VR Headset Revenues to Hit $895M in 2016

Global revenues for virtual reality headset products are poised to reach $895 million this year, according to a fresh forecast from Strategy Analytics.

New, premium products from Oculus (Rift), HTC (Vive) and Sony (PlayStation VR) will drive 77% of the value, despite accounting for just 13% of the volume, while lower priced smartphone based devices, such as the Oculus-powered Samsung Gear VR, will dominate the 12.8 million VR units shipped during the year, the firm said, calling 2016 a “pivotal” year for the emerging platform.  

Strategy Analytics believes that high-end VR headsets that must be tethered to PCs and came consoles (the Oculus Rift, HTC Vive and coming PlayStation VR), will be lucky to exceed 1.7 million devices shipped globally this year because of “prohibitively high pricing.”

“At the same time, smartphone toting consumers are being bombarded by low cost and often bundled-in VR viewers like never before,” Strategy Analytics said, adding that they effectively are a “gateway drug” to upsell consumers on higher-end platforms. Of that group, Samsung has been bundling the Gear VR (regularly $99) with its new S7 smartphones.

As volumes go, smartphone-based VR headsets will represent 87% of the category volume in 2016, versus game console-based systems (9%), and PC-based products (4%). Game console-based VR platforms will represent 46% of the revenue share in 2016, versus 31% for PC-based VR, and 23% for smartphone-based systems, the research firm said.

"Consumers will soon be exposed to an incredible diversity of virtual reality options ranging from ultra-low cost to super premium,”  Cliff Raskind, director of Strategy Analytics' Wearable Device Ecosystems service, said in a statement. “While we expect smartphone-based viewers to take the lion's share of VR headset volumes in 2016 at 87% of shipments, PC and Game Console powered headsets will absolutely dominate value share commanding 77% of revenues."