First-gen VR won't live up to hype - Report

The future of virtual reality is still bright, but the near term might be a bit dimmer than expected. That's according to a November IDATE DigiWorld report which the firm released some findings from earlier this month.

The company's Artifical Reality report projected that 2016 would see an installed base of 3.9 million headsets worldwide, expanding to 7.4 million by the end of 2017.

"IDATE DigiWorld considers that the first generation of VR headsets will not be as successful as the hype would suggest," the firm's head of gaming Laurent Michaud said. "Overall, sales are likely to be lower than most observer estimates."

The high price of the fixed headsets (Vive/Rift/PSVR) is a key part of the problem, but the low price of software has also been an issue, Michaud said. The VR experiences on the market are often short and underdeveloped compared to their traditional gaming counterparts, so they can't charge as much.

"However, we are starting to see a catalogue of high-end games emerge as developers want to invest as quickly as possible in the new market opened up by the Oculus Rift, HTC Vive and Playstation VR. Most publishers able to offer AAA experiences are waiting for the headset installed base to be large enough to amortise the several million Euro investment needed for content creation," Michaud added.

As of November, IDATE said 62% of VR content revenues was coming from the mobile market. However, because the experience offered by fixed VR platforms is superior, the firm expects they "will gradually predominate in market value by 2020."

The firm is projecting that by 2020, the worldwide market will have an installed base of 60 million headsets, with North America and the EMEA region each claiming about 20 million equipped households. The report put the 2020 worldwide VR headset market at €13 billion ($13.79 billion), with VR games trailing at €3 billion ($3.18 billion).