In recent years the market forecast data for virtual reality hardware and content / software has predicted strong growth into significant tens of billion of dollars range. So far nobody has been able to produce reliable data for this new industry,
While compound growth rates near 100% sound great, it is the initial value that plays an important role. If you double a million dollars five times you have 32 million dollars, if you start with a billion dollars you have a 32 billion dollar market.
According to OrbisResearch.com the worldwide VR market reached $2.67 billion in 2017. To be fair they predict a lower CAGR of about 60% through 2022. Statista published a VR market forecast of $13 billion by 2020 or $40 nylon as shown below. Zion Research predicts a VR market size of $26.9 billion by 2022 with a CAGR of 54%. You get the drift. The industry expectations are that VR will become a major industry within the next five years.
VR Market Forecast from Statista based on VRFocus data
The main issue with all these forecasts is that there is no basis for it, as companies do not publish or break out their numbers. You want to know how many iPhones Apple sells per quarter? Easy enough, just open their quarterly reports and they tell you. While other companies are not as forthcoming, there is often some form of indication in the earning releases of publicly traded companies. At the same time, some market research companies have agreements to aggregate data from the manufacturers into an overview report that is relatively close to the truth. This does not exist in the VR industry at this point in time. One of the reasons is that many of these companies are privately owned or start up companies that could be hurt significantly if data came out if it turned out negative.
This is what kind of happened in the last weeks. In a relatively complex way, Ars Technica was able to use some downloadable data from Steam via Valve to estimate game player counts for the last year or so. This was not a straightforward process and required some deep thinking but it seems that the data is pretty close to the truth, as Valve immediately plugged the hole. So this is a one time view of the VR gaming community. The highest ranked game was Team Fortress II with just over 50,000 players.
To go one step further, Alex Novak, CEO of SexLikeReal used the opportunity to take a look at the the various VR applications and estimate the revenue stream form the top three consumer applications. First, he translated the number of gamers as derived from the Steam data into dollars and compared that to money being made by VR movies and the adult industry. In 2017, which he used as the basis for his comparison, he estimates that the Steam VR gaming and video revenue was about $50 million in 2017 and about $18 million for VR adult entertainment in the same time period. He continues that in 2018 so far, the revenue derived from VR videos is $18 million. As Gizmodo points out there is also some revenue to be added for Oculus and Playstation, but they estimate that to be much lower. They estimate Games and Movies have added up to $130 million since 2016.
According to Novak, this makes adult entertainment the second largest consumer VR market today. While the numbers are not verifiable and are not very consistent, there is an issue in understanding the numbers completely. Nevertheless, the total is much lower than one would expect based on the market research numbers.
All in all, one could estimate that based on this data set, that is at least partially based on actual revenue numbers, the VR content revenue was around $80 – $90 million in 2017. Since I cannot argue with this logic and neither do I have a better data set, I am still surprised by the huge difference in VR market size they we see. I understand that the professional VR market is excluded from this point of view, but I was also under the impression that the professional market is somewhat limited in size. If the several billion dollar VR market size estimate from the market researchers is correct, than the professional market has to be in the billion dollar range, as the consumer markets aren’t contributing much.
No matter how you look at it, these data raise some questions about the published research numbers and consequently the VR market in general. – NH
