VRC-16 Executive Summary - tractica.omdia.com · Virtual Reality for Consumer Markets Head-Mounted Displays, Accessory Devices, and Consumer Virtual Reality Content: Global Market

MARK BECCUE Principal Analyst

CLINT WHEELOCK

Managing Director

EXECUTIVE SUMMARY Virtual Reality for Consumer Markets Head-Mounted Displays, Accessory Devices, and Consumer Virtual Reality Content: Global Market Analysis and Forecasts Published 4Q 2016

RESEARCH REPORT

NOTE: This document is a free excerpt of a larger research report. If you are interested in purchasing the full report, please contact Tractica at [email protected].

Virtual Reality for Consumer Markets

© 2016 Tractica LLC. All Rights Reserved. This publication may be used only as expressly permitted by license from Tractica LLC and may not otherwise by accessed or used, without the express written permission of Tractica LLC

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SECTION 1

EXECUTIVE SUMMARY

1.1 INTRODUCTION

Technologists have dreamed of three-dimensional (3D) computer interaction and have attempted to commercialize it more than once over the past 30 years and failed. Now, thanks primarily to recent exponential advances in graphics component technology, virtual reality (VR) experiences are coming to the consumer market.

VR is defined as an artificial environment created with software and presented to the user in such a way that he or she can be made to believe it is real. There are two major categories for VR: consumer VR and enterprise/industrial VR. Consumer VR can be further subdivided into two categories:

Mobile VR, in which smartphones are used with Head Mounted Devices (HMDs) for VR experiences

VR experienced via personal computer (PC), console-based, or all-in-one devices

This report examines the market and technology issues surrounding consumer VR, with an emphasis on hardware, software, ecosystem, and use cases, with most of the emphasis on issues around PC-based, console-based, and all-in-one devices. While it is included here, a separate Tractica report will explore mobile VR in greater depth.

Consumer VR is further defined as when the wearer uses his or her own headset only. If an experience requires a user to wear an HMD provided by a third party, then it is classified as a commercial application.

Enterprise/industrial VR hardware, software, ecosystem, and use cases are not part of the scope of this report and are explored in depth in Tractica’s report entitled Virtual Reality for Enterprise and Industrial Markets.

1.2 MARKET DRIVERS AND BARRIERS

There are several market drivers and barriers for consumer VR.

Some of the key drivers include:

Desire for Immersion: Humans have actively sought out immersive experiences (defined as the ability to become part of a story) for centuries, through books, movies, theater, and games. VR technology has the potential to enable a broad spectrum of consumers to fulfill their desire for immersion.

3D User Interface (UI): The way humans interface with computers has been slow to evolve and has not matched the computing power available today. Our interfaces have shifted from keystroke commands and graphical user interfaces (GUIs) to touchscreens. As we move slowly into a world where computing becomes 3D through VR and augmented reality (AR), new interfaces are required and desired. Most experts believe our evolving user interface will someday become a multimodal stew of old and new interfaces and will include hand gestures, voice commands, and eye tracking.



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Smartphones as a Gateway: Smartphones, the personal computing device of choice for most consumers, are gateway consumer VR devices, providing sufficient computing and graphics processing power to deliver fundamental VR experiences to the world. They are the keys to introducing VR to mass market.

Some key barriers include:

Cost: With the exception of mobile, consumer VR equipment is expensive, starting at $499 for the Sony VR HMD and controllers. Unit pricing should gradually ease by 2018.

Limited Installed Base: With the exception of mobile, the installed base of consumers with the required equipment for today’s VR is relatively small. Tractica estimates a worldwide installed base of consumers with Sony PlayStation 4 (PS4) or PCs with a sufficient central processing unit (CPU)/graphics processing unit (GPU) to be less than 60 million. The installed base of VR-capable PCs should climb slowly and all-in-one HMDs will help mitigate installed base issues.

Quality of Experience Challenges: A disturbing number of issues can degrade the quality of today’s VR experiences to the point that they can turn consumers away. The issues include motion and virtual sickness, limited field of view (FOV), tethers, lack of natural user input (ability to use your hands as controls), and obstacles for prescription eyeglass wearers.

