Virtual reality

Glossary

• augmented reality (AR) - Supplementing a real-world environment with computer-generated perceptual information, which may add to or mask the physical environment. Augmented reality alters the perception of a physical environment, whereas virtual reality replaces the physical environment with a simulated one.

• extended reality - See XR.

• immersive technology - Despite all game technology incorporating various degrees of immersion, immersive technology tends to refer to anything incorporating 'virtual reality, mixed reality or augmented reality. See also XR

• mixed reality (MR) - A term describing the middle-ground between 'virtual reality and augmented reality. Mixed reality tends to refer to experiences delivered via high-end headsets rather than e.g. mobile phone-based devices.

• pervasive game - A game that blends its in-game world with the physical world. The term has been associated with ubiquitous games, mixed-reality games, and location-aware mobile games. Examples of pervasive games include Pokémon Go.

• virtual reality (VR) - Virtual reality is an interactive computer-generated experience taking place within a simulated environment, that incorporates mainly auditory and visual, but also other types of sensory feedback like haptic. This immersive environment can simulate the real world or it can be fantastical, creating an experience that is not possible in reality. Current VR technology commonly uses headsets or multi-projected environments, sometimes in combination with physical environments or props, to generate realistic images, sounds and other sensations that simulate a user's physical presence in a virtual or imaginary environment. A person using virtual reality equipment is able to "look around" the artificial world, move around in it, and interact with virtual features or items.

• XR - Also extended reality. A catch-all term for anything incorporating virtual reality, mixed reality or augmented reality. Also sometimes referred to via the term immersive technology.

2020 Stats

SuperData projection of XR hardware and consumer software revenues, published Apr 2020. Source: Superdata

• In 2020, combined XR hardware and consumer software will earn a projected $6.3bn, revised from a previous estimate of $7.7bn due to COVID-19 impacts. (Superdata, Apr 2020)
  • This $6.3bn total is split between VR revenues ($2.6bn), AR/MR headsets ($1.4bn) and Mobile AR ($2.3bn)
  • By 2021, global XR revenues are predicted to rise to $8.2bn, with with VR revenues growing significantly to $3.7bn.
  • By 2023, the overall XR market will reach $12.2bn, with $5.1bn relating to VR, $4.4bn to AR/MR headsets and $2.8bn in mobile AR.

• Location-based VR venues are thought to have been heavily impacted by the Coronavirus outbreak, with a projected revenues falling 72% to $141m globally in 2020. (Superdata, Apr 2020)

Virtual Reality

• Sony Interactive Entertainment's PlayStation VR headset has sold 5 million units to date. (Road to VR / Sony, Jan 2020)

2019 Stats

Virtual Reality

• From Q2-Q3 of 2019, HTC and Oculus dominated the VR headset market, with a market share of 46.8% for HTC (Vive, Vive Pro) and 41.8% for Oculus (Go, Rift, Rift S) (Observer Analytics, Nov 2019)

• During this period, NVIDIA completely dominated the market for graphics cards in the VR sector, with a 87.9% market share (Observer Analytics, Nov 2019)

• During the average VR session, tracking is lost 2.49 times (this occurs when sensor are blocked or cables become disconnected). This is most common for the Oculus Rift headset (tracking lost over 4 times on average) and least common with the Valve Index (tracking lost around once per session) (Observer Analytics, Nov 2019)

• In the UK in 2018, games made up 53% of spending on VR (Catapult Digital, Nov 2019)

• The UK VR industry specifically is expected to be worth £294m by 2023 (Catapult Digital, Nov 2019)

• By the end of 2022, the market size for VR is predicted to reach $13.7bn (SuperData, Oct 2019)

• Sony have announced that as of 3rd March 2019, they have sold through 4.2m PSVR systems worldwide. (Sony PlayStation Blog, March 2019)

• Oculus Go sold 1million units after its May 2018 launch. It appealed to mainstream users by being a mobile headset that didn't require a connection to another device. (Superdata, Jan 2019)

