Virtual reality VR is a niche technology with gaming, entertainment, and professional training applications. Despite the challenges that will limit the adoption of VR technology, the global VR market is forecast to grow from $11 billion in 2023 to $57 billion by 2030, registering a compound annual growth rate CAGR of 26 percent over the period, according to GlobalData, a leading data and analytics company.
Globaldata’s latest Strategic Intelligence report “Virtual Reality,” reveals that while the revenue share of VR software in the total VR market will slightly decline from 61 percent in 2023 to 59 percent in 2030, VR hardware will increase its share from 39 percent in 2023 to 41percent in 2030.
Shabnam Pervez, Analyst, Strategic Intelligence team at GlobalData, comments: “As VR adoption grows, both hardware and software will experience more demand. Demand for VR software will be driven by advancements in content creation and the development of more immersive experiences while declining hardware costs will make VR headsets more accessible to a broader audience.”
Globaldata’s report also highlights that VR players may eventually transition to mixed reality MR, which is a hybrid technology that enables users to see and interact with virtual objects integrated into the real world. MR has become desirable to headset makers as an alternative to VR.
For example, HTC, Meta, and Pico started with pure VR headsets but have pivoted to MR. HTC released its vive focus 3 in 2022, a standalone mixed reality headset. The meta-owned oculus is also working on Mr headsets. Pico Interactive also makes several MR headsets, including the Pico Neo 3.
Pervez adds Apple’s vision pro, launched in february 2024, is typically described as an Mr device. Apple will likely set the path for many more VR makers to transition towards MR. However, VR companies will all strategize differently. For example, Meta will likely continue to call its devices VR headsets as it has invested so much in VR tech. However, the company’s offering has more in common with MR than standalone VR.
The transition reflects an interest in bridging the gap between the immersive world of VR and the user’s physical environment. MR’s ability to overlay digital elements onto the real world presents exciting possibilities for applications where maintaining awareness of surroundings is crucial. The market is responding to a demand for MR in areas like design, education, and even healthcare, where seamlessly blending virtual elements with real-world environments holds significant value.
Despite advances in hardware and software, VR faces significant challenges that will hinder its growth. One of the primary obstacles is its cost. VR headsets, even those with basic features, typically cost between $200 and $1,000. Additionally, some VR headsets must be tethered to powerful devices to function effectively, which can further increase the overall cost.
Another challenge is the potential for negative health effects associated with prolonged VR use. Some users have suffered eye strain, headaches, and motion sickness. Addressing these health concerns is crucial to ensure the long-term viability of VR technology.
Pervez concludes moreover, the development of compelling and diverse VR content remains a challenge. While there have been some successful VR experiences, creating content that truly captivates users and offers lasting value is not always easy. The lack of a thriving VR content ecosystem could further limit the appeal of the technology.
The estimate includes revenues generated by VR hardware i.e., headsets and software i.e., apps and content distributed via VR app stores. It does not cover revenues from VR services like hardware designing, app development, and VR arcades
