Virtual reality (VR) is meant to be the next big thing, but how big will the market be?

That’s a question Strategy Analytics has attempted to answer with new research predicting the total virtual reality market will hit $865 million in 2016.

Of that number, the bulk of the value, 77 percent to be precise, will come from premium virtual reality devices from the Facebook, Inc. owned Oculus (Oculus Rift), HTC Corp. (HTC Vive) and Sony Corp. (PlayStation VR).

While premium devices will dominate in terms of revenue, they will not in volume, with lower priced smartphone powered VR devices expected to lead with an 87 percent market share versus 13 percent for premium devices, with a 4 percent share for PC-based devices (Oculus Rift, HTC Vive) and 9 percent for game console devices (PlayStation VR).

Strategy Analytics said in a statement that it 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.”

The firm is particular hard on the problem of a lack of content, noting that “customer ready content will largely remain in the planning and building stages in 2016,” and that “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.”

That slow rollout of of content is credited as being due to major game publishers waiting to see how well virtual reality headsets take off.

“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,” Strategy Analytics’ Connected Home Devices Director David Watkins said. “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.”

Positives

The report wasn’t all doom and gloom when it comes to content, noting that outside of gaming major investments have been directed towards enabling virtual experiences such as entertainment and sports (pre-recorded and eventually live events), marketing and product retailing, and education/training, meaning that there verticals which the technology could thrive in.

A full copy of the report is available here.

Image credit: janitors/Flickr/CC by 2.0