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VR Slows As AR Grows VIRTUAL AND AUGMENTED REALITY USERS 2019 VR Slows as AR Grows MARCH 2019 Victoria Petrock Contributors: Jaimie Chung, Chris Keating VIRTUAL AND AUGMENTED REALITY 2019: VR SLOWS AS AR GROWS As virtual and augmented reality mature, both technologies are gaining traction among consumers and businesses. However, they are growing at different rates. This report provides our latest forecasts for virtual reality (VR) and augmented reality (AR) users in the US, and examines some of the market dynamics that are shaping the evolutions of both immersive technologies. What’s the difference between VR and AR? Though we US Virtual Reality and Augmented Reality Users, release our forecasts for VR and AR at the same time, 2017-2021 they are distinct technologies with different use cases. millions VR places users in virtual worlds and often requires the 85.0 use of specialized headsets, while AR involves overlaying 77.7 computer-generated information onto existing real-world 68.7 views and is largely accessible via everyday mobile 59.6 57.1 devices. VR is the more mature of the two technologies, 51.8 but has fewer users. 42.9 37.6 26.5 34.7 23.9 How many people in the US will use virtual and 19.6 15.7 augmented reality in 2019? We anticipate that 22.5 11.0 42.9 million people will use VR and 68.7 million will use 27.9 30.6 19.0 23.3 AR at least once per month. This represents 13.0% and 11.5 20.8% of the population, respectively. 2017 2018 2019 2020 2021 AR users VR users (nonheadset) VR headset users How are this year’s forecasts different from last Note: virtual reality (VR) users are individuals of any age who experience year’s? Since we released our 2018 forecasts, we have VR content at least once per month via any device; augmented reality (AR) users are individuals of any age who experience AR content at least once revised our VR user estimates downward and our AR user per month via any device estimates upward to reflect changing market dynamics. Source: eMarketer, March 2019 We have also added a new metric, “social network AR 245839 www.eMarketer.com users,” to capture the use of AR features within social KEY STAT: This year, 42.9 million people in the US will use networks such as Snapchat, Instagram, Facebook VR, and 68.7 million people will use AR at least once and Pinterest. per month. Why are there more AR users than VR users in the US? AR applications are increasingly accessible via everyday mobile devices and have the potential to make people’s lives easier. In addition to the breakout success CONTENTS of Pokémon Go in 2016, the introduction of Apple’s ARKit and Google’s ARCore software development kits 2 Virtual and Augmented Reality 2019: VR Slows as (SDKs) in 2017 signaled the tech industry’s confidence AR Grows in—and ongoing support of—AR experiences. This is 3 Virtual Reality: Still in Search of a ‘Killer’ App spurring developers to accelerate activity and create more applications. 5 Augmented Reality: Mobile Apps Take Off 8 Read Next WHAT’S IN THIS REPORT? This report includes our 2017-2021 forecast for VR and AR users in the US 8 Editorial and Production Contributors and an analysis of the forces shaping the growth of these technologies. VIRTUAL AND AUGMENTED REALITY USERS 2019: VR SLOWS AS AR GROWS ©2019 EMARKETER INC. ALL RIGHTS RESERVED 2 Behind the Numbers As a result of these consumer- and business-focused eMarketer’s US VR and AR user forecasts are updated advances, VR usage is steadily gaining traction, albeit annually to continually incorporate the latest changes at a slower-than-expected pace. In 2019, 42.9 million and developments in consumers’ adoption of VR and AR people in the US will use VR at least monthly, via any technology. Our forecasting methodology is based on device. By 2021, that figure will reach 57.1 million. And the analysis of more than 450 survey and traffic metrics over the forecast period from 2017 to 2021, the number from 78 sources, including research firms and regulatory of users will rise at a compound annual growth rate agencies, sales projections, historical trends, company- (CAGR) of 26.2%. specific data and demographic and socioeconomic factors. Our methodology incorporates ongoing qualitative trends and changes in major company initiatives, partnerships US Virtual Reality Users, 2017-2021 and innovations to deliver an accurate estimate of how VR millions and % change 57.1 and AR technology adoption is expected to evolve. 