IHS Markit report shows growth across both sectors but at very different rates

AR and VR are commonly lumped together, which seems more of an accident of their naming and dual rise to prominence over the last few years than any great similarity in their potential as technologies or markets. So we're thankful that there's plenty of detail to break out of this new report on both.

IHS Markit's all-encompassing 2017 report says that consumer content and the apps market for AR and VR combined hit $3.2bn last year. That's year-on-year growth of 72 percent. It goes on to say that $2bn of that came from apps with AR features - driven by 'the high-profile releases of Apple’s ARKit and Google’s ARCore SDKs that spurred interest in AR apps.'

“The consumer AR market is inherently better positioned than VR, because AR features are relevant to a wider cross-section of content and application categories,” said Piers Harding-Rolls, research and analysis director, IHS Markit. “A smartphone-driven AR market offers a huge addressable audience, but this scale will be offset to an extent by the more limited use cases for handheld and small-screen dedicated AR experiences. Even so, consumer AR’s overall market potential will significantly outweigh VR over the next five years.”

And that can be seen in the comparable number of addressable devices. IHS Markit states that 'the installed base of Apple’s ARKit devices alone reached 375 million in 2017'. And while the installed base of all forms of VR headset jumped up as well, it's still a far smaller potential market - with 28 million headsets by the end of 2017, up from 18 million in 2016.

'The consumer VR headset market continues to grow, but at a relatively sedate pace,' the IHS Markit reported noted. 'Adoption of high-end VR headsets in 2017 was hampered by cost of the equipment and a lack of standout content, while the potential of the smartphone-based sector was undermined by limited support for Google’s new Daydream platform. Additionally, smartphone vendors spent the year pushing other features to sell their high-end phones, particularly, the screen and camera technologies, and not VR headsets.'

And the slow adoption has hit content makers: 'With limited adoption of high-end PC and console VR headsets so far, many independent VR content companies selling content directly to consumers have found it difficult to realize a return on their investments.'

It's not all gloom and doom though, with big titles such as Resident Evil 7: Biohazard and Bethesda’s Fallout 4 VR generating interest in the VR platform.

In addition, there were 8,945 venues globally where consumers could pay for VR content and experiences, such as Star Wars: Secrets of the Empire, that's up 52 percent from the previous year.

It's a long game but VR will get there say Harding Rolls. “Consumer spending will be driven by continued adoption of PC, console and standalone headsets, offset by a reduction in headset prices,” Harding-Rolls said. With the report stating the global consumer VR headset install base will hit 28 million at the end of 2017, but by 2021 that number will rise to 75.7 million.

An example of that growth is the recently-launched Oculus Go. An all-in-one headset that shifts the convenience of the Gear VR into a refined, dedicated device. We tried the Oculus Go out at GDC recently

Related