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VR & AR set for £1.8bn in 2018

Virtual reality concept as vector illustration of business man using VR headset

The virtual and augmented reality industry is set to get a bit of a boost over the next 12 months, with headset and glasses sales expected to grow fivefold to $1.8 billion.

According to research from CCS Insight, sales are expected to exceed 22 million units over the year, while continuing to grow 50% annually over the next five years, taking the market up to $9.9 billion in 2022.

“Virtual reality headsets have been the main source of growth in unit sales to date, and we expect this will continue, particularly headsets that use a smartphone,” said George Jijiashvili of CCS Insight. “However, we expect stand-alone headsets like the Oculus Go and HTC Vive Focus to ignite a new wave of growth that will help broaden the appeal of virtual reality, particularly with businesses and in education.”

Gaming is still the primary use for the technology to date which is unlikely to change. There are other uses starting to make waves, tourism is a good example, but until the price point comes down and normality created around the segment, these are likely to remain a pipedream. In reality, to perfect the technology and develop the supply chain to allow for economies of scale, the best place to start (and continue to concentrate) is a dedicated niche where the users are willing to spend premium prices. Gamers are the perfect guinea pigs for the moment.

The sales of AR glasses might be due a bit of a surge thanks to the adoption of AR is smart phone applications. Whether it is shopping applications or interactive games, this does seem to be proving an effective stepping stone for the consumer into the immersive world. Realistically it is very much a walk before you can run scenario; create smart phone applications, which move onto glasses and then onto headsets. Each step normalises the idea of immersive content one stage further, taking the user on a journey which he/she is comfortable with.

“We’re encouraged by the technology developments in smart glasses for consumers,” said Jijiashvili. “Products such as Intel’s Vaunt glasses are a clear signal of the direction these devices are moving in, with a design little different from a pair of standard prescription glasses. It only takes a big company like Apple to jump into the market and we could be looking at market of millions of smart glasses in no time at all.”

While there has been a lot of promises made in the VR and AR space, and some pretty interesting use cases, mass market penetration is yet to become a reality. This should hardly be considered unusual, few technologies do not play by the bell-curve rules, which might come as a bit of relief for the telcos.

Although there will be opportunities to monetize the new craze, such breakthroughs come with their burdens as well; if you think the networks are under stress now, just wait until the tsunami of data hits the virtual highways. Hype is all well and good, but considering 5G and full-fibre networks are not going to be the norm for some time, a delay in the VR and AR reality could be viewed as a positive. A poor experience for consumers could set back the segment for years; the silver lining of delayed adoption could be the time and space to make sure the networks are actually ready.

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