109.7% 51.8 42.9 VIRTUAL REALITY: STILL IN 34.7 SEARCH OF A ‘KILLER’ APP 22.5 Several years ago, industry analysts hailed VR as 54.1% the next big thing in consumer technology, but it 23.6% has yet to live up to expectations. Instead, VR has 20.8% been plagued by clunky and expensive hardware, 10.1% 2017 2018 2019 2020 2021 complaints of motion sickness and a scarcity of VR users % change compelling content. Worst of all, many consumers Note: individuals of any age who experience virtual reality (VR) content at just aren’t that interested. least once per month via any device Source: eMarketer, March 2019 245831 www.eMarketer.com Our complete estimates for US AR and VR users can be found in this report’s accompanying spreadsheet. NEW HEADSETS WILL DRIVE GROWTH Despite these challenges, a Who’s Who of high-profile While the majority of VR users experience content in the tech companies—including Facebook, Samsung, Sony, form of 360-degree photos and videos within desktop/ HTC, Qualcomm, Lenovo and Google—have been laptop and mobile environments (including Facebook and working to improve VR experiences. They continue to YouTube), the subset of VR headset users (also known as invest in the technology, rolling out faster processors, head-mounted display users or HMD users), is also rising. lower-cost hardware and untethered (standalone) Beginning in 2019, we expect the number of headset headsets with more advanced features. users to grow at a slightly higher rate than total VR users as newer, lower-priced and easier-to-use models hit The industry is also working to develop VR beyond its the market. most common use case in video gaming. Applications for healthcare, shopping, design, entertainment and This year, we expect 19.6 million people in the US (45.7% education/training are gaining traction, especially among of VR users) to use VR headsets. By 2021, 26.5 million organizations that can afford higher-end headsets and (46.4% of VR users), will use them. This will represent custom-developed software. 5.9% of the US population in 2019 and 7.9% in 2021. Over the forecast period from 2017 to 2021, VR headset use will rise at a CAGR of 24.6%. VIRTUAL AND AUGMENTED REALITY USERS 2019: VR SLOWS AS AR GROWS ©2019 EMARKETER INC. ALL RIGHTS RESERVED 3 US Virtual Reality and Virtual Reality Headset* Users, How Has the Forecast for US Virtual Reality Users 2017-2021 Changed from 2018 to 2019? millions and % change millions, 2016-2021 22.5 (109.7%)11.0 (127.3%)34.7 (54.1%) 42.9 (23.6%)19.6 (25.1%)51.8 (20.8%)23.9 (21.9%) 57.1 (10.1%)26.5 (10.9%) 15.7 (42.6%) 62.8 49.7 57.1 36.9 51.8 42.9 22.5 34.7 10.8 22.5 10.7 2016 2017 2018 2019 2020 2021 Old forecast (2018) Current forecast (2019) 2017 2018 2019 2020 2021 VR users VR headset* users Note: individuals of any age who experience virtual reality (VR) content at least once per month via any device Note: individuals of any age who experience virtual reality (VR) content at Source: eMarketer, March 2019 least once per month via any device; *individuals of any age who 245844 www.eMarketer.com experience VR content at least once per month via headsets Source: eMarketer, March 2019 This forecast revision is consistent with other market 245838 www.eMarketer.com estimates that reflect the industry’s departure from VR’s ability to reach mainstream status over time will gimmicky, one-off experiments and low-end headsets hinge on the industry’s ability to produce wireless, toward a deeper pursuit of VR applications and content untethered, comfortable and easy-to-use headsets at ecosystems that deliver longer-term value. lower prices, and pair them with compelling content. We also expect that upcoming 5G mobile networks will “The VR market is entering a new stage of maturity, help boost VR adoption because 5G will decrease the where companies are setting aside the unrealistic associated latency and enable more stable connections expectations around explosive market growth and and higher-quality experiences. are focused instead on building more sustainable businesses,” Tom Mainelli, group vice president, devices and AR/VR at IDC, said in a December 2018 WHAT’S CHANGED SINCE LAST YEAR? news release. While we still see noteworthy technological progress At the same time, however, we have increased our on the VR headset front, there have been no significant estimates for VR headset users to reflect the software innovations since last year. For this reason, higher-than-expected uptake of lower-cost, untethered we don’t expect the number of overall VR users to rise mass-market hardware. The $199 Oculus Go—introduced as quickly as previously projected. We have therefore in 2018—and newer devices, including the Lenovo Mirage revised our user forecasts downward. Beginning in 2018 Solo and the upcoming Oculus Quest all-in-one gaming and continuing through 2021, we expect fewer overall VR system, solve many of the problems that plague older users than originally estimated.
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