1.3 MARKET OBSERVATIONS/KEY TRENDS

The year 2016 will be remembered as the debut of consumer VR, with key ambassadors in the form of Facebook/Oculus, HTC/Valve, Sony, Samsung, and a collective community of companies in China planting their stakes in the ground with formidable investments in jumpstarting a new computing platform. In addition, venture money has positively flowed. According to Digi-Capital, $2.3 billion was invested in VR and AR year-on-year (YoY) from October 2015 through October 2016.

After a shaky start, Facebook’s Oculus Rift and HTC/Valve’s VIVE started selling in the United States in 3Q 2016 and are stabilizing their ecosystems and distribution in 4Q 2016, as they are joined by Sony with the debut of PlayStation VR. Yet the number of consumers interacting with these devices pales in comparison to the number interacting with VR through a wide variety of smartphone-enabled devices.

Mobile will continue to be the gateway consumer VR device because of its large installed base and tether-less experience appeal. While VR experiences for mobile are currently less immersive than PC and console-based VR, mobile has other challenges with battery drain and heat. Tractica expects the gap in quality experiences and applications to narrow between 2017 and 2021. There is a real possibility that mobile becomes not only the choice for simpler VR experiences, but the choice for the vast majority of VR experiences, simple or more complex.

Despite the momentum behind mobile VR, it is clear that there is much work to be done for consumer VR overall. It is unclear when, or if, consumer VR will reach mass market adoption levels worldwide. Tractica does not believe global mass market adoption will be reached within our 5-year forecast window, although two individual markets, the United States and China, will likely reach the mass market adoption tipping point (17% of an addressable market base) in 2020 and early 2022, respectively. VR is an extremely complex technology. Obstacles to a frictionless, optimal user experience are many, and they must be overcome for VR to reach mass market adoption.



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VR applications are substantially more graphics-intensive than nearly any computer application, and require a significant amount of computing power in the form of CPUs and GPUs. Tracking issues and FOV limitations are also major contributors to poor experiences. Over time, technological breakthroughs in optics, processing efficiencies, cloud computing, software application development, and streaming, as well as increased access to higher quality, high-speed broadband, will improve and accelerate the broad availability of consistent, high-quality VR experiences.

The hardware and accessories necessary for a quality VR experience must be streamlined. The ecosystem must find ways to eliminate tethers and incorporate inside-out tracking. The overall price tag for consumer VR equipment must also come down to meet the expectations of consumers, who will constantly weigh price against the value proposition.

The stabilization of the flagship high-end devices and the easy availability of smartphone-enabled VR devices have allowed VR content innovation to emerge in 2016.

Consumer VR use cases for gaming and media hold great potential. Tractica believes the fundamental human desire for immersion and presence will attract consumers to content in these categories, and the VR ecosystem has to work hard not to disappoint them at the point of trial, or risk losing a significant percentage of users permanently.

Other use cases are potentially compelling, including marketing, social (a form of media in Tractica’s view), fitness and wellness self-help, and eventually spatial computing. Innovation in consumer VR applications will blossom and prosper if distribution ecosystems are nurtured, specifically new app stores, like those available from VIVE and Oculus, or existing app ecosystems like Google Play and the Apple App Store.

VR games will lead the way early on as primary consumer VR content, but media companies are also investing heavily and Tractica expects VR video content, social VR content, and e-commerce to emerge as primary drivers of consumer VR adoption.

1.4 KEY INDUSTRY PLAYERS

A diverse range of companies operates in the consumer VR ecosystem. Tractica estimates the number of players to be more than 400 and growing. They include tech giants (Facebook, Microsoft, Google, Alibaba, Intel, NVIDIA, Sony, and Samsung); emerging HMD providers (Razer, Starbreeze Studios, and Sulon Technologies); hardware OEMs (Asus, Acer, Lenovo, Huawei, Xiaomi, and Dell); technology enablers (Pixvana, uSens, Leap Motion, Improbable, and Movidius); game and media content developers and platforms (Unity, nDreams, NextVR, Wevr, and AltspaceVR); and business-to-consumer (B2C) marketers (Vroom and Amazon). This report profiles 30 key industry players.

