Metaverse hype boosts virtual reality ecosystem

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 10 Dec 2021

As the metaverse trend increasingly gains momentum, the virtual reality (VR) market is expected to show signs of increased growth in 2021 and beyond.

Global research and advisory firm Omdia finds that 12.5 million headsets will be sold in 2021, while spend on VR content will reach $2 billion.

Overall, the research firm estimates the consumer VR market will be worth $16 billion by 2026, up from $6.4 billion in 2021. This signals a 148% increasecompared to 2021, it notes.

Furthermore, Omdia reveals that 70 million VR headsets will be used by consumers by 2026, outnumbering Xbox consoles during the same period under review.

George Jijiashvili, principal analyst at Omdia, comments: “Standalone VR has quickly become the dominant device category, representing 83% of consumer VR headset sales in 2021. This was largely driven by the success of Meta Quest 2, which over-delivered on its promise of an immersive, untethered VR experience at a punchy price.”

Despite growth projections for the VR market and associated products, it is still expected to remain quite niche.

The Omdia report notes the penetration of VR headsets will stand at only 2.4 headsets per hundred households in 2021. This will grow to 6.3 in 2026, highlighting the long road ahead for VR’s mass adoption.

It believes the VR ecosystem will be boosted by the hype being generated by/and investment in the metaverse.

The metaverse is loosely defined as an extensive online world where people interact via digital avatars. Companies like Meta (formerly Facebook), have announced plans to develop metaverse experiences, services and hardware.

According to Microsoft, eventually, the idea is that people will be able to do almost anything in the metaverse – go shopping, attend school or participate in work meetings.

Omdia’s report notes that as Meta builds its self-sustaining consumer VR ecosystem, other manufacturers will feel the heat.

Quest 2, the VR headset created by Meta, sold an estimated 2.4 million headsets in its first three months of availability in 2020, making it the fastest-selling VR headset to date, with a further seven million projected to be sold by the end of this year.

In comparison, it took Sony three years to sell five million PlayStation VR headsets, according to Omdia.

Jijiashvili states: “It's undisputable that Meta’s continued investment has elevated the entire VR market, placing it on route to mass adoption. However, Meta’s aggressive loss-leader strategy has made the consumer VR market inhospitable to most headset makers, who have shifted their focus to enterprise VR or left the space altogether.”

Omdia predicts Meta’s share of global standalone VR headset sales will reduce from 59% in 2021 to 46% in 2026. “As the hype surrounding the metaverse gathers pace, other tech giants and hardware manufacturers will feel compelled to enter (or re-enter) VR, leading to a wider choice of competing headsets and platforms.”

In an attempt to make VR headsets lighter and more attractive, Omdia reveals some headset makers are experimenting with shifting the processing and battery requirements to smartphones. “The results have so far been underwhelming, but Apple's much-rumoured entrance into VR could very quickly legitimise the new ‘smartphone-tethered’ category.”

The research firm notes that gaming will continue to be responsible for about 90% of VR content spend. Consumer spend on VR content will be worth $7.5 billion by 2026, with gaming responsible for 87%, it reveals.

Its estimates echo those of investment advice company Arden Partners, which expects the video game industry to record exponential growth over the long-term, as rapid acceleration of the metaverse and virtual VR piques investor interest.

Omdia expects the line between virtual and augmented reality to increasingly blur. “From 2022, there will be increased focus on the ‘passthrough’ VR feature, which lets users view an augmented version of their real-life surroundings through VR headsets.”