• The market for VR installations and attractions such as Star Wars: Secrets of the Empire and Jurassic World VR Expedition grew 37% to $413m. These VR exhibitions are expected to introduce everyday consumers to high-end VR by offering experiences in busy locations such as airports and restaurants. This may alleviate the initial slower-than-anticipated adoption of high-end consumer VR headsets. (Superdata, Jan 2019)

• According to analytics firm ABI and NVIDIA, 4 million PC VR headsets have been sold to date. Road to VR, Jan 2019)

• According to the latest Steam Hardware & Software Survey, around 767,000 or 0.8% of all Steam users have VR headsets attached to their machines, almost double the numbers published 16 months previously. (Road to VR, Jan 2019)

• The market share for VR headsets among Steam users is 46.5% Oculus Rift and 40.1% HTC VIVE, although the HTC VIVE Pro which picks up an 2.81% for HTC. Windows VR headsets collectively make up 8.9% of the market. (Road to VR, Jan 2019)

Augmented and Mixed Reality

• The market size for Augmented and Mixed reality is expected to reach $18.9bn by the end of 2022 (SuperData, Oct 2019)

• In 2019, 33% of Augmented and Mixed reality headsets are estimated to be purchased by consumers. The remaining 67% are purchased by developers and enterprise clients (SuperData, Oct 2019)

• Magic Leap has secured a $280 million investment from Japanese mobile operator Docomo, bringing the total investment into Magic Leap to $2.6 billion since being formed in 2010. (Gamasutra / Magic Leap, Apr 2019)

• Mixed reality hardware and software revenues rose from $4.5nn to $6.6bn from the years 2017 to 2018. In 2019, it is expected that $11.5billion will be generated. (Superdata, Jan 2019)

• Social media apps such as SnapChat and Instagram drove mobile augmented reality (AR) user numbers to 1.1billion and helped push mixed reality revenue to $2.3billion. In the US, 84% of mobile AR audience used mixed reality technology in social media apps like TikTok, Snapchat and Instagram. (Superdata, Jan 2019)

• Enterprise clients are set to account for 85% mixed reality headsets sold in 2019 and will continue to represent the majority of demand through 2022. (Superdata, Jan 2019)

VR and AR

• The global VR/AR market is expected to be worth $160b by 2023, with engineering and manufacturing applications of these technologies expected to be major drivers of this growth (Catapult Digital, Nov 2019)

• Outside of London, the largest regional hubs for VR/AR businesses include Manchester and the North West (52 companies) and Bristol and the South West (49 companies) (Catapult Digital, Nov 2019)

• VR and AR technologies are predicted to offer a boost of £62.5b ($69.3b) to UK GDP by 2030. Up from £1.8b ($2.0b) in 2019 (PwC, Nov 2019)

• VR and AR technologies are predicted to offer a boost of $1,542.9b to global GDP by 2030. Up from $46.4b in 2019 (PwC, Nov 2019)

• Use of VR and AR in healthcare alone in 2019 contributes $11.0b to global GDP. By 2030 this is predicted to be $350.9b (PwC, Nov 2019)

• The share of immersive technology revenue, such as Virtual and Augmented reality, grew from 27% to 25% in 2018. (Superdata, Jan 2019)

• Enterprises purchasing immersive technology surpassed $11b as businesses see the potential for return on investment. Training employees is the biggest reason why businesses purchase immersive technology, with 71% of firms using VR to develop their workforce in skills from performing surgery to practising customer service. For example, Walmart agreed to purchase 17,000 Oculus Go headsets to train retail employees in September 2018 in customer service. (Superdata, Jan 2019)

2018 Stats

Virtual Reality

• By 2022, VR content will generate $21.2bn a year by 2022, with game revenue ($12bn approx.) staying ahead of video ($9bn approx.). (PwC, Jun 2018)

• Total global revenues from VR apps, gaming and video will grow from $3.9bn in 2017 to over $20bn in 2022. (PwC, Jun 2018)

