Virtual Reality: Not Just Fun and Games; Real Business Uses Too

Virtual reality is gaining real traction. Science fiction is becoming fact via this fast-growing technology niche. Find out which companies are leading the wa

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Virtual reality is getting closer to real business. Science fiction is becoming science fact as virtual reality is a fast-growing technology niche.

Virtual reality uses computer screens or a head-mounted display (HMD) to replicate an environment. The technology simulates a user's physical presence in a way that allows her to interact with the virtual environment and create a sensory experience.

Right now, virtual reality is primarily used in training and entertainment. For instance, the military uses virtual reality in applications such as flight simulations. The medical industry uses virtual reality to help medical personnel treat a wider variety of injuries.

But virtual reality’s uses may grow. Research firm Gartner sees head-mounted displays moving in business, too. By 2018, Gartner expects that 26% of headsets will be created for business use for tasks such as equipment repair, inspections, and maintenance.

Right now, however, the video gaming industry dominates virtual reality. Two new-generation gaming headsets are being produced by Oculus Rift (now owned by Facebook [FB]) and HTC’s HTC Vive. Other companies are betting on virtual reality, too. Sony (SNE) is expected to release its PlayStation VR later this year. Samsung has Gear VR; Google (GOOGL) has Google Cardboard; and Microsoft (MSFT) has Microsoft HoloLens.

Virtual Demand and Sales

There’s a lot of industry excitement over virtual reality, but the hype hasn’t yet translated into sales.

In April, SuperData Research, which provides research for the playable media and digital games industry, lowered its global virtual reality revenue forecast for 2016 by 22%, down to an estimated $2.9 billion in combined sales of hardware and software. SuperData concluded that demand was lagging for now, saying, “Initial demand for VR devices has been driven primarily by gamers and industry hopefuls. And while demand has outpaced early expectations, this does not suggest consumers are ready to buy just yet.”

Still, the research firm stands by its longer-range forecasts, saying by 2019, sales could reach $22.86 billion and then almost double to $40.26 billion by 2020. This growth is expected to be driven by pricing decreases and increased software development.

Converting Virtual to Real Dollars

Cost is an issue right now, according to SuperData. Surveyed consumers who are aware of virtual reality say headsets are too expensive, which the research firm says is a significant barrier to adoption.

For instance, the price for an Oculus Rift package, which includes the headset, sensor, remote, cables, Xbox One controller, and a game is $600. Competitor HTC Vive is priced higher, at $700, and includes a headset, two wireless controllers, two base stations, link box, earbuds, and Vive accessories.

But Gartner predicts that headsets will catch on in 2016. They forecast 1.43 million units to be sold this year, and 6.31 million in 2017.

"New virtual reality HMDs for consumers, such as the HTC Vive, Oculus Rift, Sony PlayStation VR, and Microsoft HoloLens are expected to be available along with video games and entertainment content as well as business applications critical for their success," said Brian Blau, research director at Gartner. 

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