Virtual Reality’s $182 Billion Future

Two significant endorsements recently for the value of virtual reality — from Goldman Sachs and Deloitte consultants — are escalating the hype about VR, which was virtually ubiquitous at CES this month. In addition, Google, which has been on the VR fringes, confirmed this week it has created a VR division, headed by a senior executive, Clay Bavor, who has run Google’s apps units, according to published reports.

Goldman Sachs analyst Heather Bellini, in a 58-page outlook on virtual reality and augmented reality, predicted the technologies have “the potential to become the next big computing platform.” Her most optimistic growth estimate expects VR and AR could generate up to $182 billion in revenue, including hardware and software/content, by 2025 — exceeding television revenue.

Even at a slower pace, VR could generate $80 billion by then, she said. Bellini’s forecast cites nine categories for VR and AR adoption. Video games will represent about one-third of the revenue, with live events, video entertainment and retail collectively pulling in about another quarter of the money; healthcare, engineering, military and real estate applications will also use VR to varying degrees, according to the Goldman Sachs forecast.

Separately, consulting firm Deloitte Global, as part of its 2016 Telecommunications/Media/Telecom outlook, forecast that this year will be VR’s first billion-dollar year. It expects “full feature” VR — based on consoles and wired devices — will initially exceed the market for “mobile VR,” which may rely on high-resolution smartphones for displays.

“VR’s capability is likely to improve further still over the years as processors improve, screen resolution increases yet further, and content creators learn how to create for the format,” Deloitte’s report observed. But it acknowledged, “As can happen with emerging technologies, there is considerable hype about the impact of VR in the near term.”

For cable operators, the VR/AR juggernaut poses countless questions, ranging from the capability of home gateway devices to signal latency for live events. There will also be challenges in dealing with the VR vanguard, which now includes Facebook’s Oculus subsidiary, HTC/Vive and Sony, in addition to Google.

CableLabs is working out “what cable operators need to do to prepare for a large market adoption of VR,” said Steve Glennon, principal architect at CableLabs’ Advanced Technology Group, who is focused on VR. CableLabs’s recent consumer survey about the value of technology found “an overwhelmingly positive consumer response on the value, comfort and lack of nausea problems using the goggles,” he said in an interview after CES.

“We’ve been trying to understand the bandwidth needs and have found a good consumer experience needs between 30 and 40 Mbps for 360-degree content with current technology.” he said. “This is far above current video streaming bandwidth requirements for online video like Netflix and Hulu.”

Glennon said CableLabs is continuing “to look for tactical opportunities to speed the consumer adoption of the VR technology.”

At CES, “It was pleasing to see how mainstream this technology is becoming,” Glennon added.

“I think this will quickly move from HD content for the VR sphere up to 4K,” he observed, citing several immersive VR demos that were “not for the faint of heart.”

Prior to CES, CableLabs CEO Phil McKinney characterized VR developments as “beyond the goggles,” referring to the limited hardware demonstrations of previous years. “What we’re going to see is content,” McKinney told USA Today, emphasizing that sports and travel-related VR content are the most likely initial products.

Skeptics have noted the new VR buzz resembles the 3D TV hype a few years ago, which fizzled away. Bellini, in the Goldman Sachs report, waves off such cynicism, insisting VR and AR are laying the groundwork for new kinds of devices “beyond PCs and phones” that include controls via head and hand motions.

This article was first published in MultiChannel News

Published by

Gary Arlen

Gary Arlen has tracked media/telecom convergence for more than 30 years. He is president of Arlen Communications LLC, a Bethesda, MD research firm. ( )

14 thoughts on “Virtual Reality’s $182 Billion Future”

  1. “Skeptics have noted the new VR buzz resembles the 3D TV hype a few years ago, which fizzled away.”

    This. Someday it might become something more than an interesting toy, but it’s not going to become mainstream. Two reasons off the top of my head:

    1. Real life features these things called interruptions. With a regular game, all you do is press pause and look away from the screen. With a VR game, you have to take off the VR gear and reorient yourself. That right there means that a lot of people will buy a VR unit, use it for a while, then realize it’s too much a PITA to disengage from and never pick it up again.