• By 2022, 175.2m VR headsets will be in consumers’ hands across ten major markets, up from an estimated 37.6m at the end of 2017. (PwC, Jun 2018)

• The UK’s fastest growing entertainment and media sector is Virtual Reality, growing at 34 per cent annually to reach £1.2bn in revenue by 2022. VR headsets are forecast to sell with more than 7.8m cumulatively by the same period. (PwC / City AM, Jun 2018)

• The UK’s VR industry will generate more revenue than any other country in Western Europe over this time. (PwC / digitsaltveurope.com, Jun 2018)

• Venture capital investment in UK virtual reality grew +260% from £50m in 2016 to £180m in 2017. Seed stage funding was down from £5m to £2m in the same period. (ImmerseUK, May 2018)

• Consumer virtual reality revenue reached $2.2bn in 2017, with $1.7bn from hardware sales and $554m in software sales. In 2018, revenues are expected to increase 105% to $4.5bn. (Superdata, Jan 2018)

• Samsung’s Gear VR was the highest selling mobile headset in 2017 and Sony’s PlayStation VR was the highest selling console/PC headset (see chart below). (Superdata, Jan 2018)

Augmented and Mixed Reality

• Venture capital investment in UK augmented reality increased by around 40% to £48.4m in 217 but investment at seed stage was broadly flat year-on-year. (ImmerseUK, May 2018)

VR and AR

• There are 1,000 immersive-specialist companies in the UK (>50% of income from immersive projects), employing around 4,500 people and generating £660m in sales. This potentially represents as much as 9% of the global market. (ImmerseUK, May 2018)

• Half of immersive-specialist businesses in the UK were incorporated since 2012. (ImmerseUK, May 2018)

• 6 out of 10 of immersive-specialist businesses grew their turnover in the past 12 months and 90% were confident of their future prospects. 70% were exporting immersive-related products and services, with a particular focus on US markets. (ImmerseUK, May 2018)

• 38% of immersive business are located in London. Other hubs for immersive businesses include Brighton, Bristol, Newcastle, Liverpool, Manchester, Cambridge, Oxford and Edinburgh. (ImmerseUK, May 2018)

• 253 projects worth a total of £160m were identified in UK Research Councils, Innovate UK and EU Horizon 2020 open datasets. Funding for immersive tech projects was 9 times higher in 2016-2017 than in 2009-2010. (ImmerseUK, May 2018)

• 3 in 10 immersive specialist companies benefitted from tax incentives in the last 12 months and 2 in 10 received some sort of national grant. (ImmerseUK, May 2018)

• Extended reality (XR) revenue up by 37% to $4.0bn in 2017. (Superdata, Jan 2018)

• $2.3bn of venture investments in XR were made in 2017, with Magic Leap accounting for $0.5bn of total revenues. The remainder was split $0.9bn in VR projects and $0.9bn in AR/MR projects. (Superdata, Jan 2018)

• Venture funding of VR/AR companies reached at least $1.9bn in 2017. The total number of companies raising venture capital during 2017 outpaced 2016, but the average deal size declined sharply by 35%. (Greenlight Insights, Jan 2018)

• The majority of VR/AR venture funding deals in 2017 were early stage (Seed and Series A). The number of early stage deals in 2017 was up 27% YoY and 105 companies raised $2M or more from VCs. However, the average Seed and Series A deal size declined 9% and 17%, respectively. (Greenlight Insights, Jan 2018)

2017 Stats

Virtual Reality

• Sony’s PlayStation VR headset (PSVR) has sold through 2m units globally. (SIE, Dec 2017)

• The UK will have the largest and fastest growing VR hardware market in EMEA, worth £0.8m in 2021, growing at 76% CAGR. (PWC, June 2017)

• PlayStation VR has sold more than 1m units worldwide ($399 / £308 approx), Sony Interactive Entertainment have confirmed. (MCV / BBC, June 2017)

