Market Forecast Virtual and Augmented Reality Devices Worldwide, 2016-2020 - August 2016 - CCS Insight
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Market Forecast
Virtual and Augmented Reality Devices
Worldwide, 2016-2020
August 2016Content Categorization of virtual reality (VR) and augmented reality (AR) devices Update on the VR and AR market in 2016 Key assumptions and long-term evolution Summary of the VR and AR forecast Smartphone VR forecast Dedicated VR forecast AR forecast Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 2
Categorization of VR and AR Devices Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 3
VR and AR: Split into Subcategories
Subcategory Definition Examples of current devices
Augmented reality Devices that overlay information from
smart glasses a smartphone onto the user's field of
vision.
Recon Jet Vuzix M300 Epson Moverio BT-300
Mixed reality Mixed reality headsets place virtual
objects in the real world and allow
users to interact with them through
gestures and voice commands. Microsoft HoloLens Meta 2 Intel Alloy HMD
Smartphone virtual Devices providing a fully immersive
reality VR experience by using the screen
and processing power of a
smartphone, which is inserted into the
Samsung Gear VR Carl Zeiss VR One Google Cardboard
device.
Dedicated virtual Devices that offer a fully immersive
reality experience enhanced by additional
sensors, cameras and controllers.
Oculus Rift Sony PlayStation VR HTC Vive
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 4Smartphone VR: Competitive Landscape
Samsung Gear VR Carl Zeiss VR One View-Master VR Google Cardboard
Definition: smartphone VR devices provide a fully immersive experience. They use the screen and processing
power of a smartphone, which is inserted into the device.
– Some advanced, high-end products like the Samsung Gear VR can include sensors, a camera and other enhancements.
– Simple cardboard or plastic devices with extremely low retail pricing provide a basic, but sufficiently good introductory VR
experience at the low end.
Primary uses:
– Consumer: gaming, home entertainment and sharing user-generated content.
– Enterprise: marketing, tourism and education.
Key current players: Google, Samsung, Carl Zeiss.
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 5Key Messages from the VR and AR Market in 2016
Smartphone VR is gaining momentum.
– Samsung Gear VR is performing well. Samsung sold over 500,000 units in Europe alone from January to August 2016.
– In May, Google revealed its Cardboard application has been installed over 50 million times, up from 25 million installs in
January 2016.
– In July, Oculus VR disclosed there were more than 1 million monthly active users of the Oculus-powered Samsung Gear
VR headset.
Several dedicated VR devices successfully debuted.
– Oculus Rift started shipping its consumer version at the end of March 2016. Demand outstripped supply.
– The HTC Vive headset started selling in April. Unofficial numbers suggest sales have been strong. Our channel checks
support this.
– Sony PlayStation VR is expected to start selling in October.
AR devices have had a slow year to date.
– Despite our expectations that enterprise deployment of AR solutions in 2016 would grow strongly, adoption in the first half
of 2016 has been slow, primarily centred on low-volume pilot projects.
– Google Glass has all but disappeared from the public eye. Small competitors are selling thousands rather than tens of
thousands of units.
– Microsoft released its HoloLens device to the public at more than $3,000, but with few applications available, we expect
limited volume in 2016.
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 11Dedicated VR: Projected Evolution
2015 2016 to 2017 2018 to 2020 Distant future
Products: Early prototypes, First Oculus, HTC and More devices, mostly Large variety of
availability, developer kits. Sony devices, a small improved versions with products. Socially
functionality, number of other devices wireless connectivity. Links acceptable.
maturity following. to major gaming consoles.
Pricing High. Oculus sets price at Relatively stable.
$600.
Users Developers, individual Gamers, early Gamers, early enterprise Adoption beyond
enthusiasts. enthusiasts, trials by adoption in some verticals gamers. Many
enterprises. (retail, travel and others). possibilities in
enterprise, education
and entertainment.