1.5 MARKET FORECAST HIGHLIGHTS

1.5.1 CONSUMER VIRTUAL REALITY REVENUE

In 2015, total global revenue associated with consumer HMDs, VR accessories, and VR content was estimated at $453 million. By 2021, Tractica expects this to increase to $35 billion at a compound annual growth rate (CAGR) of 133%. HMDs will account for the largest portion of total revenue throughout the forecast period. By 2021, the global VR content market will be worth close to $16 billion, surpassing HMDs as the largest revenue segment in 2022. VR accessories that are not bundled in with the sale of the HMD are expected to peak in 2019 at more than $2.9 billion and then decline and remain a niche market, accounting for just under $1.5 billion in 2021, or 4% of total global revenue.



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1.5.2 CONSUMER-GRADE HEAD-MOUNTED DISPLAY SHIPMENTS AND REVENUE

Total shipments of consumer-grade HMDs will grow from 16.7 million in 2016 to more than 122 million in 2021. Revenue for consumer-grade HMDs will grow from $2.1 billion in 2016 to more than $17 billion annually in 2021. Shipments and revenue in 2015, 2016, and 2017 will be driven significantly by demand in the Chinese consumer market. Consumer-grade HMD shipments will be impacted in a variety of ways, depending on the category in which the HMD falls; mobile, PC-based, console-based, or all-in-one HMDs.

1.5.2.1 MOBILE HEAD-MOUNTED DISPLAYS

The mobile VR segment is the largest. Tractica expects a global total of 323 million mobile VR devices to ship between 2015 and 2021. Over time, the quality of mobile VR will increase steadily, thanks to the availability of high-quality 5G connectivity, improved smartphone screen displays and graphics rendering, and the introduction of built-in depth-sensing cameras.

In addition, low-end universal smartphone HMDs will be key to the mass market adoption of VR and will continue to flood the marketplace for several years. Mobile VR shipments are somewhat skewed because of these units, which are very cheap (less than $15), easily damaged, and could be viewed as disposable. Low-end units will gradually lose their appeal toward the end of the forecast period as technology improves and prices drop for higher quality mobile VR headsets. From 2016 onward, a number of competing higher-end mobile VR headsets, ranging in price from $30 to $75, will make up more of the market.

Mobile VR headset revenue will grow from $1 billion in 2016 to $3.7 billion in 2021. The vast majority of those HMDs (78%) sold for less than $51 in 2015. The majority will sell at a low price. In 2021, 56% of the mobile VR headsets shipped will sell for less than $51.

1.5.2.2 PERSONAL COMPUTER-BASED HEAD-MOUNTED DISPLAYS

Tractica forecasts PC-based HMD shipments will grow from 900,000 in 2016 to more than 16 million in 2021.

As noted earlier, both VIVE and Oculus have had production delays and limited distribution in 2016. Oculus Rift didn’t ship its own controllers until December, nor does it enable room scale (new sensor ships when Touch Controllers do for $79 extra). While VIVE did offer consumers both dedicated controllers and room scale, it has not given HTC a decided edge in sales. For reasons stated in Section 4.2.1, Tractica expects VIVE to ship a total of between 250,000 to 300,000 units in 2016. Tractica forecasts that Rift shipments will reach about 375,000 in 2016.

Part of the challenge for HTC and Facebook is that they are conflicted about their commitment to the PC. Look for HTC to introduce an all-in-one HMD in 2H 2017, expanding its HMD portfolio. Given HTC’s experience and expertise in mobile, it would not be surprising to see HTC introduce a smartphone with exceptional CPU and GPU horsepower and expand its HMD portfolio with a mobile HMD as well.

