IHS: spending on VR entertainment to hit $3.3 billion by 2020

Aggressive promotional activity from smartphone vendors and the launch of premium smartphone VR solutions, including Google’s Daydream View, will help drive the installed base of VR headsets from 4 million in 2015 to 81 million in 2020, according to IHS Market (www.ihs.com). That same year, consumer spending on VR headsets will reach $7.9 billion and spending on VR entertainment will hit $3.3 billion, adds the research group.

“While the VR headset installed base will escalate significantly to 81 million by 2020, we predict that expensive, higher-end headsets will dominate content monetisation,” said Piers Harding-Rolls, director of games analysis at IHS Technology. “There will be a polarization of the VR market between lower volume premium VR headsets, which will have strong paid content conversion rates, and higher-volume cheaper smartphone VR headsets, which will monetise content at a lower rate.”

Smartphone VR headsets will represent the largest addressable market for VR content because of cheaper pricing. The smartphone VR base will be a major opportunity for VR content experimentation, said Ian Fogg, senior director at IHS Technology. Smartphone VR headsets’ share of the VR installed base are predicted to be 87%t at the end of 2016.

Consumer spending on VR headsets will be $1.6 billion in 2016, bolstered heavily by the launch of high-end headsets from Oculus, HTC and Sony. This will drive average sales price of all headsets to close to $85 from $26 in 2015. The average selling price is expected to climb sharply once again in 2017 to $191 as high-end headsets sell more, the IHS Technology report said.

Meanwhile, consumer spending on VR entertainment is forecast to hit $310 million in 2016, growing to $3.3 billion in 2020, as the high-end headsets gain more traction.

“A $3.3 billion VR entertainment market by 2020 will represent less than 1 percent of overall entertainment spending worldwide,” Harding-Rolls said. “There is certainly more to be done in terms of premium content for VR platforms and it will take time to deliver on the potential of the technology.”