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.
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.
However, the averages shown in the chart below are wide, incorporating high and low end peripherals. Supply of Input Devices is expected to be slow up to 2015, ramping up to 25 different products by 2018.
HMD Revenue Forecast
Applying our HMD Unit Sales forecast to our pricing estimates produces the revenue forecast. A selling price of $350 and a unit sales forecast of 200k for 2014 yields$70m revenue. This is modelled to increase to $684m in 2015 as unit sales grow to 2.7m. 2016 is the year we predict a major jump in the market, with 12 HMDs for sale in the market and 14.9m unit sales at an average selling price of $200.This therefore equates to total revenue of $2.9bn, derived from Innovators/Hardcore Gamers accounting for $420m, Early Adopters/Light Gamers representing $1.1bn and the third primary market, Early Majority/KT&T generating $1.4bn.
By 2018 we forecast HMD revenue at $3.8bn. The chart below shows annual HMD revenues from 2014 to 2018.
Based on our assumptions we forecast cumulative HMD revenues over the five year period of $11.6bn, with 2017 and 2018 accounting for the major tranche of revenue contribution.
Input Device Revenue Forecast
Shown below is our 2014 – 2018 forecast for revenues from the VR Input Device market segment. 2014 market activity is low and primarily from Kickstarter-funded companies. In 2015 we envisage a growth in supply of Input Devices from HMD manufacturers (Oculus, Sony, Samsung) along with standalone companies basing their business models solely around these devices.
2015 revenue is forecasted at $42m from circa 200k unit sales. As with our HMD forecasts, we expect 2016 to be a strong year for growth with 15 different products in the market and almost 2m unit sales at an average selling price of $150. This equates to 2016 revenues of $286m. By 2018 we forecast annual revenues to reach $766m. On a cumulative basis we size the VR Input Device market at $1.6bn over the five year period from 2014 to 2018.
Hardware Revenue Summary
On a cumulative basis aggregating HMD and Input Device unit sales, we have sized the market at $13.2bn from 2014 to 2018. On a yearly basis:
- 2014: $70.6m
- 2015: $727m
- 2016: $3.2bn
- 2017: 4.5bn
- 2018: 4.6bn
The chart below shows annual revenues split by HMDs and Input Systems. Order our full market sizing report here.
In the next article we present our forecasts and assumptions for the software-side of the consumer VR market.