Global Virtual Reality market will reach USD 32.38 billion by 2025

The global virtual reality market was valued at USD 10.32 billion in the year 2019 and is estimated to reach USD 12.48 billion by the year 2020.

It is expected to grow at the CAGR of 21.6% within the time horizon of 2020-2025 because of growing smartphones penetration rate, growing adoption of VR in gaming market, existing pandemic outbreak of COVID-19 disease, and increase in investment for the VR technology.

Its market value will reach USD 32.38 billion by the end of the year 2025.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Virtual reality is the computer interference that provides 3-D dimensional visual experience to the users. It uses the sensory devices, specifically designed headsets, and glasses to create the stimulated environment and visual immersion.

It projects 3D computer generated environment in which user can interact with person as a part of the near-reality world. This type of technology is used in the sector gaming & entertainment industry, educational sector, architecture, tourism, and other sectors. The global virtual reality market is concerned with the development, distribution and sale of hardware and software for virtual reality.

Based on components and application, the global virtual reality market comprised of following segments:

Market Overview

The total market size of the global virtual reality market is valued at USD 10.32 billion in the year 2019 and is expected to reach USD 12.48 billion in the year 2020. Its market value is expected to grow at a CAGR of 21.6% within the forecasted time horizon of 2020-2025. Its market value is expected to reach USD 32.38 billion by the end of the year 2025.

It has been estimated that the number of the VR headsets will reach almost 82 million units by the end of the year 2020. Based on geography, the North American region is leading the global market with a market share of almost 33% of the total global virtual reality market because of the rising adoption of new technology and presence of large number of the virtual reality companies in the North American countries. The market size of this region is valued at USD 3.4 billion in the year 2019.

Based on the technology insights, the semi & fully immersive segment is leading the market with a market share of almost 79.4% of the total global virtual reality market because of its flexibility and variability in applications.

The market size of this segment is valued at USD 8.19 billion in the year 2019. Based on the component insights, the hardware segment is leading the market with a market share of almost 68.8% of the total virtual market because of increasing penetration of smartphones and other electronic devices.

The market size of this segment is valued at USD 7.1 billion in the year 2019. Based on the application, the commercial segment is leading the market with a market share of almost 52.5% of the global virtual reality market. The market size of this segment is valued at USD 5.41 billion in the year 2019.

Existing pandemic outbreak of COVID-19 disease, growing smartphones penetration rate, growing adoption of VR in gaming market, and increase in investment for the VR technology are the factors responsible for the growth and development of the global virtual reality market.

However, health risks associated with the use of virtual reality headsets and issue of display latency might restrain the growth and development of this market.

Market Risks

Health risk associated with the use of virtual reality devices

The use of the virtual reality technology and devices is associated with health and safety problems among the users. The major health issues associated with the use of the virtual reality technology enabled devices are myopia, eye strain, headache, nausea, anxiety, etc.

The exposure to the virtual reality technology also possesses the risk to the electromagnetic frequency radiation. Numerous studies have shown that the exposure to the radiation of the cell phone can affect the reproduction system, sleep and cause the mood swings. The risk of the health issues might create a risk for the growth and development of the global virtual reality market.

Top Market Opportunities

Existing pandemic outbreak of COVID-19 disease

The worldwide pandemic outbreak of the novel corona virus has caused a huge impact in the sector of the education, teaching, and learning activities. It has led to the increase in the number of the virtual technological conferences, work from home, remote learning & training, summit, and meet-ups.

For instance, Microsoft has declared to organize all of the events digitally through Microsoft Ignite and Microsoft Build until July 2021. Along with this, some of the universities and hospitals are collaborating with virtual reality software development companies to organize the training programs and diagnose the health conditions.

For example, the University of the Western Cape has collaborated with EON Reality to develop the Interactive Digital Center and organize the training solutions in Cape Town. George Washington University Hospital has used virtual reality platforms to see the patient lungs in the fight against the corona virus.

