Virtual Reality by the Numbers: 5 Things You Need to Know in 2017

Who are the big players? Where are the opportunities? How does the general public feel? We look at the major trends in VR to be aware of in the coming year.

Virtual Reality (VR) has finally arrived. Questions of affordabilty aside, 2016 was the year that VR products finally hit store shelves in a major way. But now that the products are out there, the big test is whether consumers will actually use them. And if they do what will they use them for? So will VR hardware become as popular as smartphones? Or will this be a trend we see fizzling out sooner than later? We took at look at some of the numbers and came up with five things everyone should know about VR in 2017:

According to ReportLinker the majority of Americans are not aware of the major VR brands (Image source: ReportLinker) 

1.) Most Americans Don't Understand VR

There may be a section devoted to VR gear at your local Best Buy already but that doesn't mean consumers understand why it's there. A 2016 survey by ReportLinker found that “the majority of respondents do not understand the concept of virtual reality and fully half cannot name a single brand behind the VR technology.” According to the survey 58% of Americans have heard about VR, but aren't able to “explain what it's all about.” Not surprisingly, millennials exhibited the greatest familiarity with VR. What this represents however is a disconnect between the dollars going into developing and marketing VR technology and actual consumer understanding of what the big deal is. 

2.) No One Agrees How Much the VR Market Will be Worth

Depending on whom you ask, analysts are estimating the VR market to grow into the tens of billions in the next 3 years. Estimates are placing the VR market at anywhere from $10 billion to as high as $70 billion by the 2020s. Factor in augmented reality (AR) products as well and market estimates balloon into the hundreds of billions. A 2016 report by MarketsandMarkets estimated the market will be worth $33.9 billion by 2022, coinciding with estimates from other analyst groups such as Digi-Capital. Meanwhile, a 2015 report released by TrendForce estimated the VR hardware and software market would reach $6.7 billion in 2016 and hit $70 billion by 2017. Most analysts agree that hardware will be the major driver in the VR segment, generating upwards of 61% of revenue in the coming years (according to Greenlight Insights). However in its report, TrendForce noted that app development, particularly from independent developers could also be a major driver of market growth.

Projections estimate the VR market will be worth anywhere from $30-70 billion by 2020. (Image source: Greenlight Insights)

 

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3.) VR Hardware Comes in 3 Categories

With so many different product offering hitting the market it can be easy to get confused. However it's best and easiest to think of VR hardware as falling into one of three categories:

  1. PC Headsets – Arguably the most popular at the moment, these include the Oculus Rift and HTC Vive. These headsets require high power computers to run but enjoy a growing base of app support thanks to networks like Valve's Steam network for download games and VR apps.
  2. Console Headsets – The first of these to make a major impact was the Playstation VR headset. Likely companies like Sony and other console makers like Microsoft and Nintendo will be relying on the popularity and ease of console gaming to bring VR into the limelight. Among gamers, console VR headsets will likely boast the same debates as console vs. PC-based gaming in terms of quality of performance and content.
  3. Untethered / Mobile Headsets – the cheapest option. These include Samsung's Galaxy Gear, the Freefly VR headset, and Google's DayDream View headsets. Essentially these are standalone rigs that rely on a high-end smartphone inserted into them to handle all the heavy lifting. These can be a nice option for casual users who already own the latest model smartphone, but won't satisfy serious consumers looking for a hardcore VR experience.
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4.) There's Big Market Potential Beyond Gaming

Gaming to VR is like film and TV to television sets. Although the video game market (and to a slightly lesser extent entertainment like movies and live events) is widely projected to be the major revenue driver for VR, analysts are also predicting a major impact in other markets as well. In 2015, Walker and Sands conducted its first Future of Retail survey and found that, “More than a third of consumers (35 percent) say they would shop more online if they were able to try on a product virtually using a product like Oculus Rift, and 63 percent said they expect it to impact their shopping experience in the future.” The healthcare market is also expecting a major disruption from VR and AR technology. In a January 2016 report, Goldman Sachs, estimated VR and AR present a revenue opportunity that could reach $5.1 billion by 2025 because of the potential for VR and AR in telepresence, treating phobias, adding in medical procedures and training, and disrupting the market for patient monitoring devices. In the engineering sector, Goldman Sachs has estimated VR and AR will generate $4.7 billion in revenue by 2025. In its calculations, the firm estimated that 3.2 million engineers will be using VR and/or AR as part of their workflow by 2025 given VR and AR's potential in computer-aided design and product development.

