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VR HMD and Input System Device Revenue Forecasts 2014 – 2018

Taken from our latest market-sizing analysis for the consumer Virtual Reality market (order the free report here), this article present our forecasts and assumptions for hardware revenues. VR hardware revenue encompasses head mounted displays (HMDs) and input system devices such as gloves, treadmills and bodysuits as well as haptic feedback outputs.

The first post in this series detailed the addressable markets in the VR hardware market along with penetration assumptions and unit sales forecasts. As a recap:

  • Forecasted penetration for consumer VR headsets to reach 8.8% by 2015.
  • Forecasted penetration for consumer VR Input Systems to reach 26.3% by 2015.
  • By 2018 we estimate total HMD unit sales of almost 39m globally. This equates to a cumulative total of 83m HMD unit sales over the five year period.
  • By 2018 we estimate total VR Input System unit sales of almost 10m globally. This equates to a cumulative total of 18m unit sales over the five year period.

Retail Price Points

Shown below is our assessment of the retail price for consumer HMDs from 2014 to 2018. Due to factors such as component economies of scale, commoditisation and discounting to drive market share, we anticipate a steady annual fall in the retail price of HMDs, from $350 in 2014 down to $100 by 2018.

By 2017 we also expect subsidised pricing plans offsetting the hardware cost with rental/subscription plans, similar to the mobile device market. A full list of companies currently developing VR headsets is here.

Average HMD Selling Price

We expect Input Systems to be very popular and we’re already tracking this market via our Hardware Radar. Looking at the selling price for Input Systems (controllers, haptics, body suits, stereoscopic cameras etc), we expect similar downward pressure of pricing. Continue reading →

VR Headset Sales Forecasts and Market Penetration 2014 – 2018

Building on our experience in producing market forecasts for the virtual world/MMO sector since 2006, in January 2014 we published the first ever market sizing forecast for the consumer virtual reality market. This forecast has now been updated and expanded to reflect the growing VR marketplace and the emergence of input devices to accompany HMDs. Our full (and free) updated VR market sizing report can be ordered here.

We’ll be diving into our findings in a series of articles, starting with addressable markets, HMD and input system penetration rates, available devices and overall unit sales forecasts for 2014 – 2018.

Addressable Markets and Penetration Rates

The starting point for our VR market sizing is the total global addressable market. We have defined the overall addressable market based on PC, Internet and Mobile Device availability, global gamers, socnet users and consumers residing in developed (as opposed to developing) countries.

On this basis we forecast the total universe for consumer VR at 800m consumers in 2014. Taking into account technology adoption rates and the fact that the VR market is in an emerging state, we have further refined the global universe from 800m down to 400m – this is the real addressable market.

From here we have segmented this total addressable market into three primary groups:

  • Innovators / Hardcore Gamers: 2.5% of general popn.  Eager to try new ideas and willing to take risks with new tech. Youngest age group of all adopters and highest social class. Innovators are the gate-keepers of promoting new ideas. Developer kit market, digital markers and VR enthusiasts.
  • Early Adopters / Light Gamers: 13.5% of general popn. A closer social structure than Innovators, meaning they’re ‘Localites’.  The highest ability to act as opinion formers across all other adoption types.  Older tablet, mobile and console gamers.
  • Early Majority / KT&T: 34% of general popn and an above average social class, adopting new ideas just before the avg. person. They interact frequently with their peers (locally and globally) as the important link in the diffusion process. Driven heavily by Kids, Tween and Teen market and active tablet, mobile and console gamers.

Further insight into these three markets is explained here.  The chart below shows the addressable market for consumer VR by segment from 2014 to 2018.

addressable markets for consumer vr

We have then applied forecasted penetration rates of consumers purchasing VR headsets (HMDs) by each of the three target markets. This is shown below: Continue reading →

Developing Hardware for Virtual Reality?

Following the release of our Q2 Virtual Reality Hardware Radar map, we’re now in the process of updating it for Q3 2014. If you’re a start-up (pre or post funding) or operational company developing VR input systems including controllers, haptics, tracking devices and basically anything else VR related then let us know and we’ll include you in the update.

The KZero VR Hardware Radar (just like our Universe charts for the VW market) is being used by VCs and investors, the media and other interested parties to map out the virtual reality market. Here’s a segment of our Q2 Radar. Contact us here to be included.

vr hardware radar q2 2014 seg2

25 Brands in Virtual Reality

In addition to our expertise in Virtual Product Placement into virtual worlds, MMOs and social games, we also track the overall market activity of brands in this space.

This now includes the virtual reality sector and we’ve just released our Q3 2014 update of branded experiences in VR. This assessment includes official projects (sanctioned by the brand owners) as well as unofficial initiatives (created by fans).

Since our last Q2 update, we’ve seen official VR demos and experiences created by the likes of the BBC, Bloomberg and Oakley. On an unofficial basis, VR experiences have been created for  brands/IPs such as Southpark, the Matrix and Serenity.

So, this recent activity brings the total number of official and unofficial brands to 25. Check them out in the presentation below.

 

 

Further information:

Kids See Potential Beyond Gaming for Virtual Reality (Part 2)

This is the second half of our summary review of the Oculus Rift kids/tween user testing research. In part one we covered research areas including headset comfort, game perspective preference, favourite game genres and game ideation.

