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AR/VR headset market forecast to rocket 48.5% in 2018

By Ashton Young
Tue 20 Mar 2018
FYI, this story is more than a year old

After its brief hiccup in 2017, the augmented reality (AR) and virtual reality (VR) headsets market is set to soar.

The latest forecast from the International Data Corporation (IDC) shows a return to growth in 2018 in a big way with total combined AR/VR volumes reaching 12.4 million units, marking a year-over-year increase of 48.5 percent as new vendors, use cases and business models emerge.

And this huge growth is set to continue with worldwide shipments skyrocketing to 68.9 million units in 2022 with a five year compound annual growth rate (CAGR) of 52.5 percent.

According to the IDC, the primary reason for the retreat of the global AR/VR headset market in 2017 came down to a decline in shipments of screenless VR viewers. Previous champions of this form factor stopped bundling these headsets with smartphones and consumers have shown little interest in purchasing such headsets separately.

However, while the screenless VR category is undoubtedly on the decline, IDC uses the example of Lenovo’s successful fourth quarter launch of the Jedi Challenges Mirage headset – a screenless viewer for AR – to show the form factor may still have legs if paired with the right content.

Other notable product launches during the quarter included the first Windows Mixed Reality VR tethered headsets with entries from Acer, ASUS, Dell, Fujitsu, HP, Lenovo, and Samsung.

"There has been a maturation of content and delivery as top-tier content providers enter the AR and VR space," says IDC Mobile Device Trackers senior research analyst Jitesh Ubrani.

"Meanwhile, on the hardware side, numerous vendors are experimenting with new financing options and different revenue models to make the headsets, along with the accompanying hardware and software, more accessible to consumers and enterprises alike."

IDC expects the market in 2018 to be bolstered by new devices that will bring new capabilities and price points such as Facebook’s Oculus Go, HTC’s Vive Pro, and Lenovo’s Mirage Solo.

With the exception of screenless viewers, AR headsets are likely to remain largely commercially-focused until later in the forecast due to the technology's high cost and complexity.

"While there's no doubt that VR suffered some setbacks in 2017, companies such as Google and Facebook continue to push hard toward making the technology more consumer friendly," says IDC Devices & AR/VR research program vice president Tom Mainelli.

"Meanwhile, Lenovo's success with its first consumer-focused AR product shows that consumers are beginning to understand what augmented reality is and the experiences it can provide. This bodes well for the category long term."

Highlights

AR head-mounted displays are expected to undergo market-beating growth over the next five years as standalone and tethered devices grow to account for more than 97 percent of the market by 2022.

The overall market leader in 2017, IDC expects AR screenless viewers to peak in 2019 once standalone and tethered products become more widely available at lower price points. The rise of screenless viewers geared toward consumers tilted shipment volumes away from commercial viewers in 2017 and that's likely to continue in 2018, but by 2019 the segment will shift back toward more commercial shipments.

VR head-mounted displays are set to undertake a shift in product mix. IDC expects the former overall leader, screenless viewers to see its share eroded rapidly over time.

Meanwhile, standalone and tethered devices – in the minority in 2017 – will comprise 85.7% of total shipments by 2022. Consumers will account for a majority of headset shipments throughout the forecast, but commercial users will slowly occupy a larger share, growing to nearly equal status in 2022.

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