Consumer Virtual Reality market worth $5.2bn by 2018

That’s one of the headline findings from our latest market sizing report on the Consumer Virtual Reality market. As part of our latest KZero report – Consumer Virtual Reality, State of the Market, we’ve assessed both hardware and software forecasted sales from 2014 to 2018 (order the free State of the Market report for complete findings or view the Slideshare presentation).

Unit Sales and Primary Markets

This article drills into some of the detail of our market sizing. First up, unit sales of consumer VR devices (hardware), as shown in the chart below.

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We’ve split the primary audience for consumer VR into three main groups (Hardcore gamers/Innovators), Light Gamers/Early Adopters and the Kids,Tween and Teen (KT&T) segment. Shown right are annual forecasted unit sales.

On an overall basis, we estimate 2014 unit sales of 200k (all from the Hardcore Gamer / Innovator segment), as the market begins to emerge.

From here, 2015 sales are forecasted at 5.7m units rising to 23.8m in 2018. Total cumulative units sold from 2014 to 2018 equals 56.8m devices. This is broken out as 10.9m units from Hardcore Gamers, 18.1m from Light Gamers and 27.7m from the KT&T segment.

Hardware Revenues

Applying a starting selling price point of $300 in 2014, falling circa $50 per year through to 2018 (we’ve factored in a continuing fall in the retail price as more companies enter the market and drive competition), the chart below presents revenues from device sales (hardware revenue). 2014 hardware revenue is calculated at $60m in total.

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As unit sales increase, total hardware revenues grow to $1.4bn in 2015 (from 5.7m purchased devices), through to $2.1bn 2016, and $2.4bn in 2017.

Full year 2018 hardware revenue from devices sales is estimated at $2.3bn, creating total cumulative hardware revenues (2014 – 2018) of $8.4bn. This is broken out as $1.6bn units from Hardcore Gamers, $2.5bn from Light Gamers and $4.2bn from the KT&T segment.

The Software Side (Games and Apps)

Of course, once you’ve got a consumer virtual reality device you need games, apps and other software to ‘do stuff’! So, we’ve also assessed the software side of the market. To calculate software revenues we’ve created an active user forecast (on the basis that a single device will have more than one user) and applied forecasted ARPPU data in order to determine revenues.

Screen Shot 2013-12-30 at 11.06.55The chart above shows annual software sales of games and apps for consumer virtual reality. We estimate 2014 software revenue at $30m in 2014, from 600k active users. This increases to $947m in 2015 from 15.7m active users.

Total 2018 annual software revenue is forecasted at $2.8bn from 47.6m active users. Cumulative software revenue from 2014 to 2018 is estimated at $7.7bn.

This is broken out as $1.4bn software revenue from Hardcore Gamers, $2.4bn from Light Gamers and $3.8bn from the KT&T segment.

Applying hardware and software sales together yields the total revenue market size for consumer virtual reality and this is shown in the chart below.


2014 total revenue is estimated at $90m, 2015 $2.3bn, 2016 $3.8bn, 2017 $4.6bn and 2018 calculated at $5.2bn. Cumulatively across the period of 2014 to 2018 we have forecasted the consumer virtual reality market to be worth $16.2bn.

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Order our full State of the Market Report and Marketing Sizing Analysis here.

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