© 2017 eMarketer Inc.
Virtual and Augmented Reality
StatPack
Current Forecasts and the State of the
Market
July 2017
Contributors: Christopher Bendtsen, Ricky Costa
Victoria Petrock
© 2017 eMarketer Inc.
VR and AR: What’s the difference?
Virtual reality (VR): VR fully immerses a user inside a nonfixed visual environment, such as a virtual world or experience. Examples of VR include 360-degree videos, photos and product demos via any device (e.g., connected TVs, desktops/laptops, mobile devices and headsets that let users navigate through the experience), and games via head-mounted displays (HMDs). Examples of VR headsets include AuraVisor, Google Cardboard, Google Daydream View, HTC Vive, Oculus Rift, PlayStation VR and Samsung Gear VR.
Augmented reality (AR): AR enables a user to interact with virtual objects and other types of digital information that are overlaid over the real world. Examples of AR include filters for videos and photos (e.g., Snapchat Lenses); games (e.g., Pokémon Go); navigation (e.g., heads-up displays [HUDs]); interactions with objects (e.g, Blippar, HP Aurasma); and 3-D product demos and projections via headsets and smart glasses.
Source: VR headset: Hopkins; AR goggles: Felisberto Piazza; Icons via The Noun Project, licensed under CC by 3.0.
© 2017 eMarketer Inc.
eMarketer definitions
• Virtual reality (VR) users: Individuals of any age who experience VR content at least once per month via any device. This definition includes users who view 360-degree photos/videos and 3-D animations on any device, including desktops/laptops, mobile devices, game consoles or HMDs.
• 360-degree video: Video footage recorded using a collection of cameras, or an omnidirectional camera that enables the viewer to control the viewing direction. This format is also known as immersive video or spherical video.
• Head-mounted displays (HMDs): Devices used to experience VR and AR content that are held up to the eyes or worn on the head. HMDs are either stereoscope-style headset enclosures that can incorporate a smartphone, or dedicated HMDs that contain their own screens and are tethered to computers or game consoles. Examples include Oculus Rift, Google Daydream View and PlayStation VR. HMDs are also commonly referred to as “headsets.”
• VR headset users: Individuals of any age who experience VR content at least once per month via specialized HMDs.
• Augmented reality (AR) users: Individuals of any age who experience AR content at least once per month via any device.
• Smart glasses: Wearable computer glasses used in AR applications that display information that supplements what the wearer is seeing. Examples include Google Glass, Epson Moverio and VuzixBlade 3000.
• Heads-up displays (HUDs): Transparent displays that project information and imagery onto a surface (often a windshield) without requiring viewers to look down or away from what they are focusing on. They are most often used in AR applications, as with aircraft or automobiles.
© 2017 eMarketer Inc.
Virtual Reality
© 2017 eMarketer Inc.Source: eMarketer, April 2017
42.9
millionpeople in the US will
be VR users by 2019
That’s
14.8% of the population
© 2017 eMarketer Inc.
109.5%
63.7%
34.1%
0%
100%
2017 2018 2019
US Virtual Reality User Growth (% change)
The number of VR users in the US will more
than double in 2017
10.7
22.4
36.7
49.2
0
60
2016 2017 2018 2019
US Virtual Reality Users (millions)
Source: eMarketer, April 2017
eMarketer’s forecasts
include people who
consume 360-degree
photos/videos or 3-D
animated VR content at
least once a month on
any device.
The number of users will grow
109.5% in 2017. The increasing
popularity of 360-degree
photos/videos is driving growth.
© 2017 eMarketer Inc.
Though VR penetration will remain relatively
low, it will continue to grow
Source: eMarketer, April 2017
By 2019, nearly 15%
of the US population
and 17.5% of internet
users will be VR
users.
4.0%
8.2%
13.2%
17.5%
3.3%
6.9%
11.1%
14.8%
0%
20%
2016 2017 2018 2019
% of internet users
% of population
US Virtual Reality User Penetration (% of internet users and % of population)
© 2017 eMarketer Inc.
Most VR is consumed on computers and
mobile devices
• VR generally falls into two categories: 360-degree photo/video and 3-D animation. It can be consumed via desktop/laptop, mobile device, game console or HMD/headset.
• Most of today’s VR is consumed via desktops, laptops and mobile devices in the form of 360-degree photo/video.
• Specific HMDs used to view VR are designed to tether to one or another of these devices. HMDs currently make up less than one-quarter of VR device sales.
• The majority of today’s VR content is related to gaming and entertainment, but there are also promising applications in other industries.
