This is our third post in the series presenting our market sizing forecast for the Consumer Virtual Reality sector. In the first post we scoped out addressable markets, HMD (and input device) penetration rates and unit sales. HMD and input device revenues were presented in the second post. Completing our market sizing forecast from 2014 to 2018, this article looks at revenues from the software side. Order the full market sizing report here.
Within the general category of ‘software revenue’ we include the following:
- Revenues from Virtual Reality games: A combination of monthly access subscriptions and in-game microtransactions (MTX). As some background, we’ve been analysing these types of game revenues from virtual worlds and MMOs since 2006.
- Revenues from Social Virtual Reality applications: Primarily access-driven virtual goods revenues as well as decorative/functional virtual goods popular within social worlds. Virtual goods is another revenue segment we have a deep understanding of.
- Revenues from real-world video applications: Based around the video capture of live events (sports, music etc) and presentation via VR, this is a revenue stream expected to be driven via MTX. We include LifeLogging within this software revenue segment.
HMD Owner to Active User Ratio
Our starting point to forecast software revenues is to assess the relationship between HMD owners and active users. We believe the virtual reality sector is very much a ‘Check this out!’ concept, meaning HMD owners will actively promote and advocate using their headsets to other people. Furthermore, within the timeframe of our forecast (2014 to 2018) we expect HMD ownership to mirror game consoles, i.e. one console to several ‘users’ within a household. On this basis, shown below is our forecast for the HMD to active user ratio.
On an average basis we forecast the HMD to active user ratio to grow from 1.0 in 2014 through to 2.4 in 2016 then dip slightly to 2.05 by 2018. Of the three primary target markets we’ve segmented our forecast by, the Early Majority (including the Kids, Tween and Teen market) possesses the highest ratio as this group is most likely to contain families. The corresponding ratio for this segment peaks at 3.0 during 2015/6, falling to 2.5 from 2017 onwards. Continue reading →