Application or Gaming, exploration of Predominantly gaming. Predominantly gaming, also Anything. Immersion
use other uses, trials. entertainment content, can be in daily
marketing. situations.
Technology Very immature. Developing. Some Third generation. Problems Development in
problems solved, but solved. Links to other various directions.
others in progress. connected devices.
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 15Changes to the Forecast Since February 2016
Installed base of devices at end of year (M) Shipments of devices (M)
250 100
200 80
150 60
100 40
50 20
0 0
2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020
New forecast Previous forecast (Feb 2016) New forecast Previous forecast (Feb 2016)
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 20Installed Base of AR and VR Devices Will Reach 236 Million in 2020
Installed base at end of year (M), core scenario
250 236
12
AR
200 47
Dedicated VR
155
150 6
29 Smartphone VR
97
100
16 177
54
120
50 7
23 78
7 46
0.6 21
0
2014 2015 2016 2017 2018 2019 2020
The biggest adoption will be seen in smartphone VR devices — mostly made of plastic and cardboard — owing to
their low retail prices. Another driver will be the growth of the installed base of capable smartphones and of VR
content.
Adoption of dedicated VR headsets will mostly be boosted by gamers in the next few years. Another growth driver
will be marketing in certain industries selling high-value products and services such as cars and holidays.
AR devices will be adopted mainly by enterprises.
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 21Sell-In Value of AR and VR Devices Will Approach $15 Billion in 2020
ASP by subcategory ($), core scenario Sell-in value by subcategory ($B), core scenario
1,500 14.7
15
2.1
10.4 1.8
1,000 10 1.5
7.1 0.9
1.3 9.3
0.5
500 5 4.0 6.6
0.8
0.1 4.3
1.9
2.2
0.2 0.4 1.0
0.9 1.1 1.3 1.6
0 0
2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020
Smartphone VR Dedicated VR Smartphone VR Dedicated VR
AR smart glasses Mixed reality AR smart glasses Mixed reality
The majority of the market value will come from dedicated VR devices. We project the average selling price (ASP) of
dedicated VR to be relatively flat after their launches in 2016. These are devices for a limited audience, such as
advanced gamers, willing to pay for the latest technology.
Smartphone VR devices will account for the bulk of the volume, but only a small proportion of the value, as their
ASP is low and will erode fast. Some devices will be offered for free, or in a bundle with other technology products
or consumer products.
The ASP of AR devices will fall but will remain relatively high. Mixed reality devices will have a higher price that AR
glasses, owing to their superior capabilities and high build cost. AR will account for 26% of the total value in 2020.
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 25AR: Alternative Scenarios
Installed base at end of year (M) Sell-in volume (M)
25 12
21.2 10.0
10
20
8 7.3
6.9
15 13.1 12.4
6
10 3.7 3.6
6.1 6.5 4
4.9 2.2 2.0
5 1.5 1.9
2.4 3.0 3.1 2
1.6 0.7 1.0
0.2 0.61.0 0.2 0.3
0.0 0.1 0.03 0.02
0 0
2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020
Low Core High Low Core High
Drivers of low scenario: Drivers of high scenario:
– Slow conversion of trials to deployment in enterprises. – Successful conversion of most trials into operational
– Slow development of relevant applications. implementations using more devices.
– Hardware glitches make enterprises wait for future – Fast adoption by a specific vertical. One major player
iterations of the technology. drives quick adoption.
– Clear business case for adoption.
The difference between core, low and high scenarios is – Adoption in medicine and education.
only in the speed of adoption. – Some consumer adoption.
Market Forecast: Wearables, UK, 2016-2020 © CCS Insight 41More information about CCS Insight's wearables service can be found at: http://www.ccsinsight.com/our-services/wearables CCS Insight www.ccsinsight.com EMEA: Twitter: @ccsinsight North America: Tel: +44 8450 574223 info@ccsinsight.com Tel: +1 408 807 3637
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