Sony's Playstation VR is the first major console-based VR headset to hit the market. (Image source: Sony Computer Entertainment). 

5.) There are 11 Major Players in VR to Watch

On the software / app side expect to see a wide array of companies getting into the market. But on the hardware end there are 11 major companies to keep an eye on”

  1. Alphabet – the parent company of Google. The company has already invested into VR and AR hardware with products such as Google Glass and DayDream VR. The company is also well positioned on the content side – YouTube already offers support for 360-degree streaming video and Google should have a big presence in the VR advertising market.

  2. AMD – The chipmaker will be among many that manufacture the high-end processors needed to run VR on PCs and other systems.

  3. Facebook – The parent company of Oculus VR. Facebook is the owner of the company that put VR back on the map and is heavily invested in making VR a social experience. In a February 2016 earnings call, Facebook CEO Mark Zuckerberg announced that over 1 million hours of 360-degree video through Facebook via devices like the Samsung Galaxy Gear.

  4. GoPro – the leading name in consumer head-mounted cameras. GoPro is looking to be a leader in producing VR content. The company has already launched the Omni, a six-camera spherical array for creating 360-degree content.

  5. HTC – Creators of the Vive, the main competitor to the Oculus Rift in the PC VR headset market. The Vive also boasts support from Valve's Steam network, a platform for downloading game content from developers at all levels that boasts over 100 million subscribers.

  6. Largen Precision – According to Goldman Sachs, the lens manufacturer is poised to become a major name in supplying lenses for hardware behind creating and experiencing VR. According to Goldman Sachs, “In our research on VR hardware, plastic Fresnel convex lenses would be the mainstream VR HMD magnifying lenses. We believe Largan’s expertise in plastic lenses could enable it to outperform its competitors...”

  7. Microsoft – to date Microsoft has kept its focus squarely in the AR market with its Hololens product – targeted mainly at enterprise applications over entertainment. However as a major name in gaming consumers should not be surprised if Microsft also begins a push into VR either through a strategic partnership with a company like Oculus or HTC or through going the Sony route and developing its own hardware.

  8. Nvidia – According to Goldman Sachs, “Nvidia has partnerships in place with approx. 250 companies to work on VR applications with its DesignWorks and GameWorks platforms, including vendors such as Oculus and HTC.” Perhaps known best for its high-end graphics processors (GPUs) for gaming, Nvidia has also been actively developing and released GPUs targeted at bringing VR to enterprise applications such as product design.

  9. Qualcomm – As a big name in mobile hardware, Qualcomm is already positioned to take advantage of the demand for stronger processors in the mobile VR market. However the company is also looking to enable OEMs looking to develop their own VR hardware. Earlier in 2016 the company released a development kit built around its Snapdragon VR820 processor.

  10. Samsung – Makers of the Galaxy Gear VR. Samsung has already established itself as the major name in mobile VR. Consumers should look for it to maintain this position with further iterations of the Gear VR.

  11. Sony – the first gaming console maker to create its own headset, the Playstation VR, which was released in October 2016. 2017 will be the first big test of the Playstation VR as the company releases its first wave of big titles for the hardware. Depending on whether hardcore gamers and enthusiasts jump on board the Playstation VR could be the first indication of just how strong the market and demand for console-based VR really is.

Chris Wiltz is the Managing Editor of Design News.

 

look aheadThe new year is here and already proving to offer significant opportunities and advances on 2016. Before you dive to deeply into 2017, prepare yourself for what will surely be an innovative year with more stories from Design News' "Look Ahead: 7 Areas of Advancing Engineering Opportunity in 2017" article series.

 

 

 

 

 

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