Overhype is the curse of virtual reality. Despite all of the excitement about VR headsets, only 6 percent of Americans will own a VR headset this year, according to a forecast report by market researcher Strategy Analytics.
And of those who own a headset, 93 percent will have basic smartphone models. Only 1 percent will buy the most expensive headsets, such as the Oculus Rift and the HTC Vive.
Boston-based Strategy Analytics said that 11.4 million Americans will own a VR headset by the end of 2016. With prices ranging from under $15 for a Google Cardboard headset to $800 for an HTC Vive, VR headsets will generate nearly $556 million worth of sales in the U.S. this year, according to the company.
“Penetration in the U.S. is higher than in other countries, partly due to the greater number of headset giveaways to promote the technology,” said David MacQueen, analyst for Strategy Analytics’ global wireless practice, in a statement. “Samsung is giving away lots of Gears with new handsets, Google has given a lot away too, and even the New York Times gave 1.5 million to their subscribers to try out a series of VR documentaries.”
The lower-cost headsets, which are basically “shells” into which people slide a smartphone — Google Cardboard and Samsung Gear are good examples — will account for the vast majority (93 percent) of units owned. Those which attach to games consoles, such as the PlayStation VR launching on Friday that costs $399, will account for 6 percent. Just 1 percent of sales will go to the likes of Oculus Rift and HTC Vive headsets that plug into PCs.
“Despite the rush of companies eager to jump in, the reality is that VR take-up among the U.S. public will be a slow burn and dominated by low-cost headsets,” said MacQueen. “The VR headset market will be much like the car market — most owning the likes of Fords and Toyotas, a handful owning Porsches, and the odd few splashing out on a Ferrari.”
MacQueen emphasizes the big gulf between lower-priced and premium headsets: “The experience of a Google Cardboard versus an HTC Vive is as different as listening to a car stereo versus being in the front row of a concert.”
By the end of next year, 16 percent of U.S. adults are estimated to own a VR headset, rising to over one in four (27 percent) in 2018.
“To put its popularity in context, it will take about 18 months for VR headsets to reach the level of household penetration that say Netflix has now, but that penetration will still be totally dominated by the cheaper smartphone headsets,” notes MacQueen.
However, by 2020, four in 10U.S. adults will own some form of VR headset.
“Despite the slow start, there’s a real opportunity in the longer term,” MacQueen said. “VR can bring new experiences to people, beyond the obvious next step in video games. There’s also watching sport rights in amongst the action, enhanced communications and social networking, plus more serious uses, such as better educational materials for kids or use in architecture and design.”