The Gem vision has placed the order of M400 smart glasses with Vuzix Corporation in May 2020 to meet the remote healthcare needs related to COVID-19 in the Netherlands.

The increasing number of the virtual training and learning sessions in the educational and other sectors to minimize the risk of transmission of COVID-19 disease will create a significant opportunity for the growth and development of the global virtual reality market.

Growing smartphones penetration rate

The global smartphone penetration has reach 41.5% in the year 2019, which is increased from 33.5% in the year 2016. The smartphone penetration rate is expected to reach 44.9% by the end of the year 2020.

Globally, the number of smartphone users has reached 3.2 billion in the year 2019, increased from 2.5 billion in the year 2016. It has been estimated that the smartphone users will reach 3.8 billion by the end of the year 2021.

Along with this, the sale of the smartphone is also in increasing trend and about 1.4 billion smartphones are sold annually over the past five years. The increasing penetration of the smartphone is creating a favorable environment to rise the demand for the virtual reality devices, which will ultimately promote the growth and development of the global virtual reality market.

Market Trends

The factors driving the growth and development of the global virtual reality market are growing adoption of artificial intelligence and automation technology, rapid acceptance of VR technology, rising 5G and cloud computing technology, easy availability of affordable VR devices, increasing use of the VR for aerospace and defense training and simulation, and increase in the investment for the virtual reality technologies.

The major driving factors for the growth and development of the global virtual reality market are discussed as follows:

Growing adoption of VR in gaming market

Globally, the number of the gamers are in increasing trend and are expected to reach three billion by the end of the year 2023. The global games market is also expected to grow at a CAGR of almost 9.3% within the forecasted time horizon of 2020-2025. The revenue of the global games market is expected to reach USD 159.3 billion in the year 2020. The adoption of the virtual reality devices in the gaming sector is in increasing trend.

A worldwide survey conducted among technology company executives, startup founders, investors and consultants has found that almost 59% of the study participants believe that the gaming segment will lead the investment towards the development of the virtual reality technology.

Along with this, according to the 3Dinsider, more than 64% of the active virtual reality users believes that the gaming segment has the potential to benefit from the advancement of the virtual reality technology. The growing global gaming market and rising adoption of the virtual reality technologies is driving the growth and development of the global virtual reality market.

Increase in investment for the VR technology

Globally, the investment of the government and other non-governmental organizations on the virtual reality technologies is in increasing trend. According to the International Data Corporation, the spending on the virtual reality is reached at USD 10.5 billion in the year 2019 worldwide, which is increased from USD 2.3 billion in the year 2017.

It has been expected that the global spending on the virtual and augmented reality will reach USD 18.8 billion in the year 2020 with an expected increased by more than 78.5% in comparison to the investment of the year 2019. The global spending on the virtual and augmented reality products is expected to grow at a CAGR of 77% within the forecasted time horizon of 2019-2023.

Here, the spending from the commercial industries is expected to be the most in retail valued at USD 1.5 billion and discrete manufacturing valued at USD 1.4 billion in the year 2020.

The increasing global spending on the virtual reality products are driving the growth and development of the global virtual reality market.

Issue of display latency

The global average speed for download is about 34.51 Mbps and for upload is about 10.93 Mbps. The global average speed latency is about 41 milliseconds. However, the virtual object should not have latency more than 15 milliseconds while adopting to the new situation.

The virtual reality enabled devices requires the minimum latency to continue the virtual entity at a stable position. Delay in the projection is degrading the quality of the VR-enabled devices and influence the user experience and satisfaction. So, the display latency might restrain the growth and development of the global virtual reality market.

Industry Challenges

Development of the user-friendly virtual reality systems

The virtual reality devices are composed of software and hardware components. It tracks the movement of the users through the use of the multiple sensors and project them in the virtual environment.

The experience and satisfaction of the VR-enabled device users differs as per their needs. So, it is quite challenging for the key market players to develop virtual reality software to enhance the virtual content display so that it will satisfy the needs of the respective users.

