Virtual reality has yet to live up to its hype, with a projected modest growth rate to reach $7.2 billion in total revenues this year. According to The Virtual Reality Industry Report: Spring 2017, head-mounted displays is expected to account $4.7 billion of the revenues for this year.
The report, released by US tech market research firm Greenlight Insights with consumer VR industry publication Road to VR, along with input from iResearch and MoguraVR covering the Chinese and Japanese markets, predicts that the VR industry will only grow into a major global marketplace by 2021, reaching $74.8 billion in global revenues.
Clifton Dawson, CEO of Greenlight Insights, acknowledged that there are "turbulent times" ahead for VR, but he said analysis is pointing toward VR achieving critical mass in many markets by 2019. "We saw mixed results in the global VR industry in 2016—initial sales volume by some high-end manufacturers didn't quite live up to the hype, while PlayStation VR, Samsung Gear VR and low-cost headsets continued to gain traction," said Dawson in a statement.
Speaking to Campaingn Asia-Pacific, Alexis Macklin, analyst from Greenlight Insights, said a major contributing factor to lower unit sales is high-cost of VR-capable PCs, as the firms's 2016 VR Consumer Adoption Report said price is still a major purchasing factor for consumers. "This raises the barrier to entry for consumers," Macklin said. "Hardcore PC gamers are a smaller market than video game console gamers, which contributes to why PlayStation VR has been selling more units."
Eddie Lou, China market analyst with Greenlight Insights, said new users are turning to location-based entertainment centres to experience VR inexpensively before splurging on the equipment. "Niche accessories such as full haptic suits, sensory simulators and specialised controllers will find a home in LBE centres as consumers will be less inclined to purchase expensive hardware. This represents a distinct market opportunity for VR content studios and hardware vendors," said Lou in a statement.
On the other hand, Microsoft's upcoming release of VR headsets later this year is expected to bring non-entertainment VR experiences to the forefront of the industry, said Macklin. The release will also spark demand by enterprise firms for VR-related hardware, software and services.
In addition, the report mentioned that the introduction of new hardware platforms from top PC manufacturers in late 2017 will accelerate the availability of affordable headsets and VR-ready computers, offering a better pricing strategy for consumers.
On the marketing front, Macklin said VR is currently not ideal for call-to-action campaigns, as it has not been proven to effectively drive specific outcomes. "VR is best for awareness and engagment campaigns," said Macklin, who cited the 2016 VR Consumer Report, which stated that 71 percent of consumers surveyed said they feel a brand that sponsors VR content is forward-thinking and modern. "VR is a current way for brands to stand out from competition. That will be another story when VR hits mainstream, brands will need to be more creative in creating branded content for the medium," said Macklin.