VR to hit $70 billion by 2020 - Report

Virtual reality hardware and software will be a $70 billion annual industry as soon as 2020, according to TrendForce. The research firm shared its analysis of the market today, saying VR hardware will bring in about $20 billion five years from now, with software accounting for about $50 billion.

Of course, the market is nowhere near that yet. With high-profile launches from Oculus, Sony, and Valve/HTC planned for early 2016, TrendForce expects next year to see VR generate $6.7 billion in revenue, with most of that coming from the hardware side given the technology's pricey initial buy-in costs.

"These explosive growth projections actually do not sufficiently reflect just how hot the VR industry is right now," said TrendForce wearable device analyst Jason Tsai. "The figures do not include the value of non-commercial uses of VR technology. For example, the industry is currently pushing the development of free software and do-it-yourself apps. While these projects do not immediately generate revenue for the developers, they have a vital role in the promotion market growth and innovations."

TrendForce believes social media will provide a strong platform for VR applications, as the sharing of user-generated VR content will help encourage adoption of the technology.

"The development of the VR industry is not solely based on wearable devices launched by major hardware vendors such as Sony, Oculus and HTC," Tsai said. "Much of the growth drive also comes from independent developers that contribute innovative apps to the VR industry. Their market value is not often reflected in the data. Since making apps does not have a high entry barrier, there has been a proliferation of non-commercial software made by students, independent developers and content providers. Instead of being guided by immediate commercial interests, they aim to attract consumers' attention with innovative products."

The company is the latest in a series of research firms to offer a prognostication of the burgeoning market, but TrendForce's outlook appears significantly rosier than that of its peers. In April, Digi-Capital predicted that VR revenues would only grow to $30 billion annually by 2020, dwarfed by augmented reality's $120 billion. In September, Juniper predicted an installed base of 30 million VR headsets globally, with retail revenue from headsets surpassing $4 billion. And in October, IHS projected a VR installed base of 38 million headsets by 2020, with annual hardware spend at just $2.7 billion.