Virtual reality: a billion dollar niche Deloitte Global predicts that virtual reality (VR) will have As with many technologies, the notion of virtual We would its first billion dollar year in 2016, with about $700 million reality is decades old, but its commercial realization expect the in hardware sales, and the remainder from content. has been subject to the sometimes slow pace of majority of We estimate sales of about 2.5 million VR headsets and technological progress. Optimal VR experiences require 10 million game copies sold. very high resolution screens (ideally over 500 dots per spending on VR inch, which have only recently become commercially to be by core VR is likely to have multiple applications, both consumer available), a wide field of view and high refresh rates and enterprise, in the longer term, but in 2016 we 136 (ideally at least 75 frames a second , requiring rather than expect the vast majority of commercial activity to focus powerful processors). More processing power is also casual gamers. on video games. We would expect the majority of necessary so that synchronization between the user spending on VR to be by core rather than casual gamers. moving their head and the picture being adjusted is This implies that while anyone with a smartphone could as near-simultaneous as possible. It is only recently try out a variant of VR, the majority of VR’s revenues in that screen and processor technology have improved 2016 will likely be driven by a base of tens of millions in terms of price and performance such that VR is of core gamers rather than the hundreds of millions of commercially viable, albeit still at high price points for occasional console or PC gamers, or the billions who the full featured solution. play casual games. There are likely to be two main types of VR device in Virtual reality hardware offers visual (and sometimes 2016: ‘full feature’ and ‘mobile’. audio) immersion via a head-mounted display that shows a stereo image in 3D. Sensors in the headset The former incorporates high resolution screens and track the user’s movements and change the user’s view will cost about $350-$500 (with prices at the start of accordingly. A VR version of scuba diving allows you to the year likely being higher), and we estimate between feel as if real fish are swimming toward you. If you look 1–1.75 million sales in 2016, with volumes depending 137 up, you see a realistically rendered sky. When you glance heavily on the initial price . down, you are shown the ocean floor. The sound track adjusts accordingly, enhancing the perception of being Full feature devices will likely be designed for use with elsewhere. All other things being equal, the higher the either latest generation games consoles or PCs with screen resolution, and the faster the screen refresh, the advanced graphics cards (each costing about $300) 134 capable of driving high refresh rates: the ‘average’ PC is more convincing the simulation . not powerful enough to support a viable VR experience. However the illusion remains incomplete, in that not all senses would be catered for. VR could take you into the We expect the addressable market for games consoles depths of the rain forest. You could see the forest floor as of the end of 2016 to be at least 30 million units, and or look up to the canopy. But you would not feel the high-end PCs at about seven million units worldwide. humidity, experience the smells or touch the vegetation. We also expect that most users of full feature VR would already own the latest generation console or a high-end VR content can be created using CGI (computer generated PC. Otherwise, a full feature VR experience would images) or filmed using special clusters of cameras that require at least $300 additional spending on a console collectively capture a 360-degree field of view. In playback, or $1,000 for a suitably equipped PC. the user is shown different aspects of the images 135 Some VR owners may purchase additional accessories, captured, depending on where he or she is looking . ranging from controllers to treadmills whose base plate moves in alignment with the view being seen. The floor 138 would tilt, for example, if you were walking uphill . 22