Virtual reality device market to decline in 2018 | Media Analysis | Business
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Even though it believes that the prospects for certain parts of the remain positive, research from CCS Insight has revealed the challenges facing makers of head-worn virtual and augmented reality devices.

CCinsight 3Dec2018It believes that despite early enthusiasm and a continued expectation of significant long-term potential for the technology, CCS Insight believes there is still significant work to be done to improve the user experience, software platforms and content availability. This sober yet positive message is the main conclusion of the company's recently published global market report for VR and AR devices.

The analyst forecasts that eight million virtual reality (VR) and augmented reality (AR) headsets and glasses will be sold in 2018, down from 10 million in 2017. Yet these are said to be set to grow to 14 million in 2019 and to 52 million in 2022.

Drilling deeper, the forecast shows a dramatic drop in sales of smartphone VR devices, from close to 8 million units in 2017 to fewer than 3 million this year. This steep decline has occurred despite heavy price cuts and extensive promotions over the past 12 months.

CCS Insight believes the advent of standalone VR headsets will help reinvigorate the product category. All-in-one devices overcome the inconvenience of being attached to a PC, smartphone or games console, and so deliver a better VR experience. The company believes devices such as Facebook's Oculus Go and Oculus Quest, which are being offered at a retail prices of $200 and $400 respectively, are good examples of the future of VR.

“We continue to believe that content is the key to unlocking adoption of VR,” explained CCS Insight's chief of research Ben Wood. “We. Although some games companies and adult content creators have embraced VR technology, much more needs to happen to persuade consumers that VR devices are a must-have item. We believe the device market has now shifted away from the early wave of cheaper, less-functional cardboard and plastic smartphone VR viewers. We expect the next wave of adoption to come from dedicated devices that offer a more compelling, wire-free experience.”

CCS Insight expects standalone devices to be the key driver of VR adoption in the next few years by both consumers and businesses. It sees the Chinese market as looking particularly promising and that Facebook's partnership with Xiaomi has certainly helped standalone VR headsets make a strong start in China.
Yet while it recognises the ‘excitement’ about standalone devices, CCS Insight still believes there is an important role to be played by tethered devices like the Sony PlayStation VR, HTC Vive or Oculus Rift. The CCS Insight research forecasts that 5 million tethered VR headsets will be sold in 2019, growing to 18 million in 2022.