hardware’s place within a historical context.”
Hardware adoption has always grown exponentially and, as a result, the new forecasts reflect this trend. “There is a lack of content in the beginning of a new media cycle, which is something that VR is facing now. Software revenue will begin with just a half a billion dollars in revenue, growing slowly year-over-year until acceleration begins with $24B in 2020E. Now that developers see VR’s potential they are clamoring for first-mover advantage leading software revenue to outpace hardware by 2019E.”
SuperData is currently leading the effort to help media firms understand the Virtual Reality marketplace. Our background as the top research firm for digital games and playable media helps us leverage both data acquisition and consumer insights efforts, allowing us to forecast the market with increasing accuracy.
Key Data Points On Current Market for Virtual Reality
Total VR market revenue will reach $40B over the next five years, at a CAGR of 61.3%.
Almost 200M households worldwide will own at least one VR device by 2020E.
Mobile manufacturers are on track to sell 17M VR devices in 2016E, as console hits almost 3M and PC another 2M.
VR manufacturers will see slow device adoption to start, but will show quick linear growth once John Riccitiello’s “Gap of Disappointment” passes in 2020E.
Initially gaming will claim three-quarters (77%) of the VR software market, eventually giving way to non-gaming content developers.
Interview W/ Stephanie Llamas Director, Research and Insights @ SuperData Research
VRR: There are numbers of existing market data research companies, how does SuperData differentiates from existing research firms? Can you share your vision?
Stephanie: We have access to information that other firms don't through our long-time industry contacts and data partners. We launched a report in February 2014 on the VR industry when most people and research companies weren't interested because we saw it’s massive potential. Closely following the industry since day one means we don’t have to try to catch up – we are already there. VR is not an output for media – it is a medium just like televisions and computers. It will change how we view and interact with content in the same way and we plan to be on the forefront of that change.
VRR: Are Virtual Reality and Augmented Reality industries going to be SuperData's key focus in the years to come?
Stephanie: They will be one of them, yes. We are currently the leading provider of research for the entire digital gaming market as well as playable media, which we define as any medium that facilitates or is facilitated by interactive content. This covers topics like gaming video content and eSports, but also VR at large– not just in terms of gaming.
VRR: How does SuperData team collect data, perform research, and generate market forecast? Through random sampling, in-house data mining team, or via more traditional method such as having people filled out online forms and so forth?
Stephanie: Our approach is entirely data driven and with a bottom-up approach. We use point of sale data that no other firm has, and that gives us clarity and comprehensiveness on the digital games and playable media market that isn’t available to other firms. We then compliment that data through consumer insights that we gather from consumers. Since we have focused specifically on digital games since 2009, we can dive deeper into not only the who and what, but the why of parallel topics like VR.
VRR: What is SuperData's plan and agenda for 2016? Is SuperData going to host analytic events or VR/AR focused conference or discussion panel?
Stephanie: We are already speaking about, have spoken about and have been on discussion panels regarding VR/AR at a number of conferences including Casual Connect and SxSW. We definitely plan to keep evangelizing VR/AR at industry events and will be holding a webinar soon.
VRR: Where do you see VR/AR in the next 5 years?
Stephanie: We foresee the industry growing to $40B by 2020E. It will initially be driven by gamers since mobile devices are still largely unknown and high-end devices require intensive processing power that most computers don't have. However, as more industries become keen on VR, we see gaming accounting for only a quarter of the market in the next five years as entertainment emerges. Mobile devices will largely focus on entertainment since they will be the key drivers of adoption growth, while PC and console devices will continue to be focused on gaming and enterprise like training and design.
About SuperData Research
Founded by veteran games industry researchers, SuperData is the leading provider of market intelligence covering the market for free-to-play gaming, digital console, mobile, PC downloadable, streaming media and eSports. Using digital point-of-sale data received from publishers, developers and payment service providers, SuperData’s analyses are based on the monthly spending of 48 million paying online gamers worldwide in combination with qualitative consumer insight. SuperData helps its customers understand what people play, connect to and spend on.
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