Notes from 2015 VR Research Report

Investment bank Piper Jaffray released a research paper last May exploring the impact virtual reality (and augmented reality) will have on technology from now until 2030.

It’s 52 pages long, so I figured I’d share the main points from my notes:

  • Market size: An estimate of $5.8B by 2025 (excluding $62B for hardware). Think of the VR/AR market now as where smartphones were 15 years ago.
  • VR, then AR, then VR+AR mixed: VR will take off first but then over time, the total market will be 70% AR and 30% VR. Eventually, however, the technologies will converge and people will use the same device for both.
  • Likely public company winners: Facebook (bought Oculus for $2.3B in March 2014), Google (invested $542mil in Magic Leap), and Apple.
  • Best positioned private companies: Magic Leap, Next VR, Jaunt VR, Leap Motion, OTOY, Matterport, Linden Lab and Valve.
  • Risks: competition (hundreds of companies with no clear leaders) and consumer appetite (at the end of the day, VR is still an unproven market).
  • Technology shift: Huge improvements in smartphone processing power has been most significant in the current rise of VR technology. Processing power helps with the fundamental action behind good VR: every time a user moves their head, everything needs to be updated and rerendered to display the new point of view.
  • Major devices:
  • Controllers 1st gen vs 2nd gen: the first gen consumer devices by Oculus, Sony, and HTC won’t have hand tracking and will give you controllers instead. Once tracking limbs is possible, the next step will be to “accurately capture what one hears and feels in the virtual world.”
  • Content sources: YouTube, the NBA, NextVR (partnering with Fox Sports and NASCAR), and the NHL will be early leaders in the rise of live VR content. Companies like Theta, VSN, and (hopefully) GoPro will lead the initial stages of user-generated VR content. Oculus’ Story Studios (partnering with Pixar and Lucasfilm), Jaunt Studios, The VR Company, VRCade, Surveys, and Kenzan are companies focused on providing optimal VR experiences.
  • Movies: Movies will be huge and has already had some adoption, but a “major challenge film directors have is that if you record content in 360 degrees it means the director and anyone else who shouldn’t be in the shot has to be out of sight. Also, you have to get the consumer who is viewing the content to look at the right place at the right time.”
  • Avatars: in order for people to feel connected to VR avatars, they must have movement realism (e.g. do their hands wave properly?) and anthropometric realism (e.g. do they have body parts to communicate like eyes, mouth, etc).
  • Practical Use Cases: besides gaming and recreation, VR will be huge in education, in the workplace (e.g. for training), in the courtroom (e.g. lawyers could recreate a crime scene), on the football field (e.g. reviewing plays), healthcare (e.g. surgery simulation, robotic surgery, skills training, phobia treatment, and patient/doctor interaction), and excitedly for some, the adult entertainment industry.
  • Industry overview by categories: to recap, the major players in the industry will be broken up by the following categories: head-mounted displays (HMD), processing power, haptics, cameras, social, application store, 3D engines for content creation, VR content studios, medical, fashion, and gaming.
  • Revenue growth estimates by industry:
  • Example VR or AR experiences (summary of the examples given throughout the report): Virtually attend an NFL or NBA live game; listen to a live concert of your favorite band; visit friends in far-away locations; classrooms can virtually tour landmarks like the Great Wall, Stone Henge, etc.; look at a building and know what’s inside; seeing a restaurant’s menu just by looking at the building; knowing directions somewhere as you drive down a street; using your entire living room environment while playing Call of Duty; a father attending the birth of his child via VR thousands of miles away; attending birthdays and weddings; effective training tools for the military and industry.

The last section of the report goes over the main individual companies in the industry in more depth. I’d recommend giving it a read.
2016 is looking to be an influential year for the future of VR and so it’ll be interesting to see which of these companies makes the most impact in the coming months.

Originally published at on January 4, 2016.