VR Headset Market Posts 5 Percent Growth in 2019

Virtual Reality Headset Market Analysis and Commentary

The VR headset market continues to expand, with volumes increasing by 5% in 2019, according to a new market report from Futuresource Consulting.
While VR headset sales growth slowed during 2019, the outlook is positive.

Consumers are opting to purchase next generation devices over dispensable low-tech mobile viewers, giving content creators the opportunity to showcase more immersive experiences and the true potential of this unique content medium.

“Mobile is the weakest link in the VR chain,” says James Manning Smith, Market Analyst at Futuresource Consulting. “Its market volume dropped by 11% in 2019, dipping below 11 million shipments worldwide, though All-In-One (AIO) also underperformed relative to early year expectations.

“This shift in fortunes is primarily due to a change in market direction. Vendors are focusing on providing a high quality six degree of freedom (DoF) experience, rather than the standard 3DoF interface which was responsible for the rapid mobile and AIO growth of 2017.”

PC and console VR both posted strong results in 2019, helping to offset the declining volume in mobile and the modest growth in AIO. Although market development hasn’t reached the levels expected at the start of 2019, this is a delay in uptake rather than a market reversal. Consumers are now looking to the benefits of improved hardware and moving away from easy access to limited, short-lived content.

“Console VR is definitely a market high-point,” says Manning Smith. “With shipments of 2.4 million in 2019 and an installed base of 3.8 million active units, it continues to deliver on its promise, with an attachment ratio of 5% to active PS4 consoles.

“Looking to PC VR, we’re seeing some strong developments, with 4.1 million shipments achieved in 2019. However, we expect the category to remain a premium niche, driven by high quality headsets. And while this will drive interest for business users, the consumer gaming angle is likely to remain limited.”

Q4 2020 will usher in the next generation of console hardware, with the release of Sony’s PS5 expected to boost demand for PSVR headsets. While the PSVR is the only product in the segment, an upgraded model is likely to follow the launch of PS5.

By 2023, Futuresource expects the AIO HMD market to ship more than 30 million units, with a volume CAGR of 61% across the forecast period out to 2023. Growth will be driven by increased consumer demand for mid-level 6DoF AIO headsets in Europe, the USA and Japan.

“Although price and content availability remain the largest inhibitors to widespread consumer adoption of VR, we are seeing signs of progress,” says Manning Smith. “Technological achievements like inside-out tracking, hand tracking, field of view and resolution milestones suggest that this technology is leaving its nascent stage and will be commercially viable within the next five years.”