Today we publish the 2016 Virtual Reality Industry Report. Co-authored with VR business intelligence firm Greenlight VR, the report is a distillation of years of experience, research, and analysis into an accessible and comprehensive foundation of the virtual reality landscape, with the goal of informing forward-looking strategies.

Bigger is Not Always Better (or more accurate)

So what’s the problem with projections? Big projections get big headlines. You don’t have to go searching very far or wide to find VR and AR industry projections forecasting market revenue of tens or hundreds of billions in short timeframes, or that massive numbers of VR headsets will ship in no time at all.

These sorts of stories get headlines because they paint a very optimistic picture of an industry that—in all truthfulness—is unproven and still in its earliest stages. At Road to VR, we see such juicy figures flaunted frequently in our direction, and often pass on reporting them.

Everyone in the industry wants to know that VR and AR is going to be wildly successful and that it’s going to happen fast. Investors especially, many of which are looking for maximum return on a minimal timeframe, are emboldened by the opportunity that the big numbers suggest. But great momentum doesn’t a projection make, it’s about what’s actually happening inside the black box of “the industry.”

Why the 2016 Virtual Reality Industry Report is Different

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” – popularly attributed to Bill Gates

In general, we’ve found that many of the projections we see are overly aggressive in their early timeline, seemingly trying to one-up each other as time goes on. We think that the VR industry will achieve its greatest potential when actors within are equipped with the most accurate knowledge.

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See Also: Google Developing “High Volume” Consumer VR Hardware, New Job Postings Suggest

We’ve applied our experience as the industry’s most senior VR-dedicated publication, combined with Greenlight VR’s trusted data-driven analysis, to create a comprehensive foundation of the virtual reality landscape and a realistic account of how the market will grow, not only in scale, but crucially, in time as well.

So when you glean insights from our 2016 VR Industry Report that aren’t all roses and sunshine—like that many developers don’t believe VR will begin to approach mainstream adoption for another 2-3 years, or that the industry is still lacking a killer app to drive that adoption—know that we aren’t going for big headlines, we’re going for big accuracy.

Buy the 2016 VR Industry Report

That’s not to say that the future isn’t bright. VR’s potential is huge and only getting bigger. We conclude at the forefront of our report that “VR is here to stay,” and that we’re overall optimistic about the industry, believing there to be an even larger potential market in the long-term than most other analyst forecasts.

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VR may be here, but it’s also only just arrived. Here in 2016, virtual reality makes its first steps into the consumer marketplace where the uninitiated can handle and judge this new medium. And while what we have today is undoubtedly the best, most affordable virtual reality technology that’s ever existed, the opportunities for what comes next are even greater (and growing) than what we’ve seen up to this point.

Facebook CEO Mark Zuckerberg | Photo courtesy Facebook
See Also: Facebook on Rift Sales: “It’s not going to be material to our financials this year” | Photo courtesy Facebook

From hardware to software and everywhere in between, virtual reality technology will only stop evolving once the experience it provides is indistinguishable from reality. That point is unlikely to be achieved within the lifetime of anyone reading our report in the year that it’s published, and that means that there’s, at minimum, a lifetime’s-worth of opportunity awaiting anyone involved in the field.

Prior to that far-flung future of a perfect simulation, there are countless opportunities for the technology in this year alone. While the initial wave of VR is focused on gaming and entertainment, the capabilities of the technology have wide reaching implications that will transform many industries.

For those who today see VR only as an entertainment platform, let’s return briefly to the original iPhone. As launched initially in 2007, the iPhone had very little support or focus on enterprise capabilities. It was seen as a toy that would never compete with the likes of the then-dominant BlackBerry. Yet as the device spread, the experience it provided was so widely enjoyed that the user base itself demanded that the iPhone become part of their enterprise workflow. Consequently, apps and enterprise integrations sprung forth, causing the iPhone to not only knock the former leader off of its throne, but to exceed the prior expectation of the role that such a device could and should play in our lives.

And now comes consumer VR systems which, to many not paying close attention, look like toys for entertainment. But the experience they provide is so profound—creating ‘instant converts’ out of the vast majority of first-time users—that the user base will demand that it become part of the enterprise workflow, and so much more.

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  • TaxPayer

    They need Demo stations setup ASAP at the big box stores. I cant believe they haven’t partnered with them yet. They tried to do the shipping themselves and that blew up….I know im not alone in saying that, i have the $$$ ready to deploy, but i need to see it to believe it. They talk about the success of iPhone in 2007, well i can tell you that i got one back then, and its because i tried it out at the apple store and was sold that very minute.

