Virtual and Augmented Reality Have Great Growth Potential

Virtual and Augmented Reality Have Great Growth Potential

Virtual reality has picked up strongly in recent years. Devices like Samsung Gear VR shipped 5 million units in 2016 (against expectations which ranged from 2 to 5 million units). We believe total shipments reached 8 –10 million units in 2016, including Oculus Rift, HTC Vive and Sony PS VR products and others.

While the numbers look healthy, we believe that lower hardware price points could support an even higher adoption of the technology. We envisage virtual and augmented reality (VR/AR) to move beyond technology and gaming enthusiasts into areas such as consumer applications and manufacturing. 

VR/AR market could potentially grow to the size of the current smartphone market

Growth Forecasts for Virtual and Augmented Reality Market 

in USD bn

Adressable market Virtual and Augmented Reality

2015–2018 2018–2023 2023–2030
Focus on gaming (VR)
Focus on interaction (VR/AR)
Focus on commerce (VR/AR)
  • Big VR glasses
  • PC
  • Video games
  • Treadmill
  • Slim glasses
  • Start of AR
  • Holograms
  • Gloves
  • VR integrated in daily life
  • Buying house, shopping etc.
  • Mass market
Potential market size: USD 8 bn

Potential market size: USD 68 bn

Potential market size: USD 600 bn

Source: Gartner, Credit Suisse

Learning with virtual and augmented reality set to increase

Another very interesting area for VR/AR is education, with several start-ups such as Immersive VR, Alchemy VR, Curiscope and even Alphabet making inroads. VA/AR is helping education service providers to offer a more enriching and interactive experience.

The primary idea for virtual worlds is that they enable immersive learning, which will assure higher attention and active involvement from students. For example, students can virtually be among native Italians while learning the language or can tour space while studying astronomy.

Virtual reality still has a lot of untapped potential

The long-term outlook for the VR/AR market is very positive. We expect the market for VR/AR hardware and software to potentially become even larger than the current smartphone market (USD 600 –700 bn) and grow at the same pace as the latter in 2001– 2015. It is not only the gaming market that VR could impact strongly. This segment is merely a catalyst and a good advertisement for numerous other applications that could evolve in the next 10 to 15 years.

Apple is now thought to be working on incorporating AR capabilities in its new flagship iPhone 8. This, along with several other examples, confirms our view that the VR/AR theme has long-term growth potential.