Source: SuperData Research and Unity Technologies, Feb 2017; eMarketer calculations
39.5% 37.8% 22.6%
Virtual Reality Device Sales Share Worldwide, by Type, 2016 (% of
total)
Desktop/laptop Mobile Console
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The majority of 360-degree photos/videos
are consumed via YouTube and Facebook
Source: Facebook Newsroom; Google Blogs; Panorama graphic by mikicon from thenounproject.com
© 2017 eMarketer Inc.
360-degree photos and videos are the most
widely viewed type of VR content
Source: Facebook Newsroom; Google Blogs
“More than 25 million 360-degree photos
and more than 1 million 360-degree
videos [have been] posted on Facebook to
date.”
—Brent Ayrey, Product Director, and Christopher
Wong, Software Engineer, Facebook, March 2017
“YouTube has hundreds of thousands
of 360-degree videos available.”
—Amit Singh, Vice President, Business
Operations, AR & VR, Google, February 2017
© 2017 eMarketer Inc.
The number of US VR headset users is
expected to double this year
Source: eMarketer, April 2017
4.8
9.6
13.9
17.2
0
25
2016 2017 2018 2019
US Virtual Reality Headset Users (millions)
98.7%
45.3%
23.4%
2017 2018 2019
US Virtual Reality Headset User Growth (% change)
0%
100%
© 2017 eMarketer Inc.
But VR headset users will still make up less
than half of total VR users
Source: eMarketer, April 2017
34.9%
37.9%
42.7%
45.0%
0% 100%
2016
US Virtual Reality User Share, Headset Users vs. Non-Users (% of total)
VR headset
users’ share of
overall US VR
users will decline
over time. The
sales and use of
cheaper
headsets will
decrease, and
more people will
watch 360-
degree photos
and videos on
other devices.
2018
2017
2019
VR headset users Headset non-users
© 2017 eMarketer Inc.
A number of headsets are now on the market
Source: Google; Samsung; Oculus; Sony Interactive Entertainment; HTC
Samsung Gear VR
November 2015
Oculus Rift
May 2016
HTC Vive
June 2016
Google Daydream View
November 2016
PlayStation VR
October 2016
Google Cardboard
June 2014
© 2017 eMarketer Inc.
So far, Samsung Gear VR and PlayStation VR
lead the pack
Source: Thrive Analytics, March 2017
14%
18%
22%
42%
60%
Google Cardboard
Google Daydream
Oculus Rift
PlayStation VR
Samsung Gear VR
Virtual Reality Headsets Used by US VR Headset Owners (% of respondents)
The Samsung device’s
popularity is likely a
function of its perceived
value at a relatively low
price.
© 2017 eMarketer Inc.
BI Intelligence expects
global VR headset shipments
will increase from
12 million
in 2017 to more than
55 million
in 2022
That’s
359% growth over the next
six years
Source: BI Intelligence, Feb 2017
© 2017 eMarketer Inc.
Citigroup expects worldwide VR headset sales
to quadruple between 2017 and 2025
Source: Citigroup Investment Research, Oct 2016
10
30
40
0
50
2017 2020 2025
Virtual Reality Headset Sales Worldwide (millions of units)
VR hardware is
expected to drive
industry growth in the
near term.
© 2017 eMarketer Inc.
The US, Europe, China and Japan are among
the biggest markets for VR headsets
Source: UBS, Jan 2017
0%
100%
2016 2017 2018 2019 2020
Europe
US
Japan
China
Virtual Reality Device Sales in Select Countries/Regions
(millions/billions and % of total)
$2.1 billion by 2020
$384 million by 2020
$2.4 billion by 2020
$705 million by 2020 VR device
sales in these
countries and
regions are
forecast to
reach $5.6
billion by
2020.
$168 million in 2016
$170 million in 2016
$576 million in 2016
$632 million in 2016
© 2017 eMarketer Inc.
VR headset users generally have positive
things to say about them
Most consumers
who purchased
headsets reported
experiences that
met or exceeded
their expectations.
© 2017 eMarketer Inc.
Fewer than
15% of internet
users worldwide are
interested in purchasing
a VR headset...
while 59.6% are
not interested and
25.6% are
unsure
But many consumers remain lukewarm
Source: Gamer Network, Feb 2016
© 2017 eMarketer Inc.
Lack of interest and cost are the biggest
obstacles to headset adoption
3%
12%
14%
43%
53%
Poor quality of content
Lack of content
May cause motion
sickness
Too expensive
Just not interested
Reasons that US Internet Users Are Not Interested in Owning a Virtual
Reality Headset (% of respondents)
Source: Thrive Analytics, March 2017
Younger people are
more concerned about
cost and more likely to
worry about a lack of
content for headsets.