    • jlschmugge

      The problem with demoing it, is that you are reaching people that know nothing about the past three years of VR re-emergence, and especially know nothing about the fact you can only get it by pre-order and still have to wait about 3-4 months now. I think this will only baffle potential customers and discourage them. By the time VR is then out of the pre-order phase and actually on shelves, people are going to forget about that novel experience they had in Best Buy six months ago.

      The limited experience in Europe stores I hear about right now with the Vive might be a good introduction, but having every HMD in every tech and game store in every country is a bit risky. If they do it right, they should start demoing it in stores a month before it is on shelves, so the hype generated from the first time someone puts on an HMD is fresh and they still have that spontaneous itch to throw down money.

      All the people that have preordered now are probably those who have been following VR for a while and are well informed to make their choice. I can understand those still on the fence are rationally cautious and would like to demo it to make their preorder, but those on the fence are still well informed enough to know that preorder is not coming for a while.

      • TaxPayer

        True, but what i mean is, why not have Bestbuy do what they do (Sell products and let you touch them). Why are they trying to sell them, they could be focusing on product development etc…

        if they had demo stations setup, you could then say “ya i want that, and the demo guy could be like ok, here sign up for pre order and come get it in a month or ship to your house etc..” it doesn’t need to be this hard.

        • Mageoftheyear

          They can’t commit to the volume of demand for pre-orders, and you want them to commit to the volume required for retail distribution? If a retailer sets up a demo space they have a reasonable expectation that they’ll have enough replenishable stock of that product to justify their investment.

          Retail distribution will happen when Oculus can meet the demand for it.

  • VR Geek

    We would love to see this report, but at $1,000 it just makes no sense for us as this early stage of consumer VR. We are just a little indie shop. Maybe next years report. That said, we anticipate the growth of the industry to follow a normal exponential curve (replace the top value on the Y axis with whatever your long term goal is to plot).

  • Chris7

    Vr has plenty of time for in store demos, these first units aren’t going to sell like hot cakes….this is for the gamer enthusiast. Oculus botched their launch…but they are still smiling.They know there is a lot of work to be done…and that it won’t happen for a while. When desktop quality VR is available in one box….for a reasonable amount of money…say 299-399 usd..that’s when it will be a realistic opportunity for the majority of consumers.
    They need productivity applications as well as a wide range of entertainment stuff….and then they still need the killer app…which will likely be a service similar to facebook. This is why Oculus doesn’t seem like the launch woes are getting to them. If Mark Zuckerberg really sees VR as the next computing platform…he’s in this thing for the long haul….and he’s smart enough to know that it’s going to have to get better…and no its going to have to get less expensive. We are excited about VR…we been waiting for it. But some could still care less. VR is finally ready for the world, …that world isn’t ready for it.

  • Ragu

    I disagree with th elifetime comment. As a 22 year old who’s seen an immense amount of change in my lifetime, I believe we shouldn’t be thinking linearly about these sorts of things. I think it’s very possible that we will see a full realization of VR within (at least my) lifetime, along with vast development and exponential advancements in every other area of computing as well.

    • Lucas Cooper-Bey

      Yeah that comment made me skim the rest of the arcticle because I stopped trusting the perspective of the writer. If the proven rate of our tech evolution so far is of any suggestion we should be transcending barriers within the next fifty years at the absolute least. And honestly I think that’s even being conservative.

      • benz145

        I think this is too simplistic of a view, it overemphasizes some of our advances while glossing over the immense challenges that stand between us and VR that is “indistinguishable from reality.” In particular, the field of BCI (which we will need to master before we can create VR at such a level) is incredibly immature and not developing rapidly.

        As a fun exercise, go to a public library and pull some books from the ’60s and ’70s predicting what life would be like in the year 2000.

        • Lucas Cooper-Bey

          I set a reminder on my phone. let’s finish this conversation then.

  • JrSlims

    That quote is Amara’s law. Bill Gates just added some years. https://en.wikipedia.org/wiki/Roy_Amara

    • benz145

      Excellent, thanks for adding this. I dug around for a direct source (as everyone ALWAYS do for short, uncited quotes that float around the internet), but couldn’t find one, despite a bunch of second-hand sources attributing it to Bill Gates. That’s why I wrote “Popularly attributed to” rather than rehashing the unsourced claim.