    2. Real life also features people like me who, as they get older, need glasses to focus on something up close. Which means unless they make VR headsets that can go over your glasses (not going to happen unless you take all the self-centred rabbit-eyed 20-something tech geeks who infest Silicon Valley and magically cause them to have the eyes of 45 year olds), VR is never going to be of any interest to glasses wearers or older people.

    Also let me note that I found this article extremely disappointing and not up to techpinions’ usual standards. From the parroting of marketing hype (aka used cattle feed) to the tepid “some sceptics disagree” sentence at the end, dropped without elaboration or analysis, this reads as the kind of useless “journalism” written by stock market shills that you can find at dozens of tech news sites.

    I come here for opinions and analysis, not for journalism, and especially not for shilling.

    1. “…let me note that I found this article extremely disappointing and not up to techpinions’ usual standards…”

      CES was by all accounts a snoozefest; but this “article” is a naked VR industry press release.

  2. I am with the VR Skeptics. For the mainstream VR will be an entertainment device and as such it has much in common with 3DTV.

    Those hyping VR like to point out how much more impressive/immersive VR is than 3DTV, but what they hand wave away, is how much worse the downsides are, and it is the downsides that killed 3DTV.

    Much of the failure of 3DTV is placed at the irritation wearing the 3D glasses.

    But if you compare the irritation factor between 3D glasses and a VR headsets. VR headsets would be about a 10 and 3D glasses about a 2. 3D glasses are barely worse than wearing sunglasses in some cases, and a VR headset is like strapping on ski goggles from weight about 3/4 of pound and trailing an umbilical cord.

    During the 3DTV hype, I had exactly one friend excited about it. He bought a 3D capable projector and glasses, and he likes it.

    During the VR hype, I had exactly one friend excited about VR. It is the same friend, though this time he has no interest in buying anything. Because while he can share 3DTV with his wife, VR would be an isolating solo activity. He would need to buy 2 VR rigs, and 2 high end computers to drive them.

    Irritating, and isolating and expensive. What’s not to love. We haven’t even got to the joys of motion sickness, which is NOT a solved problem, and never will be for a large part of the population.

    VR has bigger hype than 3DTV and will have a bigger fall.

    AR OTOH, I think as a lot of promise, more practical applications and less downsides than VR.

    1. Well:

      Expensive – maybe it will be solved using stuff like foveated rendering. Or maybe the value will big enough.

      Isolating – Aren’t smart phones isolating to some/large degree ? and yet they are addictive enough. VR is probably more addictive . And some people are talking about meetings and other social like things in VR so it might be less isolating in some sense.

      Irritating – the question is – did 3d glasses bring something great to the experience ? not really. Most thought they we’re mostly a gimmick. And there was little content. It could turn otherwise for VR, causing a different result.

        1. If that’s the case and most people will get sick in 5-10 minutes of use – you’re right.

          On the other hand it would be silly to invest so much money in it if that’s the case. So maybe those problems are solvable ?

          1. Ok, that was a flippant statement on my part. Many people won’t get motion sick at all, but many will.

            But it is still a gimmick technology that Demos better than it has staying power.

            Novelty wears off. Irritants last forever. It’s why 3DTV
            failed even with minor irritation of lightweight glasses. This is a huge,
            heavy, isolating, sweaty set of goggles, trailing a bunch of wires. That sucks.

            When the novelty wears off, you are left mainly with how much that

            Here is a good article on the issue:

          2. Thank you. It’s definitely an interesting article.

            On the other hand, many people do have rift equipment at home, and we don’t see a lot of articles like this one, even when we search for them specifically .

            So at the very least the success may be a 50%/50% story ?

          3. How many stories do we get from people telling us they lost interest in their 3D TVs? Zunes? Segways? Fading interest is a story that seldom gets told for any product. There is love/hate sides in the beginning but almost nothing about the fade-away. Because when it fades, it goes forgotten into the closet or the garage.

            Novelty fades and irritation is permanent. A high irritation product can create an initial wow if the novelty is high enough. But eventually the novelty fades and you are just left with the irritation. That linked story is bang on and is representative of things to come, even though it will likely be largely unexpressed and not understood when VR fails.

  3. Every time I see the word ‘potential’ floating somewhere near the word ‘technology’ within a stone’s throw of ‘billion’, I run for the hills.

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