Tractica forecasts that Oculus Rift PC-based shipments will peak at around 2.5 million shipments in 2021. Oculus will likely introduce an all-in-one HMD in 2017. Tractica believes Facebook will gradually move away from hardware production to focus on the VR social platform and content. By 2019, Facebook will begin to mimic the hardware philosophy Google has embraced, which is to build hardware more or less at a loss as reference designs to jumpstart partner OEM production.



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Despite these potential HTC and Facebook strategies, other companies will propel PC-based HMD shipments and sales. Tractica forecasts that in 2017, a collective group of other HMD manufacturers will out-ship HTC and Facebook in PC-based HMDs, 1.7 million units to HTC/Facebook’s 1.1 million. By 2021, PC-based HMD manufacturers other than HTC or Facebook will ship more than 50% of PC-based HMDs.

PC-based HMDs will gain momentum over the latter part of the forecast period as experience issues are resolved and prices drop. PC-based HMD revenue will grow from $528 million in 2016 to $5.6 billion in 2021.

1.5.2.3 CONSOLE-BASED HEAD-MOUNTED DISPLAYS

Tractica forecasts that console-based HMD shipments will grow from 900,000 in 2016 to 9.5 million in 2021, or about 13% of the installed base of Tractica’s estimate of serious gamers worldwide. An increasing proportion of Sony PlayStation 4 (PS4) owners will opt to buy the PlayStation VR headset, eventually reaching 26% of PS4’s installed base in 2021. Tractica does not expect a Nintendo VR product until 2018 and Xbox’s Scorpio VR-ready console until late 2017 or early 2018. Given their installed base and timing, those companies will have a minimal impact on VR market adoption until 2019.

Shipments for console-based HMDs could accelerate beyond Tractica’s expectations. The key is the price versus “worth it” factor for gaming enthusiasts. Early critics have voiced that given the extreme high quality of today’s graphics for two-dimensional (2D) screens, the VR game experience must provide a significant immersion factor or gamers will not be able to justify the cost. As with other successful game experiences where word of mouth endorsements are critical, if a VR game publisher delivers a massively compelling offering, it could accelerate console-based VR HMD shipments and sales.

Console-based HMD revenue will grow from $426 million in 2016 to $3.8 billion in 2021.

1.5.2.4 ALL-IN-ONE HEAD-MOUNTED DISPLAYS

Tractica forecasts that all-in-one HMD shipments will grow from about 240,000 in 2016 (China), to 7.4 million in 2021. While there are many practical and technical challenges for all-in-one HMDs, particularly potential weight issues and limited usage times from batteries, Tractica expects all-in-one HMDs to become a significant segment of VR HMDs. In concept, these devices will be more powerful and more specifically designed for VR than smartphone HMDs, enable users to move freely without a tether, which is an advantage over PC-based HMDs, and perhaps strike a middle ground of quality and price between smartphone and PC-based devices.

All-in-one HMD revenue will grow from $120 million in 2016 to $4.4 billion in 2021.



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Chart 1.1 Annual VR Hardware and Content Revenue by Segment, World Markets: 2016-2021

(Source: Tractica)

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SECTION 8

TABLE OF CONTENTS

SECTION 1 ...................................................................................................................................................... 1 Executive Summary .................................................................................................................................... 1

1.1 Introduction .................................................................................................................................... 1 1.2 Market Drivers and Barriers .......................................................................................................... 1 1.3 Market Observations/Key Trends .................................................................................................. 2 1.4 Key Industry Players ..................................................................................................................... 3 1.5 Market Forecast Highlights ........................................................................................................... 3

1.5.1 Consumer Virtual Reality Revenue ......................................................................................... 3 1.5.2 Consumer-Grade Head-Mounted Display Shipments and Revenue ...................................... 4

1.5.2.1 Mobile Head-Mounted Displays ...................................................................................... 4 1.5.2.2 Personal Computer-Based Head-Mounted Displays ...................................................... 4 1.5.2.3 Console-Based Head-Mounted Displays ........................................................................ 5 1.5.2.4 All-in-One Head-Mounted Displays ................................................................................ 5

SECTION 2 ...................................................................................................................................................... 7 Market Issues .............................................................................................................................................. 7