• 55% of the most frequent gamers are familiar with virtual reality; among those, 40% say they will likely purchase VR within the next year. (ESA, April 2017)

• The total virtual reality revenues to reach $7.2 billion globally by the end of 2017 with head-mounted displays (HMDs) accounting for $4.7 billion. By 2021, global revenues are expected to reach $74.8bn. (Greenlight Insights, Apr 2017)

VR and AR

• There are 463 VR / AR companies operating in the UK, split into 308 in content, 110 in technology and 45 services. (PWC / Immerse UK, July 2017)

• London is the largest hub for VR/ AR companies, with 244 businesses located in the capital. These companies have attracted a combined VC investment of $645.7m. (PWC / Immerse UK, July 2017)

2016 Stats

Virtual Reality

• The world consumer VR headset installed base reached 28 million at the end of 2017 and will reach 75.7 million consumer VR headsets installed by 2021. (IHS Markit, Feb 2016)

• World consumer spending on VR headsets reached $2.4 billion in 2017 and is forecast to reach $5.8 billion by 2021. Spend will be driven by continued adoption of PC, console and standalone headsets offset by reduction in price points for these same headsets. (IHS Markit, Feb 2016)

• World consumer spending on VR games, interactive experiences and video reached $803 million in 2017 and is forecasted to reach $2.8 billion by 2021. (IHS Markit, Feb 2016)

• Consumer spending on location-based VR reached $385 million in 2017. This is forecast to grow to $906 million by 2021. In 2017, China’s share of the market was 65%. This is expected to decrease to 51% by 2021 as other regions and country markets become more established. (IHS Markit, Feb 2016)

• The VR market generated $2.7bn in 2016 and will grow to $17.8bn by 2019. (SuperData, Dec 2016)

• The total value of VR market (including hard- and software) will reach $6.7bn in 2016 and will reach $70bn by 2020. (TrendForce, Dec 2016)

• Of more than 800 companies working in the VR sector worldwide, more than 150 are based in Britain. (GrowthEnabler, Sept 2016)

• According to 01consulting, as of November 2016, Sony’s PSVR represents around one third (30%) of the total VR market. (01consulting, Dec 2016)

• Sales of Sony’s PlayStation VR headset are on track to outsell the combined sales of the HTC Vive and Oculus Rift by the end of 2016. (Study TEASER DECK SENT TO CLIENTS 2016.pdf GfK / MCV, Nov 2016)

• Consumer spend on VR to hit $11.2bn by 2020, with headsets accounting for $7.9bn and VR entertainment $3.3bn. (IHS Markit, Sept 2016)

• The installed base of VR headsets is set to increase from 4 million in 2015 to 81 million in 2020. (IHS Markit, Sept 2016)

• According to IHS Markit, Samsung Gear VR will be the most widely used VR brand by the end of 2016, making up 30% of owned headsets. Playstation VR is expected to exceed both Oculus and HTC Vive headsets combines, covering 8% of the market. A large segment of the market (40%) is made up of many smaller entrants, mostly smartphone headsets. (IHS Markit, Sept 2016)

• While generally consumers are excited by the potential of VR, many still see a lack of understanding of the products and the potentially high costs as barriers to purchase. 75% of consumers agreed that they do not understand enough about VR products, and 73% would like to wait before investing in the platform. (CONTEXT, July 2016)

• The opportunity to demo VR products is seen as the key factor in the decision to purchase VR by European consumers (79%), ahead of the cost of the product (68%). (CONTEXT, July 2016)

• Cheaper VR products such as Google Cardboard show a higher level of penetration into the market, however, when asked which product they would most likely purchase, the UK’s consumers favoured the more advanced products from Sony PlayStation VR (18%) and Oculus Rift (10%). (CONTEXT, July 2016)

• UK consumers have a high level of awareness of VR (75% stating that they have heard of VR), ahead of Spain (72%), Italy (71%) and France (70%), although awareness is slightly higher in Germany (79.5%). (CONTEXT, July 2016)

