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The Venture Reality Fund reported that the landscape of companies it tracks in the virtual reality market grew more than 40 percent in 2016.

The largest area of growth was in content companies that create apps for head-mounted VR displays, said Marco DeMiroz, cofounder of The Venture Reality Fund with Tipatat Chennavasin. The fund invests in VR and augmented reality startups.

Gaming and entertainment nearly doubled in size, with major players as well as well-funded new companies in both the U.S. and Asia, he said.

Even with a relatively slow start for VR headset sales, smart indie studios generated solid revenue to move beyond sustainability to profitability, DeMiroz said. Traditional VCs also stepped in to make content and application bets in VR, and major gaming players in Asia embraced VR, dedicating more resources to it.


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Education, enterprise, health care, and journalism also experienced healthy growth in the non-games and non-entertainment categories. In particular, advertising and analytics startups saw solid funding.

With tools and platforms, the VR Fund saw a rise in VR content creation and management systems that enable companies to quickly get native VR apps or Web VR experiences to their customers, using 360 video and photos. In addition, the fund noticed a lot of activity on the 3D audio side, most notably with the entrance of Korea’s G’Audio and Valve’s acquisition of Impulsonic.

Regarding infrastructure, more major players announced tethered VR HMDs. Windows added its own VR platform — launching with major partners, including HP and Lenovo.

With the low price point and a focus on enterprise, this could be the huge push that makes VR mainstream. The dream of an all-in-one mobile headset with positional tracking and full gesture control is expected to arrive within the coming years, DeMiroz said.


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