Virtual Reality (VR) market growth is now finally coming to fruition. Thanks to current actions and market momentum, VR is approaching what can be considered critical mass. And, not a moment too soon.
This growth momentum comes from new hardware and content releases, accelerating enterprise value recognition, and a significant metaverse wild card that could potentially lift adoption and usage.
According to the latest worldwide market study by ABI Research, over 85 million VR Head Mounted Displays (HMDs) will be shipped in 2027 across consumer and enterprise segments, creating a $100 billion VR market that includes hardware, software, and services.
Virtual Reality Market Development
"Expectations have been high in VR for years, and even decades, without notable growth to show. That growth is finally coming over the next five years," said Eric Abbruzzese, research director at ABI Research.
The barrier to entry is lower than ever, all while content performance and user experience have improved dramatically. This growth is also actionable across ecosystems, not just for consumers, gaming, or enterprises with a budget.
According to the ABI assessment, reasonably priced VR headsets now offer full-fledged functionality, replete with a high-quality and growing video content ecosystem.
While the consumer segment makes up most of the VR market overall, business-to-business (B2B) markets -- such as education and manufacturing -- are also set for significant growth.
According to the latest market data, manufacturing will be the fastest-growing enterprise VR segment over the next five years -- growing at over 100 percent CAGR.
This is due to the accelerated recognition of the value of VR, often above its Augmented Reality counterpart, in high-value use cases like training. Other markets, like education, are larger overall in terms of users but are growing steadily.
Apple and Meta will dictate the face of the VR market over the next two years, at least in terms of adoption and user volume. While confirmed details are scarce on Apple's plans, the company's anticipated VR entrance is in 2023.
Meta has been dominating the VR ecosystem with its Quest 2 headset; the Quest Pro, along with updated devices more in line with the Quest 2's price and target market, will come. While the company's software and service ambitions with the metaverse are still crystallizing, its hardware ecosystem is robust.
ABI Research sees standalone HMDs remaining the dominant form factor over the next five years, making up over 85 percent of total shipments in 2027.
Tethered devices make up a smaller percentage, but Sony's PSVR2 will spur interest as an accessible gaming device with a sizeable potential install base.
Qualcomm's ambitions in VR are also significant, and the potential for mobile device-based "viewer" HMDs is also growing.
Outlook for Virtual Reality Applications Growth
"Despite expected significant growth, economic headwinds still play a role and will impact virtual reality adoption, especially if inflation and global concerns continue through 2023," concludes Abbruzzese.
The theoretical total market size in the short term is smaller than the possible maximum, with both consumers and enterprises hesitant or unable to invest in an expensive VR ecosystem.
However, ABI analysts believe two factors minimize this impact: the intrinsic maturity and value of VR are higher than ever, and outright market growth outpaces these headwinds.
That said, I anticipate the current economic environment is not conducive to consumer market adoption, due to the discretionary nature of purchases for gaming and other recreational applications. Therefore, the enterprise market will likely drive new VR growth in the near term.