Despite the challenges that will limit the adoption of virtual reality (VR) technology, the global VR market is forecast to grow from $11-billion in 2023 to $57-billion by 2030 – with a CAGR of 26% over the period – according to GlobalData.
The research group’s latest Strategic Intelligence report – Virtual Reality – reveals that while the revenue share of VR software in the total VR market will slightly decline from 61% in 2023 to 59% in 2030, VR hardware will increase its share from 39% in 2023 to 41% in 2030.
“As VR adoption grows, both hardware and software will experience more demand,” says Shabnam Pervez, analyst: strategic intelligence team at GlobalData. “Demand for VR software will be driven by advancements in content creation and the development of more immersive experiences, while declining hardware costs will make VR headsets more accessible to a broader audience.”
GlobalData’s report also highlights that VR players may eventually transition to mixed reality (MR), which is a hybrid technology that enables users to see and interact with virtual objects integrated into the real world. MR has become desirable to headset makers as an alternative to VR.
For example, HTC, Meta, and Pico started with pure VR headsets, but have pivoted to MR. HTC released its Vive Focus 3 in 2022 – a standalone mixed reality headset. The Meta-owned Oculus is also working on MR headsets. Pico Interactive also makes several MR headsets including the Pico Neo 3.
“Apple’s Vision Pro, launched in February 2024, is typically described as an MR device,” says Pervez. “Apple will likely set the path for many more VR makers to transition towards MR. However, VR companies will all strategise differently. For example, Meta will likely continue to call its devices VR headsets as it has invested so much in VR tech. However, the company’s offering has more in common with MR than standalone VR.”
The transition reflects an interest in bridging the gap between the immersive world of VR and the user’s physical environment.
MR’s ability to overlay digital elements on to the real world presents exciting possibilities for applications where maintaining awareness of surroundings is crucial. The market is responding to a demand for MR in areas like design, education, and even healthcare where seamlessly blending virtual elements with real-world environments holds significant value.
Despite advances in hardware and software, VR faces significant challenges that will hinder its growth. One of the primary obstacles is its cost. VR headsets, even those with basic features, typically cost between $200 and $1 000.
Additionally, some VR headsets must be tethered to powerful devices to function effectively which can further increase the overall cost. Another challenge is the potential for negative health effects associated with prolonged VR use. Some users have suffered eye strain, headaches, and motion sickness. Addressing these health concerns is crucial to ensure the long-term viability of VR technology.
“Moreover, the development of compelling and diverse VR content remains a challenge,” says Pervez. “While there have been some successful VR experiences, creating content that truly captivates users and offers lasting value is not always easy. The lack of a thriving VR content ecosystem could further limit the appeal of the technology.”