Worldwide Augmented and Virtual Reality Headset Market Expected to Grow at a Compound Annual Rate of 58%, Reaching 99.4 Million Units in 2021, According to IDC

New device launches, an expanding array of content for both consumer and enterprise users, and lower price points will propel the worldwide augmented and virtual reality headset device market at a breakneck pace.

According to data from the International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, total headset device shipments will reach 99.4 million units in 2021, up nearly 10-fold from the 10.1 million units shipped in 2016. This results in a compound annual growth rate (CAGR) of 58% across the five-year forecast period.

“2016 marked an important step for the AR and VR headset market with product finally arriving in end users’ hands and on their heads,” noted Ramon Llamas, research manager with IDC’s Augmented and Virtual Reality team. “While there was clear demand coming primarily from technology enthusiasts, what became readily apparent were the use cases for enterprise users across multiple verticals and for consumers with gaming and content consumption. This sets the stage for the multiple aspects of the market that device makers, platforms and content providers, and developers will be addressing in the months and years to come.”

For enterprise users, AR and VR is expected to raise productivity, allowing workers to see and interact with data, like a building blueprint or the organs of a human being, instead of viewing a static image on a screen. Changes and procedures can be mapped out ahead of time before moving on to the actual work, saving companies two precious resources: time and cost. Vertical markets, such as manufacturing and design, health care, transportation, and retail stand to benefit the most.

Meanwhile, for consumers, AR and VR will provide immersive experiences to consume content. Already, content providers are developing solutions to bring “as-if-you-were-there” experiences, like attending a concert or sports event from the comfort of one’s couch. Additionally, gaming on AR and VR will transport players into outer space or the battlefield, several steps beyond what they currently experience on a PC or television screen. Layer on top of this the social element that users will have sharing experiences and it becomes clear how AR and VR will appeal to consumers.

Although AR remains as the minority portion of the market in terms of shipments, these headsets are expected to bring in significantly more revenue over the course of the forecast as the value of AR headsets grows from $209 million in 2016 to $48.7 billion in 2021. Meanwhile, VR headsets grow from $2.1 billion in 2016 to $18.6 billion in 2021. “With all the technological enhancements, there will be a wide range of products and price points,” said Jitesh Ubrani senior research analyst for IDC’s Mobile Device Trackers. “VR setups already range from sub-$100 to more than $1000 and though it’s too early to tell, the low-cost experiences may prove to be inhibitors rather than promoters of the technology as they can potentially disappoint first time VR users.

“On the other hand, due to the sophisticaltion of the hardware, most AR headsets are expected to cost well over $1000,” continued Ubrani. “This makes the technology far less accessible to consumers intially, though that’s probably for the best as the AR ecosystem and wide social acceptance are still a few years away.”