SuperData: Virtual reality will make $5.1B in 2016 mostly from mobile, not Oculus Rift or Vive

Virtual reality enthusiasts are collectively looking forward to Oculus Rift and HTC Vive, but one research group thinks those impressive devices won’t represent the bulk of consumer spending on VR this year.

Consumers will spend approximately $5.1 billion on VR hardware and software in 2016, according to market-intelligence firm SuperData. That’ll lead to an install of around 56 million across all devices — but only if you include cheap VR holsters like Google Cardboard. SuperData believes that those kinds of flimsy holders will make up the bulk of spending on VR, since the general consumer isn’t planning to invest hundreds of dollars into one of the more premium head-mounted displays. Of course, tech adviser Digi-Capital predicts that 2016’s hesitant start will eventually see the virtual and augmented reality market balloon into a $150 billion business by 2020.

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But while SuperData predicts that most of that will come from cheap mobile VR devices in 2016, it notes that the inevitable hype that will surround the launches of Oculus Rift and HTC Vive will fuel the market’s overall growth. We still don’t know the price of the PlayStation VR, Rift, or Vive, but most estimates start around $350. We’ll find out the precise cost of Rift tomorrow when preorders go live.

“Initially, affordable smartphone devices will drive the bulk of sales as consumers first explore virtual reality before committing to the more expensive platforms,” SuperData research director Stephanie Llamas said. “After this first wave, consumers will likely move more high-end VR devices on PC.”

SuperData noted that even hardcore gamers said that they would spend, on average, around $300 on a new VR peripheral for their console or PC. That’s a bit short of what most analysts are expecting, which means Sony, Oculus, and HTC may have to sell their hardware at a loss.

Alternatively, these early high-end VR companies could stick to a higher price while building up a library of software tested with early adopters. Meanwhile, Cardboard and even Samsung’s Galaxy-phone holder Gear VR could prime a new wave of consumers for the second and third generation releases of PS VR, Rift, and Vive.