New Forecast Shows Continued Growth in VR and AR Market

Device Shipments Will Near 100 Million Units in 2021

Today CCS Insight published its latest forecast update for virtual reality (VR) and augmented reality (AR) devices. Here we share some of the highlights.

In 2017, we expect that 16 million VR and AR devices will be shipped, representing growth of 47 percent year-on-year. The value of devices sold into the channel is estimated to be $1.6 billion.

It hasn’t all been plain sailing for these technologies, but we anticipate that growth will continue over the next few years, with total shipments reaching nearly 100 million units in 2021.

Unsurprisingly, the market continues to be dominated by smartphone-based VR and AR devices, thanks to their lower cost and widespread availability. We expect them to account for 13 million units of the 16 million total devices sold in 2017.

When it comes to dedicated VR devices, we’ve seen Facebook (Oculus), HTC (Vive) and Sony (PlayStation) all cut their prices in an effort to boost sales and grab a bigger slice of the market. Our estimates indicate a combined volume of 3 million units for dedicated VR in 2017, rising to 5 million units in 2018.

We think the category will benefit from the introduction of Microsoft-powered headsets from companies such as Acer, Asus, Dell, HP and Lenovo, with Microsoft putting some serious marketing muscle behind these products in the run up to Christmas and beyond.

Our forecast also reveals that China is showing signs of potential. We’ve raised our forecast expectations for this market, owing to the growing interest in VR from large Chinese companies such as Alibaba, which has offered shopping by VR, and Tencent, which is expected to launch its own VR headset. Furthermore, there are many gamers in the Chinese market who have PCs capable of supporting the new range of Microsoft-powered headsets.

There’s also a growing array of VR and AR content available. To date, a lot of VR devices have been bought for gaming, but we’re seeing growing momentum for other content genres including sports, film, TV and pornography. This is underlined by Facebook’s recent revelation that it now hosts 1 million 360-degree videos, which have generated 580 million views.

Augmented reality is another hot topic and it’s something we’ve regularly written about (see, for example, Parallel Realities). We believe this is an area that has a promising future. Apple’s commitment to the technology on iPhones through its ARKit platform and the advent of Google’s ARCore on Android smartphones are big factors in this.

Although these platforms are currently only available on smartphones, in our view, the growing use of AR experiences on a hand-held smartphone can only be a good thing for head-worn technology like AR glasses. We think it’s only a matter of time before a big manufacturer offers a pair of smart glasses designed for consumers.

As with many of CCS Insight’s forecasts, we have provided low and high scenarios describing possible outcomes. The high scenario is based on the assumption that a company such as Amazon or Apple will join the AR glasses party. This could offer a huge boost to the segment in a similar way to when Apple entered the smartwatch segment.

We also see continued, steady growth for AR glasses in specific business applications such as warehousing and field service. With numerous trials underway, it’s only a matter of time before pilots turn to bigger trials and then full-scale deployment.

The chart below offers a snapshot of our latest VR and AR forecast:

Shipments of VR and AR devices by category, 2016-2021
Source: CCS Insight VR and AR Forecast, October 2017

Click on the image above for a larger version or click here for a PDF version.

Full details of our forecast are available here to CCS Insight clients with a subscription to our virtual and augmented reality research. For more information about this service, please contact us.