Report on the current state of the VR market

“One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people” Mark Zuckerberg

In March 2014, Facebook acquired Oculus VR, a manufacturer of virtual reality goggles, for an equivalent of USD 2 billion (USD 400,000,000 in cash plus 23.1 million Facebook shares). Since that moment, the world has become more virtual than we ever thought it would be. Technological media, whose traditional area of interest was the release of new smartphones, tablets or graphics adapters, now have another intriguing topic to focus on.

The purpose of this paper is to provide readers with a closer look at the current progress and potential behind the Virtual Reality market. We write here about a potential which comes as a pleasant surprise even to the Reality51 team, the technological department of The Farm51 Group S.A. (a computer games manufacturer listed on Warsaw Stock Exchange). No wonder we react this way: the forecasted CAGR (Compound Annual Growth Rate) within the next 5 years is 100%, the value of the Augmented/Virtual Reality market is expected to reach USD 150 billion in 2020, and there will be 30,000,000 dedicated devices in the US and EU in 2018.

These figures are impressive to everyone. Today, on this market, Facebook and Oculus are joined, or will be joined within the next few months, by nearly all major hardware vendors (Samsung, HTC, Sony, Microsoft, Google, Epson, LG) and by many aspiring players active in niche segments. The increase of VR devices from 2016 will entail a growing demand for dedicated virtual reality applications because, as participants of the AMD conference have unanimously admitted at the 2015 E3 event: “It’s all about content”. The broad representation of the world’s largest corporations among virtual reality goggle manufacturers certainly means one thing: the virtual reality market is currently unfolding before our very eyes.

However, its successful growth depends on more factors than just large goggle vendors. For the customer, hardware design and capabilities are not the only thing that matters. The key is the VR applications able to fully exploit these capabilities. The aforementioned VR equipment manufacturers are aware that, once their devices are released, the development of a broad portfolio of games and applications will provide the greatest monetizing opportunities in the VR segment. That view on market is confirmed by large corporations looking for acquisition targets among companies who employ teams skilled in VR application development. For instance, Google invested in VR Resolution Games, a startup studio valued at USD 25,000,000.

Such valuations become less surprising given that, according to forecasts by Tractica, an analytical company, the VR applications market is supposed to reach ca. USD 15 billion within 5 years.