2.1 Introduction .................................................................................................................................... 7 2.2 Scope of Study .............................................................................................................................. 7

2.2.1 Consumer VR Hardware Scope .............................................................................................. 8 2.3 Market Overview ........................................................................................................................... 8 2.4 Market Trends ............................................................................................................................... 8 2.5 Market Drivers ............................................................................................................................... 9

2.5.1 Immersion Experiences ........................................................................................................... 9 2.5.2 Games Market ....................................................................................................................... 10 2.5.3 Three-Dimensional User Interface ........................................................................................ 10 2.5.4 User Interface Shift to Hands/Gesture Control ...................................................................... 10 2.5.5 Smartphone Upgrades .......................................................................................................... 11 2.5.6 Personal Computer Upgrades ............................................................................................... 11 2.5.7 China ..................................................................................................................................... 12 2.5.8 VR Video ............................................................................................................................... 12 2.5.9 Mobile Ecosystem/App Stores .............................................................................................. 13 2.5.10 Web VR ............................................................................................................................. 14 2.5.11 Cloud Gaming ................................................................................................................... 14

2.6 Market Barriers ............................................................................................................................ 15 2.6.1 Cost ....................................................................................................................................... 15 2.6.2 Complex, Multi-Element Purchase ........................................................................................ 15 2.6.3 Quality of Experience ............................................................................................................ 15

2.6.3.1 Virtual Reality Sickness ................................................................................................ 15 2.6.3.2 Restricted Field of View ................................................................................................ 15 2.6.3.3 Tethering ....................................................................................................................... 16 2.6.3.4 Lack of Natural User Input ............................................................................................ 16 2.6.3.5 Streaming Challenges .................................................................................................. 16 2.6.3.6 Corrective Eyewear ...................................................................................................... 16

2.6.4 Trial and Error for Early Virtual Reality Applications ............................................................. 17 2.7 Use Cases ................................................................................................................................... 17

2.7.1 Games ................................................................................................................................... 17 2.7.2 Video Media Content ............................................................................................................. 18 2.7.3 Social VR ............................................................................................................................... 20



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2.7.4 Marketing ............................................................................................................................... 20 2.7.4.1 Retail E-Commerce ...................................................................................................... 20 2.7.4.2 Residential Buying/Renting .......................................................................................... 20 2.7.4.3 Travel ............................................................................................................................ 20

2.7.5 Wellness Self Help ................................................................................................................ 20 2.7.6 Fitness ................................................................................................................................... 21 2.7.7 Spatial Computing ................................................................................................................. 21

SECTION 3 .................................................................................................................................................... 22 Technology Issues .................................................................................................................................... 22

3.1 Introduction .................................................................................................................................. 22 3.2 Tracking ....................................................................................................................................... 22

3.2.1 Inside-Out and Outside-In ..................................................................................................... 22 3.2.1.1 Simultaneous Location and Mapping and Computer Vision......................................... 23

3.2.2 Eye Tracking .......................................................................................................................... 23 3.2.3 Hand Tracking Solutions ....................................................................................................... 23 3.2.4 Gesture Control ..................................................................................................................... 24

3.3 Field of View ................................................................................................................................ 24 3.4 Latency Technologies and Virtual Reality Sickness Prevention ................................................. 24

3.4.1 Galvanic Vestibular Stimulation ............................................................................................. 24 3.4.2 Frame Tearing ....................................................................................................................... 25

3.4.2.1 Oculus Asynchronous Timewarp and Spacewarp ........................................................ 25 3.4.2.2 VIVE Asynchronous Reprojection ................................................................................ 25

3.4.3 Field of View Restrictors ........................................................................................................ 25 3.5 Display Technology ..................................................................................................................... 25 3.6 Graphics Processing Units .......................................................................................................... 26 3.7 Cameras ...................................................................................................................................... 26 3.8 Three-Dimensional Audio ............................................................................................................ 27 3.9 Adaptive Streaming ..................................................................................................................... 28

