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Market Forecast Virtual and Augmented Reality Devices Worldwide, 2018-2022

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Market Forecast Virtual and Augmented Reality Devices Worldwide, 2018-2022 Market Forecast Virtual and Augmented Reality Devices Worldwide, 2018-2022 November 2018 Update Content . Categorization of virtual reality (VR) and augmented reality (AR) devices . Summary of the VR and AR devices forecast . VR devices forecast . AR devices forecast Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 2 Categorization of VR and AR Devices Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 3 Important Change to the Forecast Scope . We have removed cardboard VR devices from the scope of the forecast, including retrospectively . This is based on our view that cardboard VR shells no longer deliver attractive VR experiences and are rarely used more than once or twice – A large share of these devices were offered to users free of charge or as part of promotions with other products. Many of these free devices were not even tried once. – Of those that were tried, we believe the vast majority were quickly abandoned. For this reason, it is misleading to continue to count these devices as part of the installed base of VR products . We believe that removing these cardboard devices creates a much more realistic picture of the adoption of VR Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 4 VR and AR: Split into Subcategories Subcategory Definition Examples of current devices Devices providing a VR or AR experience by using the screen and processing power Smartphone VR of a smartphone, which is inserted into the device Samsung Gear VR Carl Zeiss VR One Lenovo Mirage Homido V2 Devices that offer a VR experience by Tethered VR tethering for processing purposes to another device: a PC, gaming console or smartphone Oculus Quest Lenovo Mirage SoloXiaomi Mi VR HTC Vive Focus A self-contained VR headset powered by Standalone VR an on-board processor, battery and various sensors Oculus Rift Sony PlayStation VRHTC Vive Pro Acer OJO 500 Glasses that overlay virtual information AR smart glasses onto the user's field of vision Google Glass (2017) Vuzix M300 Epson Moverio BT-300 Enhanced AR headsets place virtual objects in the real world and allow users Enhanced AR to interact with them through gestures and voice commands Microsoft HoloLens Meta 2 ODG R-9 Magic Leap Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 5 Enhanced AR Microsoft HoloLens Magic Leap Meta 2 ODG R-9 . Definition: enhanced AR headsets place virtual objects in the real world and allow users to interact with them through gestures and voice commands – These devices could be standalone, or tethered to a computing module, battery pack or controller. Primary uses: – Enterprise: industrial, architectural, manufacturing, engineering, education and medical. – Consumer: home entertainment, gaming, communication and design, specific activities like skiing and cycling. Key current players: Microsoft, ODG, Magic Leap, Meta Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 10 Summary of the VR and AR Devices Forecast Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 11 Key Assumptions . VR and AR show great potential but the technologies will take time to develop as more improvement is needed in numerous areas related to the hardware user experience, software platforms and content availability . Content is a principal driver of VR demand and usage. Availability of high-quality, interactive content can help speed up adoption. Conversely, the lack of attractive and engaging content could delay this . In the short term, the market for VR headsets is being driven by two main uses: gaming and video (including adult content). This is reflected in CCS Insight's consumer research. In addition, there will be some enterprise adoption of VR in areas such as marketing, product demonstrations and training . A major source of VR adoption will be standalone VR headsets, as they provide the easiest experience at prices that allow broader adoption in many markets . Tethered VR devices will remain important for users who want a best-in-class experience. We expect tethering to become wireless, which will greatly improve the user experience. Throughout the forecast period, we expect Sony to remain committed to VR devices, with its headsets being tethered to gaming consoles . Smartphone VR devices made of plastic played a key role in raising the awareness of VR over the past three years. However, the experience they provide has not proven to be as attractive as expected, and these devices are expected to lose market share. We expect them to remain a niche in the low-end segment of the VR device market . AR adoption will develop in two streams: enterprise and consumer, but growth will take time – Enterprise adoption has been slow and will remain slow, but as a result of the high price of enhanced AR devices even small volumes will fuel revenue growth. – Consumer uptake will be boosted by new technology solutions and growing awareness of AR. Attractive products will appeal to technology enthusiasts and, beyond the current forecast period, possibly to the mass market. Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 12 Key Messages: the VR and AR Market in 2022 . There will be 134 million VR and AR devices in use in 2022, up from 25 million at the end of 2018 – Of these, only 6 million will be AR devices. The rest will be VR devices. Shipments of VR and AR devices will reach 52 million units in 2022 – Of these, 55%, or 29 million, will be standalone VR devices. – With 18 million units, tethered VR will account for 35% of total shipments. – AR will remain a small segment, with 4 million units. – 91% of the shipments will be to advanced markets in North America, Western Europe and Asia–Pacific, including China. The combined sell-in value of VR and AR devices will be $8.5 billion in 2022 – The majority of the value will come from standalone and tethered VR devices. – Despite accounting for a small share of the volume, AR devices will account for 22% of the market value owing to their high prices. Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 14 Changes to the Forecast since March 2018 . The new forecast excludes cardboard VR devices. They have been excluded retrospectively too . We have further reduced our outlook for VR and AR devices . VR devices – The forecast for the smartphone VR subcategory has been considerably reduced, reflecting our view that there is limited potential for this segment. This based on low sales in 2018, coupled with solid progress in the development of the standalone VR segment. – Our forecast for standalone VR devices has been increased as a result of more-promising pricing, the broader appeal of standalone devices and the immersive experience and relative ease of use they offer. – We have reduced our forecast for tethered VR devices. We believe some volume will shift to standalone VR devices. AR devices – Our enterprise adoption forecast has remained largely unchanged. We continue to see positive, albeit slow, development of this market. – We have delayed our expectations for consumer adoption of AR smart glasses by another year. We still expect that consumer devices will succeed in future, but currently we see no evidence of devices that will prompt widespread adoption. A more positive outlook is shown in our high scenario. Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 15 Installed Base of AR and VR Devices Will Reach 134 Million in 2022 Installed base at end of year (M), core scenario 150 134 6 Augmented reality 100 89 3 Virtual reality 59 128 1 50 38 86 25 18 58 8 38 2 18 25 0 8 2015 2016 2017 2018 2019 2020 2021 2022 . Virtual reality will see good growth, driven by gaming and video content . Another source of growth will be the use of VR in enterprises and in the entertainment industry (for example, theme parks, theatres and so on) . AR devices will be adopted by enterprises and consumers, but sales volumes will remain small until the early 2020s Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 17 VR Devices Forecast Market Forecast: Virtual and Augmented Reality Devices, Worldwide, 2018-2022 © CCS Insight 22 Summary of the VR Forecast . We expect 7.9 million VR devices to be shipped in 2018, with a sell-in value of $1.4 billion – Smartphone VR devices have experienced a steep decline in shipments: from 7.7 million units in 2017 to 2.6 million units in 2018, despite heavy price promotions. We believe this is the result of two main factors: beyond technology enthusiasts and early adopters, consumers have not been inspired by the experience of smartphone VR offers. At the same time, we believe hardware companies see standalone VR devices as a better way forward. – Tethered VR devices will see growth from 2.4 million units in 2017 to 3.5 million units in 2018. The biggest shipment volume in this category will come from Sony, which we expect to ship 2 million units in 2018. – Standalone VR devices are forecast to see volume of 1.8 million units in 2018, up from just above zero in 2017. This is thanks to significant launches such as the Oculus Go (a cooperation between Facebook and Xiaomi) and HTC's Vive Focus. A significant proportion of standalone VR unit sales in 2018 will take place in China. Shipments of VR devices are expected to reach 49 million units in 2022, with a value of $6.6 billion – With 29 million units, standalone VR devices will account for 59% of total unit shipments in 2022.
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