VR headset market will generate revenues of $895m in 2016

11 Apr 2016

VR headsets will make revenues of $895m, but big players like Sony, HTC and Oculus will only put a dent in the market because of the high price of devices

The global virtual reality (VR) headset business will generate revenues of $895m this year, with 77pc of this accounted for by new devices from Oculus, HTC and Sony.

But these brands will only account for 13pc of volume in 2016 as lower-priced smartphone-based devices will dominate share of the 12.8m VR units that will ship this year.

A new forecast by Strategy Analytics predicts that VR headsets tethered to PCs and games consoles will barely exceed 1.7m devices shipped in 2016 due to their prohibitively high pricing.

However, sentiment could change as these products enjoy high-profile launches.

Strategy Analytics said that smartphone-toting consumers are being bombarded by low cost and often bundled-in VR viewers like never before.

Cheap smartphone VR headsets a ‘gateway drug’ to higher-priced devices


With proper ecosystem management, Strategy Analytics’ analysts believe that smartphone-based VR can serve as an effective ‘gateway drug’ to upsell users to higher-quality VR experiences down the road while locking them into early but potentially sticky ecosystems.

“Consumers will soon be exposed to an incredible diversity of virtual reality options ranging from ultra-low cost to super premium,” explained Cliff Raskind, director of Strategy Analytics’ Wearable Device Ecosystems service.

“While we expect smartphone-based viewers to take the lion’s share of VR headset volumes in 2016 at 87pc of shipments, PC and Game Console powered headsets will absolutely dominate value share, commanding 77pc of revenues.”

“Additionally, we believe VR has the potential to fuel a new tech spec race in hardware areas such as display resolution, GPUs, storage and 360-degree cameras.”

Either way, analysts believe the restrictive prices of PC and console-powered VR devices will act as a significant barrier to more widespread uptake.

“The PC and console powered virtual reality market is entering the classic chicken and egg phase whereby the major games publishers are waiting on the sidelines until there are enough VR headsets and users in the market for it to make financial sense for them to build a VR library of content,” said David Watkins, director of Strategy Analytics’ Connected Home Devices unit.

“This is providing independent and niche developers the chance to make a name for themselves before the big boys arrive.”

Main image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years