Virtual Reality (VR) is entering its second generation. Both hardware and software have improved significantly over the last five years, and businesses are learning how the technology can best be applied.
This article looks at how the market is expected to develop and focuses on six sectors that are set to drive the greatest growth.
VR market growth
The VR market was worth nearly $7bn in 2018 according to GlobalData 1, an international research, data and analysis provider. VR software accounted for two-thirds of total market revenue, with games software taking 68% of revenue and enterprise software 30%. Hardware sales made up one-third of revenue. GlobalData’s analysts predict consistent growth, with the global VR market set to reach $28bn in 2030.
Growth in the VR market has been constrained so far by issues including lag or latency, underdeveloped ecosystems, high prices and nausea in users. Advances in AI and cloud technologies, coupled with the arrival of 5G and greater adoption will help tackle these issues and continue to drive demand.
Here are five key areas where VR is set to make significant impact.
Can’t make it to the gig, show or game? No problem, just put on your headset and immerse yourself in the energy and atmosphere of the event, streamed live. That’s the pitch from VR-based streaming services such as Oculus Venues, which was launched by Facebook in 2017. There’s a wealth of competitors including Next VR, Google’s YouTube VR, Sony’s PlayStation Vue and start-ups such as FoxVR, LiveLike, BigScreen, and High Fidelity. HTC’s Streamlink app and Valve’s SteamVR are also prominent services in this domain.
With 5G having the potential to catalyse growth, AT&T, SK Telecom, NTT DoCoMo, and Fraunhofer (among others) are racing into the domain with their own services. Amazon too is promoting Amazon Web Services (AWS) as a cloud-based VR streaming platform.
The market may be small at the moment, but with so many major players investing it is clear that streaming is set to become a key VR offering that could take the technology mainstream.
The compelling narratives and cinematography of film, coupled with the immersive experience of VR, has the potential to create a truly powerful media experience. VR films are still relatively unpolished and experimental, although plenty are trying to maximise their potential, with Disney’s Movies VR leading the way. Hulu also has VR content in its portfolio.
The Chinese streaming giant iQiyi (owned by Baidu) is taking steps towards VR films. In addition to partnering with VR developers to convert its extensive list of Chinese movies into VR versions, iQiyi is also improving its 4K VR headset. HTC, Facebook, Samsung, and Sony are seeking partnerships with Hollywood studios to make VR content and promote their own VR standards as industry benchmarks.
Making full-length VR films remains a challenge, and independent developments are largely focused on short films.
Virtual reality is an ideal way to let customers try before they buy and both traditional and online retailers are exploring ways to use it to boost sales.
It allows bricks-and-mortar stores to break out of their physical constraints, with John Lewis using VR to show how their furniture might look in a customer’s home. Web-based retailers also stand to benefit, creating virtual stores where visitors can browse and discover products in an experience more akin to that of a store. Shoppers can pick up and rotate items, or see clothing being modelled.
Alibaba in China has been a pioneer in this area, opening VR shopping malls in 2016 with Amazon and eBay following their lead. Walmart acquired VR start-up Spatialand and has filed patents for technology that allows users to get an in-store experience at home. HTC partnered with Amazon India and rolled out Viveport VR apps through its online store and in pop-up demos in shopping centres. Facebook partnered with Macy’s to deliver VR experiences in US stores.
With VR offering benefits to brands and all types of retailers, expect to see more of it, and such exposure within stores will further boost awareness of the technology and consumer adoption.
Wide adoption of VR gaming has yet to happen – but it is getting closer. Sony sold 4.2 million PSVR headsets between October 2016 and March 2019 and the newly launched Oculus Quest gaming headset is competing with Nintendo’s Labo VR kit. HTC’s Vive Focus and Valve’s Index VR headsets, both launched in 2019, are also serious contenders. The next generation of gaming consoles from Sony and Microsoft are expected to offer advanced VR technology.
It’s also worth noting that demand for VR expertise is rocketing, with Indeed.com reporting a 93% rise in VR gaming job postings between 2015 and 2018. Gaming is undoubtedly a key market for the technology and is already established with early adopters. Growth is inevitable but there are no signs currently of a mass-market shift to VR.
Don’t be surprised if you have never seen a VR arcade. Of the 4,000 estimated to be operating globally, more than 3,000 are in China. The trend is yet to become established in the West, and the US currently has less than 100 VR arcades.
Still, games developers are seeing arcades as an effective way to promote their esports initiatives and Vertigo Games and Bandai Namco are leading the way in this space. HTC is making a strong play as a headset maker with its Vive Enterprise Edition and Viveport Arcade portal.
VR arcades provide a great opportunity for customers to experience VR gaming before buying their own devices and games. For the arcade market to grow it must offer the kind of experiences that cannot be replicated at home. That could include exclusive content, multiplayer competition and successful integration with esports brands. Expect to see more arcades launching in the UK alongside those already up and running, such as DNA VR in London and Matrix Virtual Reality in Birmingham.
VR social media
VR social platforms typically allow users to create an avatar and design an environment in which they can spend time and communicate with other users via speech, text, emojis or virtual contact. Nearly 80% of VR owners are interested in engaging socially with other VR owners, according to a survey from Greenlight Insights 2, suggesting that social media could be the next frontier for VR after gaming.
Competition in this domain is already on the rise. Facebook, Tencent, Snap, Weibo (Sina), and AltspaceVR (Microsoft) are developing social media content for VR, while a wide range of start-ups – including VRChat, vTime, Tabletop Simulator, BigScreenVR, High Fidelity, NextVR, and Wave VR – are jostling for position. However, developing a product and service that appeals to a broad spectrum of users remains a major barrier.
Beyond VR delivery
Growth in the VR market will be driven by the rate of development and adoption of the channels considered above. It will also be affected by the direction and pace of technological developments as well as competition with augmented reality services provided via mobile phones. Regulatory and IP issues could constrain growth, while the B2B market represents a significant opportunity.
Where the growth will happen is yet to be decided, but that there will be growth is virtually assured.