As a recap, the research objectives were as follows:

  • Gaming Usage – how they reacted to wearing the Oculus Rift headsets, how they acclimatised to being in a virtual reality environment and their reactions to the games they played.
  • Game Design and Ideation – how well they could come up with new ideas and genres for games suitable for VR.
  • Branding – which companies they thought should sell virtual reality headsets.
  • Pricing – how much they should the headsets should cost.

Here’s what else we explored…

Pricing

We asked the kids how much they thought a headset like the Oculus Rift would cost. The average answer was £430 GBP / $720 USD.

Additionally, when we placed the Oculus Rift alongside a variety of other devices included a PS4, XBox One, a smart TV and an iPad, they ranked the headset as the most expensive. A boy aged 10 said ‘it’s the best out of all the others and it’s better than any other game‘.

Screen Shot 2014-07-01 at 09.41.58

Distribution and Branding

We gave all groups a large selection of company logos, ranging from game and software developers through to global technology manufacturers, toy companies and social networks. None of them were aware of the Facebook acquisition of Oculus VR. Continue reading →

Virtual Reality Game Videos: Roller Coasters

Ok, so we’ve had a load of requests to include Roller Coasters in our series of game videos in virtual reality. Roller Coaster rides is one of the top ‘first experiences’ that people have with a VR headset (and you can download them here).

Why? Because the person wearing the headset gets an immediate sense of presence and it’s a great way for them to quickly ‘get’ what VR is all about. And for the people standing around watching the person wearing the headset, they almost always get a reason to smile….then they want a go! Roller Coasters was also a game genre we tested with kids for our Oculus Rift research.

Buckle-up, here we go. We should probably start with this guy because he’s only had 4.3m views on YouTube.

Continue reading →

Slideshare presentation: Kids Virtual Reality Research

Related post: Kids See Potential Beyond Gaming for Virtual Reality.

Here’s a Slideshare presentation containing summary findings from our recent kids user testing research with the Oculus Rift. A full high-res version can be ordered here.

 

 

Kids See Potential Beyond Gaming for Virtual Reality (Part 1)

In March we conducted what we believe to be the first ever qualitative user testing research with kids and tweens using the Oculus Rift. The research (in conjunction with Dubit) was a series of six one-hour play sessions with pairs of boys and girls aged seven to 12.

Research Objectives

We wanted to investigate the following:

  • Gaming Usage – how they reacted to wearing the Oculus Rift headsets, how they acclimatised to being in a virtual reality environment and their reactions to the games they played.
  • Game Design and Ideation – how well they could come up with new ideas and genres for games suitable for VR.
  • Branding – which companies they thought should sell virtual reality headsets.
  • Pricing – how much they should the headsets should cost.

Screen Shot 2014-06-11 at 17.22.01

We’ve got a Slideshare presentation here or a free summary report of our findings can be ordered here. The first set of our high-level findings are as follows: Continue reading →

Crossing the Chasm – Virtual Reality Launch Strategies for Mass Adoption

This is an article about the First Time User Experience (FTUE) for virtual reality headset users, managing the expectation levels of these users and ultimately how companies developing virtual reality headsets and platforms need to carefully plan for mass consumer adoption in order to get it right first time.

The State of the Market

The Virtual Reality market is at a critical stage in its evolution. 2014 has been a very big year for VR with several companies (large and small) announcing upcoming VR headsets. Coupled to this, the number of games being developed for VR is now well over 100 with developers ranging from AAA studios right down to enthusiasts creating content at home. Closing the loop, we’re now also seeing the ecosystem include companies developing input systems for hand gestures and full body VR control.

But just because this sector is seeing multi-million dollar investments flowing in to it doesn’t necessarily mean this market will be successful. This is because there’s one person yet to be invited to this party – the consumer.

Adoption Curves and Hype Cycles

Let’s start by determining ‘where we’re at’ in terms of market development. Shown below is the Technology Adoption Curve and the Gartner Hype Cycle – two visualisation tools used to demonstrate the various stages of consumer take-up of new technologies. We have indicated (the red circle) where we believe the Consumer Virtual Reality market currently sits on both curves.

kzero technology adoption curve and hype cycle

Looking at the Gartner Hype Cycle first, here are the five lifecycle phases (sourced from Wikipedia): Continue reading →

The BBC Virtual Newsroom

The BBC Future Media division has just released a great example of a Mirror World in VR. The BBC Virtual Newsroom transports Oculus Rift owners into the news department of the BBC.

This is a passive experience, meaning you can’t navigate around the various parts of the studio or broadcasting units, but instead you have a 360 degree view around the camera position. It’s a nice demonstration of how VR can be used to take people to places they wouldn’t or couldn’t normally visit. The demo can be downloaded here.

kzero bbc virtual newsroom2

kzero bbc virtual newsroom3

This isn’t the first time a TV station has allowed people to virtually explore a studio. Sky News re-created their news studio in Second Life back in 2007, although this is the first use of virtual reality in this context. The image below shows the virtual studio in Second Life.

Screen Shot 2014-06-20 at 21.20.05

Although this isn’t really a virtual world experience, we would still classify this as a demo of a Mirror World – using virtual reality to allow the exploration of a real world place. The Mirror World genre is yet to gather momentum in virtual reality but expect this to change quite quickly in the near future. Here’s the Mirror World category in the KZero VR Radar.

kzero vr radar q2 2014 seg2

 

Further information: