AR and VR Headset Market

Market Overview

The world is beginning to witness a tectonic shift in the enterprise, consumer, retail, healthcare, and commercial sectors. Augmented Reality (AR) technology uses the superimposition of images into the real environment while Virtual Reality (VR) technology deals with an immersive 3D experience. Both of these technologies require headsets. The report includes headsets, HMD (head-mounted display), smart glasses, HUD (head-up display), and contact lens.

VR technology is generally used to train pilots and firefighters in order to simulate dangerous environments. VR also offers experiences that promote repetition and retention. AR technology, on the other hand, offers opportunities in almost every field, which includes gaming, medicine, education, architecture, and many others. The AR headsets go one step above VR headsets when it comes to applications.

The overall headset market is still in its nascent stage at a birds-eye view. However, VR and AR headsets market are in different phases of the growth stage. The VR headset market has grown more as compared to the AR headset market. The rate of innovation in the AR headset market is much rapid than in VR headsets due to which the growth rate for the AR headset market is close to double that of the VR headsets market.

Segmental Analysis

The standalone segment is expected to drop off in VR headsets while it continues to make headways in the AR headset market. The standalone market for AR headset is currently quite small but is expected to grow post-COVID-19. Companies such as Facebook, Pico, and Lenovo are trying to capture the market by launching products, such as the Oculus.

The tethered market for VR headsets dominates the VR headset space, with positive sales growth in the gaming and entertainment industry. The tethered headsets provide a more immersive experience as compared to standalone. The tethered segment is projected to witness slow growth as consumers are playing a wait and watch the game for newer products from Sony. Products such as Rift S (Facebook), Vive (HTC), and the upcoming Reverb G2 (HP) are expected to generate interest amongst consumaers.

Screenless viewers have been making inroads in the emerging markets, where the VR/AR market still hasn’t been recognized. As far as North America and Europe are concerned, the screenless viewer segment is expected to witness a decline. Consumers shifting to better products and lack of content are some of the reasons behind screenless viewer's decline.

Growing Demand for AR in Healthcare Applications

The use of AR and VR technology in healthcare has opened up endless opportunities. Healthcare being an intensive field when it comes to time, money, and effort requires practice and repetition. AR and VR headsets can provide simulator like training for surgeons. There are treatment programs that require four to 12 weeks that can be done at home using the technology. Other applications that have created huge demand in healthcare are 3-D operating room simulations, decentralized mental health treatments, and connected care with AR and VR solutions.

Rising Investments in the AR Market

Investors are latching onto the AR wave. In April 2019, the technology received a USD 280 million investment from NTT Docomo. The biggest tech companies, such as Sony, Samsung, Facebook, Google, and HTC, have already developed their line of headsets. Catching up is Apple, which is expected to launch its headset before 2022.

Corning International, which has a renowned screen solution in Gorilla Glass, received another USD 250 million funding in September 2019 from Apple to develop display solutions for smart glasses. In India, retail giants Flipkart, in November 2020, acquired an AR/VR startup to develop immersive shopping experiences. 

Growing Use of VR in Consumer Applications

The VR headset market is a little ahead of the maturity curve as compared to the AR market. Consumers have already acclimatized to the use of VR, especially in gaming and entertainment. Most of the social media platforms, such as YouTube, Facebook, and Twitch, have already accustomed to VR technology, introducing 360-degree videos to heighten experiences. The automotive industry has also gained from VR technology.

BMW and Jaguar Land Rover are using VR to hold early design and engineer reviews before commissioning expensive prototypes. As e-commerce grows, the need for immersive shopping experiences will increase, further driving the demand for VR headsets. The advent of body-scanning technology in VR enables consumers to try clothes wearing spectacles. It is expected that the retail segment is expected to generate one of the highest revenues for VR headsets during the forecast period.

Opportunities in Enterprise Applications

Many of the top enterprises are looking at AR/ VR technology for early adoption. With operating margins narrowing and increasing financial goals, enterprises are in need to increase their productivity and efficiency all the time. Companies, such as Microsoft, PTC, Accenture, McKinsey, and Deloitte,are developing AR/VR solutions with complete implementation. Enterprises are focusing on data visualization, collaboration, sales, remote assistance, knowledge transfer, and logistics mobility. The enterprises are projected to accelerate the adoption of AR/VR technology,further driving the market growth.

Display Latency and Limited Field of View

Although the AR/VR headset market is witnessing a double-digit growth during the forecast period, some hurdles need to be addressed. There are problems with the latency, which include the delay between actual movement and subsequent reproduction on the screen. There are reports that too much latency can create motion sickness and nausea, leading to unpleasant experiences.

Overcoming Social Challenges to Increase Adoption Rate

Enterprises still haven’t figured out the business models surrounding the AR/VR headsets, which is one of the key factors in the low adoption rate. The adoption rate waned between 2017 and 2018 but this changed in 2020 as consumers were locked in their homes, which eventually turned out to increased demand for immersive experiences.

As the adoption rate is slowly increasing, enterprises are still struggling to reconfigure applications for different platforms. The AR/VR technology is constantly changing, which warrants a constant upgrade to the applications.

Recent Developments

Upcoming Product Launches

The COVID-19 pandemic has accelerated the whole AR/VR adoption in the world. AR/VR technologies are able to solve critical challenges that are faced by various sectors.