BOSTON, April 7, 2016 /PRNewswire/ -- According to the latest research from Strategy Analytics global virtual reality headset revenues will reach $895 million in 2016 with 77% of that value accounted for by newly launched premium devices from Oculus, HTC and Sony. These three brands however will only account for 13% of volumes in 2016 as lower priced smartphone-based devices will dominate share of the 12.8 million unit virtual reality headset market. The analyst firm sees 2016 as a pivotal year for virtual reality given a confluence of factors, and also one where managing expectations will be paramount given a dearth of available content and the technical limitations of entry-level virtual reality.

Strategy Analytics predicts that state-of-the-art virtual reality headsets tethered to PCs and Game Consoles will barely exceed 1.7 million devices shipped globally in 2016 due to prohibitively high pricing. However, awareness of - and actual exposure to - such state-of-the-art systems will build rapidly in 2016 given a spate of highly anticipated commercial product launches from Oculus, Sony and HTC. At the same time, smartphone toting consumers are being bombarded by low cost and often bundled-in VR viewers like never before. With proper ecosystem management, Strategy Analytics' analysts believe that smartphone-based VR can serve as an effective "gateway drug" to upsell users to higher quality VR experiences down the road while locking them into early but potentially sticky ecosystems.

Cliff Raskind, Director of Strategy Analytics' Wearable Device Ecosystems service, noted, "Consumers will soon be exposed to an incredible diversity of virtual reality options ranging from ultra-low cost to super premium. While we expect smartphone-based viewers to take the lion's share of VR headset volumes in 2016 at 87% of shipments, PC and Game Console powered headsets will absolutely dominate value share commanding 77% of revenues." He went on to say, "Additionally, we believe VR has the potential to fuel a new tech spec race in hardware areas such as display resolution, GPUs, storage and 360° cameras."

With respect to developers and businesses, Strategy Analytics finds that while the potential of virtual reality has come into focus across a number of key sectors and use cases, customer ready content will largely remain in the planning and building stages in 2016. Game consoles are clearly driving the hardware and software that will be most visible to consumers in 2016, but buyers of new cutting edge VR systems must understand that their appetite for a wide variety of game titles is unlikely to be satisfied anytime soon.

David Watkins, Director of Strategy Analytics' Connected Home Devices service, added, "Adoption of the more expensive, high-end PC and Game Console based devices will be limited to a subset of early adopter enthusiasts and hard core gamers. The high price of these devices will act as a significant barrier to more widespread uptake. The PC and Console powered virtual reality market is entering the classic chicken and egg phase whereby the major games publishers are waiting on the side-lines until there are enough VR headsets and users in the market for it to make financial sense for them to build a VR library of content. This is providing independent and niche developers the chance to make a name for themselves before the big boys arrive."

Beyond the low hanging fruit of diehard gamers, major investment has also been directed towards enabling virtual experiences such as entertainment and sports (pre-recorded and eventually live events), marketing and product retailing, and education / training. Furthermore, social and peer-to-peer communications / telepresence are seen by Facebook and other enterprise IT heavyweights as hugely promising areas for virtual reality. Further out still, it is envisioned that increasingly capable 3D cameras and apps will allow users to relive (playback) and share experiences to VR headsets with compelling realism.

Exhibit 1: Virtual Reality Headsets: Volume vs. Value Splits in 2016

Photo - http://photos.prnewswire.com/prnh/20160407/352638

The full report, Global Virtual Reality Headset Forecast: 2014 - 2022, forecasts the virtual reality headset market through 2022 and is published by Strategy Analytics' Wearable Device Ecosystems (WDE) and Connected Home Devices (CHD) services. It details global unit shipments, ASP's and revenues for smartphone, PC and Game Console powered headsets, with further breakouts by high / medium / low price tiers for each category. Details of this report can be found here: http://sa-link.cc/136

About Strategy Analytics

Strategy Analytics, Inc. provides the competitive edge with advisory services, consulting and actionable market intelligence for emerging technology, mobile and wireless, digital consumer and automotive electronics companies. With offices in North America, Europe and Asia, Strategy Analytics delivers insights for enterprise success. www.StrategyAnalytics.com

US Contacts:
Cliff Raskind, +1 617 614 0727, craskind@strategyanalytics.com
Steven Waltzer, +1 617 614 0758, swaltzer@strategyanalytics.com

EMEA Contact:
David Watkins, +33 153 409952, dwatkins@strategyanalytics.com
Neil Mawston, +44 1908 423 628, nmawston@strategyanalytics.com
Chirag Upadhyay, +44 1908 423 643, cupadhyay@strategyanalytics.com

Asia Contact:
Woody Oh / +44 1908 423 665 / woh@strategyanalytics.com

India Contact:
Rajeev Nair / +44 1908 423 629 / rnair@strategyanalytics.com

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SOURCE Strategy Analytics