3.9.1 Bitmovin ................................................................................................................................. 28 3.9.2 Pixvana .................................................................................................................................. 28

3.10 Seated versus Moving Experiences ............................................................................................ 29 3.10.1 Wireless Connectivity Technologies ................................................................................. 29 3.10.2 Local Rendering ................................................................................................................ 30

SECTION 4 .................................................................................................................................................... 31 Key Industry Players ................................................................................................................................. 31

4.1 Introduction .................................................................................................................................. 31 4.2 Key Head-Mounted Display and Platform Players ...................................................................... 31

4.2.1 HTC ....................................................................................................................................... 31 4.2.2 Facebook ............................................................................................................................... 33

4.2.2.1 Content Initiatives ......................................................................................................... 34 4.2.2.2 Evolving Head-Mounted Displays and Virtual Reality Experience ............................... 35 4.2.2.3 Social Virtual Reality ..................................................................................................... 35

4.2.3 Sony ...................................................................................................................................... 36 4.2.4 Google ................................................................................................................................... 37 4.2.5 Microsoft ................................................................................................................................ 38 4.2.6 Razer ..................................................................................................................................... 38 4.2.7 Starbreeze Studios and Acer ................................................................................................ 39 4.2.8 NVIDIA ................................................................................................................................... 40 4.2.9 Sulon Technologies ............................................................................................................... 41

4.3 Key Enabling Technology Players .............................................................................................. 42 4.3.1 VisiSonics .............................................................................................................................. 42 4.3.2 Bitmovin ................................................................................................................................. 42 4.3.3 Pixvana .................................................................................................................................. 42



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4.3.4 uSens .................................................................................................................................... 42 4.3.5 Leap Motion ........................................................................................................................... 43 4.3.6 vMocion ................................................................................................................................. 43 4.3.7 Binary VR .............................................................................................................................. 43 4.3.8 Improbable ............................................................................................................................. 44 4.3.9 Movidius ................................................................................................................................ 44 4.3.10 VR Lens Lab ..................................................................................................................... 45

4.4 Other Key Players ....................................................................................................................... 45 4.4.1 Vroom .................................................................................................................................... 45 4.4.2 Alibaba ................................................................................................................................... 46 4.4.3 Amazon ................................................................................................................................. 46 4.4.4 NextVR .................................................................................................................................. 46 4.4.5 Wevr ...................................................................................................................................... 47 4.4.6 Baobab Studios ..................................................................................................................... 47 4.4.7 Surreal VR ............................................................................................................................. 48 4.4.8 AltspaceVR ............................................................................................................................ 49 4.4.9 nDreams ................................................................................................................................ 51 4.4.10 Unity Technologies ............................................................................................................ 51 4.4.11 Machina OBE .................................................................................................................... 52

4.5 Other Selected Industry Participants .......................................................................................... 53 SECTION 5 .................................................................................................................................................... 55 Market Forecasts ....................................................................................................................................... 55

5.1 Introduction .................................................................................................................................. 55 5.2 Data Collection ............................................................................................................................ 56 5.3 Forecast Methodology ................................................................................................................. 56

5.3.1 Top-Level Head-Mounted Display Shipments ....................................................................... 56 5.3.2 Virtual Reality Accessories .................................................................................................... 56 5.3.3 Average Selling Prices and Revenue .................................................................................... 56

5.4 Virtual Reality Mass Market Penetration Estimates .................................................................... 57 5.5 Top-Level Annual Virtual Reality Revenue ................................................................................. 57 5.6 Annual Virtual Reality Head-Mounted Display Shipments and Revenue ................................... 58 5.7 Annual Virtual Reality Accessories Shipments and Revenue ..................................................... 61 5.8 Annual Virtual Reality Content Revenue by Content Type ......................................................... 63 5.9 Consumer Virtual Reality Market by Region ............................................................................... 64 5.10 Conclusions and Recommendations .......................................................................................... 67

