Virtual reality headset revenues will reach $895 million in 2016 or so expects the Market researcher Strategy Analytics.  The newly launched premium device from Sony, Oculus and HTC will account for about 77% of the total value, but will only account for 13% of the volumes in 2016. Lower priced smartphone-based devices will dominate the virtual reality headset market, the research firm claims.

2016 To Be A Big Year For Virtual Reality Headsets

2016 – year for virtual reality

Given a confluence of factors, Strategy Analytics sees 2016 as an important year for virtual reality, and considering a dearth of available content and the technical limitations of entry-level virtual reality, it sees 2016 as a year where managing expectations will be paramount.

In 2016, due to high pricing, the high-end virtual reality headsets tethered to the game consoles and PCs, will barely exceed 1.7 million devices, predicts the Strategy Analytics. However the actual exposure and awareness about such state-of-the-art systems will rapidly build in 2016, the research firm believes.

“Consumers will soon be exposed to an incredible diversity of virtual reality options ranging from ultra-low cost to super premium. While we expect smartphone-based viewers to take the lion’s share of VR headset volumes in 2016 at 87 percent of shipments, PC and Game Console powered headsets will absolutely dominate value share commanding 77% of revenues,” said Cliff Raskind, director of Strategy Analytics’ Wearable Device Ecosystems service.

A new tech race about to start

Strategy Analytics believe that with proper ecosystem management, smartphone-based VR can serve as an effective “gateway drug” to upsell users the higher quality VR experiences down the road, and at the same time, locking them into early, but potentially sticky ecosystems.

The SteamVR-based HTC Vive was launched this week, and on March 28, the $600 Oculus Rift was launched by Oculus VR. Many believe that Oculus will be able to sell 1 million Rifts in the first year of sale.

Also, this October, Sony is planning to launch the PlayStation VR headset. Meanwhile, last November, the mobile-based VR device – the Samsung Gear VR – was launched by the Korean firm whereas Google Cardboard has been in distribution for free nearly everywhere.

Raskind further said that his team believes virtual reality has the potential to fuel a new tech spec race in hardware areas such as GPUs, storage, display resolution and 360-degree cameras.

Meanwhile, the tech adviser Digi-Capital predicts the VR could rake in $30 billion in revenue by 2020, and marketing could add to it significantly. Separately, SuperData Research expects VR industry to generate as much as $40 billion in revenue by 2020.