Older people are
more likely to say
they aren’t
interested, but less
likely to be
concerned about
motion sickness.
© 2017 eMarketer Inc.
Augmented Reality
© 2017 eMarketer Inc.
The number of AR users in the US is also
steadily rising
Source: eMarketer, April 2017
30.7
40.0
48.1
54.4
0
60
2016 2017 2018 2019
US Augmented Reality Users (millions)
30.2%
20.1%
13.1%
0%
50%
2017 2018 2019
US Augmented Reality User Growth (% change)
eMarketer’s forecasts
include people who
consume AR content at
least once a month on
any device.
© 2017 eMarketer Inc.
54.4
million
people in the US will
use AR by 2019
That’s
16.4% of the US population
Source: eMarketer, April 2017
© 2017 eMarketer Inc.
That’s a compound
annual growth rate
(CAGR) of
81% between 2016 and 2024
The global AR market will
be worth more than
$165 billion
by 2024
Source: Global Market Insights, 2017
© 2017 eMarketer Inc.
By 2019, nearly one-fifth of US internet users
will be AR users
Source: eMarketer, April 2017
11.5%
14.7%
17.3%
19.4%
9.5%
12.3%
14.6%
16.4%
0%
25%
2016 2017 2018 2019
% of internet users
% of population
US Augmented Reality User Penetration (% of internet users and % of population)
© 2017 eMarketer Inc.
Right now, there are more US AR than VR users
Source: eMarketer, April 2017
3.3%
6.9%
11.1%
14.8%
9.5%
12.3%
14.6%16.4%
0%
25%
2016 2017 2018 2019
VR users
AR users
US Virtual Reality vs. Augmented Reality User Penetration (% of population)
... but VR
use is
growing
more quickly,
from a
smaller base.
© 2017 eMarketer Inc.
AR content can be viewed with several
types of devices
Source: HUD: Hyundai Australia; Smart glasses: Epson; Handheld device: zedinteractive from Pixabay
HUDsHandheld devices
Smart glasses and
HMDs
© 2017 eMarketer Inc.
Most of today’s AR experiences take place
on handheld devices
Source: Technavio, 2017
15.8% 35.8% 48.4%
0% 100%
Augmented Reality Device Revenue Share Worldwide, by Type, 2016 (% of total)
HMDsMobile devices
Smart
glasses
© 2017 eMarketer Inc.
Apps and filters for mobile devices are
among the most popular AR uses right now
Source: Snap Inc.; Facebook; Darren Mark Domirez from Flickr
Facebook Messenger
filters, 3-D masks and
camera effects
Snapchat and Instagram
lenses, filters and
stickers
Pokémon Go
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Shipments of dedicated VR hardware dwarf
shipments of AR hardware
VR hardware is
much further along
on the development
and adoption curve;
much of the AR
hardware remains
experimental.
© 2017 eMarketer Inc.
But AR hardware is expected to generate
more revenues than VR hardware by 2021
Source: Citigroup Investment Research, Oct 2016
$2$9 $10
$10$2
$9
$18
$120
$0
$120
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Axis Title
VR hardware
AR hardware
Augmented Reality vs. Virtual Reality Hardware Revenues Worldwide (billions)
AR devices have more
potential to begin
replacing smartphones,
and to become more
widely used as work tools.
© 2017 eMarketer Inc.
Both VR and AR have use cases in many
industries
Source: Doctor: IYIKON; Car: Dinosoft Labs; House: ranjit kumar; Airplane: Gan Khoon Lay; Mortarboard: amymorgan; Shopping cart: Made; Movie camera: Storm; All icons from thenounproject.com
Video GamingTravel, Tourism &
Transportation HealthcareReal Estate
AutomotiveRetail &
MarketingEducation
Digital
Entertainment
© 2017 eMarketer Inc.
Gaming and entertainment will continue to
drive revenues in the near term
© 2017 eMarketer Inc.
$130 billion
$276 billion
$163 billion
0%
100%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Hardware
Software, service & content
Commerce
Augmented and Virtual Reality Revenues Worldwide, by Segment (billions and % of total)
$0
$4 billion
$4 billion
By 2025, AR and VR revenues worldwide are
expected to reach at least $569 billion
Source: Citigroup Investment Research, Oct 2016
Although
software,
service and
content will
make up the
largest
portion of
AR/VR
revenues by
2025,
commerce
will grow
from $0 to
$163 billion.