SECTION 6 .................................................................................................................................................... 69 Company Directory ................................................................................................................................... 69 SECTION 7 .................................................................................................................................................... 72 Acronym and Abbreviation List ............................................................................................................... 72 SECTION 8 .................................................................................................................................................... 75 Table of Contents ...................................................................................................................................... 75 SECTION 9 .................................................................................................................................................... 78 Table of Charts and Figures..................................................................................................................... 78 SECTION 10 .................................................................................................................................................. 79 Scope of Study .......................................................................................................................................... 79 Sources and Methodology ....................................................................................................................... 79 Notes .......................................................................................................................................................... 80



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SECTION 9

TABLE OF CHARTS AND FIGURES

Chart 1.1 Annual VR Hardware and Content Revenue by Segment, World Markets: 2016-2021 ......... 6 Chart 5.1 Annual VR Hardware and Content Revenue by Segment, World Markets: 2016-2021 ....... 57 Chart 5.2 Annual HMD Unit Shipments by Product Type, World Markets: 2016-2021 ........................ 60 Chart 5.3 Annual HMD Revenue by Product Type, World Markets: 2016-2021 ................................... 60 Chart 5.4 Annual VR Hardware Unit Shipments by Product Type, World Markets: 2016-2021 ........... 62 Chart 5.5 Annual VR Hardware Revenue by Product Type, World Markets: 2016-2021 ..................... 62 Chart 5.6 Annual Content Revenue by Content Type, World Markets: 2016-2021 .............................. 64 Chart 5.7 Annual HMD Unit Shipments by Region, World Markets: 2016-2021 ................................... 65 Chart 5.8 Annual HMD Revenue by Region, World Markets: 2016-2021 ............................................. 65 Chart 5.9 Annual VR Accessory Unit Shipments by Region, World Markets: 2016-2021 .................... 66 Chart 5.10 Annual VR Accessory Revenue by Region, World Markets: 2016-2021 .............................. 66 Chart 5.11 Annual VR Content Revenue by Region, World Markets: 2016-2021 .................................. 67 Chart 10.1 Tractica Research Methodology ............................................................................................ 80

Figure 2.1 UnlimitedHand Enables Touch Control via a Forearm Sleeve .............................................. 11 Figure 2.2 China Joy Tech Show in Shanghai in August where VR was a Dominant Theme ............... 12 Figure 2.3 Figure Screenshot GoPro VR Video, Tahiti Surfing .............................................................. 13 Figure 2.4 Wevr’s theBlu Is a Series that Explores Ocean Habitats Up Close and In Person ............... 18 Figure 2.5 Mattel’s View-Master Will Feature “Batman: The Animated Series” VR Experience ............ 19 Figure 2.6 360fly VR Camera Single Lens Camera for Stitchless 360° Video, $499 ............................. 19 Figure 3.1 Field of View Adaptive Streaming ......................................................................................... 29 Figure 4.1 Hang Glider VR Experience at CEATEC Japan, October 2016 ............................................ 33 Figure 4.2 Oculus Touch Controllers ...................................................................................................... 34 Figure 4.3 Facebook Virtual Reality Emoji ............................................................................................. 36 Figure 4.4 StarVR HMD .......................................................................................................................... 39 Figure 4.5 Screenshot from NVIDIA’s Fun House .................................................................................. 41 Figure 4.6 Improbable ............................................................................................................................. 44 Figure 4.7 Invasions! .............................................................................................................................. 48 Figure 4.8 Reggie Watts’ Virtual Comedy Show in AltspaceVR ............................................................. 50 Figure 4.9 Midi Jacket ............................................................................................................................. 53

Table 3.1 Consumer 360° Cameras ...................................................................................................... 27 Table 4.1 Additional Industry Participants ............................................................................................. 53



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SECTION 10

SCOPE OF STUDY

The year 2016 marks the potential emergence and second coming of consumer VR. Facebook, HTC, and Sony HMDs have been introduced to the marketplace, along with a host of mobile VR HMDs. Lessons have been learned since the 1990s when consumer VR last generated this much hype, with huge strides having been made in creating a convincing level of immersion, emergence of standards, and development of compelling content. Additionally, mobile VR is beginning the journey from inexpensive entry point in the form of Google Cardboard to something that could dominate the industry when technology improves.