Technology Trends

Adoption of new and advanced technologies is creating a favorable environment for the growth and development of the global virtual reality market. Some of the key technological trends in this global virtual reality market are discussed as follows:

WebVR: It is the experimental software technology with JavaScript application programming interface that assists the virtual reality devices in a web browser form.

Web3D consortium: This software technology is used for the development of the web-based 3D graphics in the virtual reality-enabled devices.

Gyroscopes and motion sensors: Gyroscopes are used to measure the orientation and angular velocity of the users and motion sensors are used to track the head, body, and hand positions in order to create the virtual environment for the user as per their need.

Omnidirectional cameras: This type of cameras is able to create the 360-interactive photography in highly compressed formats for online streaming of the videos.

Mixed reality: It uses the virtual reality enabled HoloLens head mounted display which are used to address the mobility needs of the consumers.

Pricing Trends

The price of the products of this virtual reality market depends upon the type of product, technology type, component type, application, size, development tools, platforms, and brand name.

For instance, the cost of the Gear VR headsets is about USD 129 per unit while the cost of the Oculus Go is about USD 199 per unit. The cost of the Quest and Rift S is about USD 399 per unit while the cost of the Homido is about USD 75 per unit.

The price of the Sony PlayStation VR headset is about USD 269.99 per unit. The cost of the simple virtual reality game with low-quality 3D graphics ranges from USD 15000 to USD 25000 while the cost of the popular VR gaming ranges from USD 50,000 to USD 200,000.

Regulatory Trends

The regulations about the virtual reality market differs following the countries all over the world. In the context of the China with the global largest gaming market, the approval of the new domestic online game licenses is frozen, games featuring blood and corpses are banned.

The market players engaged in the virtual reality of the United States has create their ethical guidelines to protect the business from the interference of the outsiders. Most of the countries has developed their own regulations for the data privacy regulations. Some of them are Act on the protection of Personal Information in Japan, Consumer Privacy Act in California, General Data Protection Regulation in Europe, etc.

Market Size and Forecast

The total market size of the global virtual reality market is valued at USD 10.32 billion in the year 2019 and is expected to reach USD 12.48 billion in the year 2020. It is estimated that the number of the VR headsets will reach almost 82 million units by the end of the year 2020.

Its market value is expected to grow at a CAGR of 21.6% within the forecasted time horizon of 2020-2025. Its market value is expected to reach USD 32.38 billion by the end of the year 2025.

Based on geography

The North American region is leading the global market with a market share of almost 33% of the total global virtual reality market because of the rising adoption of new technology and presence of large number of the virtual reality companies in the North American countries. The market size of this region is valued at USD 3.4 billion in the year 2019.
The European region accounts for the market share of almost 26% of the global virtual reality market. The market size of this region is valued at USD 2.68 billion in the year 2019.
The Asia Pacific region accounts for the market share of almost 32% of the global virtual reality market. The market size of this segment is valued at USD 3.3 billion in the year 2019.
ROW stands for the rest of the world, which includes the Middle East Africa and the South America. This segment accounts for the market share of almost 10% of the global virtual reality market. The market size of this segment is valued at USD 1.03 billion in the year 2019.

Based on the technology insights

The semi & fully immersive segment is leading the market with a market share of almost 79.4% of the total global virtual reality market because of its flexibility and variability in applications. The market size of this segment is valued at USD 8.19 billion in the year 2019.
The non-immersive segment accounts for the market share of almost 20.6% of the global virtual reality market. The market size of this segment is valued at USD 2.12 billion in the year 2019.

Based on the component insights

The hardware segment is leading the market with a market share of almost 68.8% of the total virtual market because of increasing penetration of smartphones and other electronic devices. The market size of this segment is valued at USD 7.1 billion in the year 2019.
The software segment accounts for the market share of almost 31.2% of the global virtual reality market. The market size of this segment is valued at USD 3.21 billion in the year 2019.