• Worldwide shipments of Virtual Reality hardware will reach 9.6 million units in 2016, generating revenues of approximately $2.3 billion. (IDC, Apr 2016)

• $2.8B has been invested in VR this year, bringing the total since 2012 up to $8.8B (Superdata, Apr 2016)

• As of April 2016, the market data company Superdata have revised their 2016 global VR hardware and software forecast down to $2.9 billion, a 43% drop from their $5.1 billion projection at the beginning of the year. (Superdata, Apr 2016)

• Across key countries in North America and Europe, an average of 11% of the online population between 10 and 65 state that they are planning to buy VR products in the next six months. (Newzoo, Apr 2016)

• On average, men comprise 68% of those who intend to buy VR. (Newzoo, Apr 2016)

• 12% of the online US population is planning to buy VR products in the next 6 months. (Newzoo, Apr 2016)

• 10% of online brits intend to purchase VR within the next 6 months, with a further 26% who were undecided. (Newzoo, Apr 2016)

• For US eSport enthusiasts, 56% intend to buy in the next 6 months, making up 45% of the group that intends to buy VR in that period. Occasional eSport viewers are also keen, with 24% intending to buy in the next 6 months. (Newzoo, Apr 2016)

Augmented and Mixed Reality

• Consumer spend on all AR-related mobile apps is forecast to grow from $1.6bn in 2017 to $7.8bn in 2021. (IHS Markit, Feb 2016)

• Augmented Reality accounted for $1bn in 2016 revenue and Mixed Reality made up $100m. By 2019, Mixed Reality will become the dominant sector of the two, worth $9.4bn to AR’s $4.2bn. (SuperData, Dec 2016)

VR and AR

• The Virtual, Augmented and Mixed Reality games market will be worth $1.2bn by the end of 2016 and is projected at up to $8.8bn by the end of 2020, with VR becoming the dominant sector in revenue terms. (Superdata, Nov 2016)

• London is the top hub for VR and AR talent in Europe, with the highest number of LinkedIn members with VR/AR skills. As a proportion of total local members, London has the 7th highest density of VR/AR talent, followed by Birmingham at 9th. Oxford and Cambridge also have high level of VR/AR talent. (LinkedIn/ Atomico / Slush, Nov 2016)

• Growing at a cumulative annual rate of 184%, VR shipments will reach 64.8 million units by 2020. Combined with Augmented Reality hardware, shipments will reach 110 million units by 2020. (IDC, Apr 2016)

2015 Stats

Virtual Reality

• Current VR hype is different from past attempts, in that systems will exceed the hype this time, as opposed to systems that can’t live up to the hype. In past VR were more gimmicks than launchable platforms, finally it’s really here. It’s now realistic to do VR at consumer pricing, whereas before it was too expensive. (VR Intelligence, Aug 2015)

• The impact of having many companies involved in VR is that they are releasing products around the same time, so we’ll see a whole industry that wasn’t there before. VR and AR are going to be powerful drivers in PC growth, as you need better hardware to run the new experiences. It will push the ecosystem of PCs and transform the technology landscape. Having major players involved will accelerate things, but considering a 10-year span before the technology is widely available is reasonable, as PCs will be gradually upgraded with powerful hardware. (VR Intelligence, Aug 2015)

• The challenges developers face to develop for VR are the misunderstanding of the medium (need for managing motion sickness, mixing gameplay styles to accommodate…) and the natural behaviour of recreating genres that already exist. Sometimes inspiration can be found in sci-fi books rather than in the current market. (VR Intelligence, Aug 2015)

VR and AR

• Digi-Capital has forecasted that augmented and virtual reality will be worth $150bn by 2020. Interestingly AR is forecasted to reach 4 times what VR will ($120bn vs $30bn). Digi-capital analysts state that while VR is great for games and 3D films, due to its need for full immersion you won’t be able to play anywhere. AR on the other hand will be easier to play on the tube, and there’s more potential market for the technology beyond games. (Gamesindustry.biz, Apr 2015)