Consumer spending on virtual reality hardware and software could reach $21.8 billion by the year 2020, according to a new report from market research and consulting firm Tractica.
The year 2016 will be the "make or break year" for virtual reality, according to the Tractica report, as new VR headsets including the Facebook-owned Oculus Rift and Sony's Project Morpheus hit the market. Another major headset, the HTC Vive, is expected to ship later this year.
“The stakes are high for VR given the huge amount of money invested in the industry by some of the world’s biggest companies,” Tractica analyst Craig Foster said in a statement. “Getting users to experience VR technology firsthand, and therefore truly understand its potential, remains a challenge.”
But if consumers respond to the new headsets, Tractica anticipates that combined revenue for head-mounted displays, VR accessories, and VR content will increase from $108.8 million in 2014 to $21.8 billion worldwide by 2020, with a compound annual growth rate of 142%. Then, as headset adoption begins to reach a critical mass, the industry’s revenue mix will shift from hardware sales to content. Tractica predicts that content sales will represent more than one-third of total VR revenue by 2017, and will grow to nearly two-thirds of all VR revenue by 2020. Video game sales will lead that market, but music, social, tourism, sports and fitness apps should also contribute significant revenues.
In addition to Facebook,