6.4 million consumer VR headsets will be sold in 2020, with content spending surpassing $1bn mark, Omdia’s new research shows
New research from Omdia shows that the consumer virtual reality (VR) market will be worth $10bn by 2025. The latest outlook comes from Omdia’s Consumer VR Headset and Content Revenue Forecast 2020-2025 report, a deep dive into the VR market with individual forecasts for 32 countries. It predicts that in 2020, 6.4 million headsets will be sold, while the spend on VR content will reach $1.1bn.
After getting caught up in the industry hype and proving unable to live up to the unrealistic expectations set in 2016, VR is now undergoing a much-needed period of readjustment. The product mix of the VR installed base is changing rapidly; away from rapidly-abandoned smartphone VR headsets to more engaging standalone and tethered VR headsets.
Despite the persistent doom and gloom stories about the future of VR, Omdia believes that the VR market will continue to expand, albeit at a slower rate than previously anticipated.
As with the broader games market, the consumer VR segment experienced an uplift in spending during Covid-19 lockdowns in 2020, nudging the content spend just over the $1bn mark. Its full potential was however limited by manufacturing challenges in the first half of 2020 and the November launch of next-gen games consoles diverting gamers’ attention and budget.
Not accounting for multiple ownership of VR headsets, the household penetration at the end of 2020 will be a mere 1.2% across the leading 32 countries forecasted in Omdia’s report. This will only grow to 3% in 2025, highlighting the long road ahead for the mass adoption of VR.
VR content revenue will grow from $1.1bn in 2020 to $4bn in 2025, when games will be responsible for 90% of the total spend. 360-degree and interactive video content initially showed a lot of potential, but companies struggled to effectively monetize their content due to the low headset installed base and lackluster demand. This led to several prominent casualties in the VR video production space, including the BBC VR Hub, Google Spotlight Stories, Jaunt, and Oculus Story Studio.
In the future, Omdia expects interactive video monetization to be driven by advertising and media subscriptions, as exemplified by YouTube and Netflix’s approach to VR. Social VR is another category which has shown potential, but it has experienced similar challenges to interactive video. Facebook remains strongly committed to its long-term vision for its Horizon platform, but it remains to be seen if it can create a truly compelling social experience in VR.
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