The industry faces a challenge in enticing users to experience VR technology, but awareness is steadily growing. Some believe that any fad that would have someone wear a cumbersome device will ultimately fail. Given the huge amount of money invested in the industry by large companies like Facebook, Sony, HTC, and Google, the stakes are high. Development cycles have been long, as industry players seek to fine-tune their products so that a mid-quality system does not come along and muddy the water for all involved.

This Tractica report provides global market forecasts for annual unit shipments and associated revenue for VR hardware and content. HMDs are segmented into four product types: PC-based devices, console-based devices, all-in-ones, and mobile VR headsets. VR accessories, such as cameras, gamepads, other VR-specific controllers, and hand tracking devices, are also quantitatively analyzed. Data is segmented by five major world regions (North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa), while content is split into gaming and media (premium and ad-supported). All forecasts span the period from 2014 through 2021.

SOURCES AND METHODOLOGY

Tractica is an independent market research firm that provides industry participants and stakeholders with an objective, unbiased view of market dynamics and business opportunities within its coverage areas. The firm’s industry analysts are dedicated to presenting clear and actionable analysis to support business planning initiatives and go-to-market strategies, utilizing rigorous market research methodologies and without regard for technology hype or special interests including Tractica’s own client relationships. Within its market analysis, Tractica strives to offer conclusions and recommendations that reflect the most likely path of industry development, even when those views may be contrarian.

The basis of Tractica’s analysis is primary research collected from a variety of sources including industry interviews, vendor briefings, product demonstrations, and quantitative and qualitative market research focused on consumer and business end-users. Industry analysts conduct interviews with representative groups of executives, technology practitioners, sales and marketing professionals, industry association personnel, government representatives, investors, consultants, and other industry stakeholders. Analysts are diligent in pursuing interviews with representatives from every part of the value chain in an effort to gain a comprehensive view of current market activity and future plans. Within the firm’s surveys and focus groups, respondent samples are carefully selected to ensure that they provide the most accurate possible view of demand dynamics within consumer and business markets, utilizing balanced and representative samples where appropriate and careful screening and qualification criteria in cases where the research topic requires a more targeted group of respondents.



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Tractica’s primary research is supplemented by the review and analysis of all secondary information available on the topic being studied, including company news and financial information, technology specifications, product attributes, government and economic data, industry reports and databases from third-party sources, case studies, and reference customers. As applicable, all secondary research sources are appropriately cited within the firm’s publications.

All of Tractica’s research reports and other publications are carefully reviewed and scrutinized by the firm’s senior management team in an effort to ensure that research methodology is sound, all information provided is accurate, analyst assumptions are carefully documented, and conclusions are well-supported by facts. Tractica is highly responsive to feedback from industry participants and, in the event errors in the firm’s research are identified and verified, such errors are corrected promptly.

Chart 10.1 Tractica Research Methodology

(Source: Tractica)

NOTES

CAGR refers to compound average annual growth rate, using the formula:

CAGR = (End Year Value ÷ Start Year Value)(1/steps) – 1.

CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well.

Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2016 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding.

PRIMARY

RESEARCH

SECONDARY

RESEARCH

SUPPLY SIDE DEMAND SIDE

Industry Interviews

Vendor Briefings

Product Evaluations

End-User Surveys

End-User Focus Groups

Company News & Financials

Technology & Product Specs

Government & Economic Data

Case Studies

Reference Customers

QUALITATIVE

ANALYSIS

QUANTITATIVE

ANALYSIS

Company Analysis

Business Models

Competitive Landscape

Technology Assessment

Applications & Use Cases

MarketSizing

Market Segmentation

Market Forecasts

Market Share Analysis

Scenario Analysis

MARKET RESEARCH

MARKET ANALYSIS



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Published 4Q 2016

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VRC-16 Executive Summary - tractica.omdia.com · Virtual Reality for Consumer Markets Head-Mounted Displays, Accessory Devices, and Consumer Virtual Reality Content: Global Market