Based on the application

The commercial segment is leading the market with a market share of almost 52.5% of the global virtual reality market. The market size of this segment is valued at USD 5.41 billion in the year 2019.
The consumer segment accounts for the market share of almost % of the global virtual reality market. The market size of this segment is valued at USD 3.15 billion in the year 2019.
The aerospace & defense segment accounts for the market share of almost 8.88% of the global virtual reality market. The market size of this segment is valued at USD 0.91 billion in the year 2019.
The health care segment accounts for the market share of almost 6.94% of the global virtual reality market. The market size of this segment is valued at USD 0.71 billion in the year 2019.

Market Outlook

The global virtual reality market is expected to grow at the CAGR of 21.6% within the forecasted time horizon of 2020-2025 because of growing smartphones penetration rate, growing adoption of VR in gaming market, existing pandemic outbreak of COVID-19 disease, and increase in investment for the VR technology. Its market value will reach USD 32.38 billion by the year 2025.

Technology Roadmap

The adoption of advanced technological changes in the context of the virtual reality technology is driving the growth and development of the global virtual reality market. The major technologies used in VR-enabled devices are WebVR, Web3D consortium, gyroscopes, motion sensors, omnidirectional cameras, HMD technology, etc.

These hardware and software technologies are assisting to enhance the quality and experience of the virtual reality devices.

Distribution Chain Analysis

The key stakeholders involved in the operation of this global virtual reality market are VR hardware manufacturers, software developers, product distributors, retail & online sales and end-users.

At first, the hardware components of the virtual reality are manufactured and software vendors designs and develops the software and application for the display and projection. The software is assembled with the hardware components and distributed to the end-users through the retail and online sales.

Competitive Factors

The key market players engaged in this global virtual reality market are competing for the product portfolio expansion, high investment in research and development activities, mergers & acquisitions, geographical expansion, and collaborations.

For instance, Apple Inc. announced to collaborate with NextVR Inc. to enhance the virtual reality initiatives for sports and entertainment. LLC division Oculus has collaborated with Sanzaru Inc. to expand the virtual reality gaming for Facebook technologies.

Key Market Players

The key market players engaged in the operation of its market are Barco, CyberGlove Systems, Facebook technologies, Alphabet Inc., HTC corporation, Ultraleap limited, Microsoft, Samsung electronics, Sensics, and sixense enterprises. Short profile of the key market players engaged in the global virtual reality market are discussed as follows:

Barco: It is the Belgium based technology company engaged in the sector of digital projection, imaging technology for entertainment, enterprise and healthcare sector. It has almost 400 granted patents and is providing the services in almost 90 countries.

CyberGlove Systems: It is the US-based company engaged in the development of the hand-centric 3D motion capture solutions, and virtual hand software development kits.

Alphabet Inc.: It is the US-based multinational company engaged in the provision of web-based search, advertisements, software applications, mobile operating systems, enterprise solutions and hardware products.

HTC corporation: It is the Taiwan based telecommunication equipment company engaged in the development of the smart phones and virtual reality headsets.

Microsoft: It is the US-based multinational company engaged in the development, manufacture and sale of computer software, consumer electronics, personal computer and other related services.

Samsung electronics: It is the South Korea-based electronics company engaged in the manufacture of mobile phones, electronic components, tablet computers, semiconductors, and home appliances. The revenue of this company is valued at USD 221.6 billion.

sixense enterprises: It is the US-based leading company engaged in the development of the immersive computing solutions in the sector of healthcare, training, retail, and entertainment.

Strategic Conclusion

The global virtual reality market is growing at a rate of 21.6% because of growing smartphones penetration rate, growing adoption of VR in gaming market, existing pandemic outbreak of COVID-19 disease, and increase in investment for the VR technology. However, health risks associated with the use of virtual reality headsets and issue of display latency might restrain the growth and development of this market.

References

Appendix

Mbps= Megabits per second
HMD= Head Mounted Display
VR= Virtual reality
USD= United States Dollar
CAGR= Compound Annual Growth Rate