• VR headset manufacturers are driving both the development and distribution of VR content by investing significant technical and monetary resources in developers, in an effort to build up an exclusive content library. As a result, content on VR platforms will be heavily dependent on which VR headset a user owns and will not be cross-platform for a while.
  • High demand for VR headsets by mobile and console gamers will fuel demand for VR content. The VR content market will take an increasing portion of the mobile gaming software industry. Global revenue from mobile gaming will hit roughly $58 billion by 2020, according to our estimates based on New Zoo data. 
  • Mobile-mounted VR headsets are cheaper than other headsets and will account for the largest share of all VR headset shipments in the short term. These headsets will provide the most limited VR experience, with minimal motion-tracking capabilities, but they will also be the cheapest devices.
  • Gaming console-based VR headsets are tethered to specific gaming consoles. Console gamers offer a built-in audience for VR hardware — hardcore gamers who will often pay for additional hardware that enhances the gaming experience, especially through motion-tracking. 
  • Traditional VR headsets are not only the priciest VR headsets, but they also require high-powered computer processing and so must tether to expensive desktop PCs. These headsets will attract a niche user base of VR enthusiasts and avid gamers.
  • Beyond gaming, VR video entertainment will remain short-form until demand for VR headsets increases. Entertainment content developed thus far includes shorts and promotional videos shown at industry events. Oculus has been at the forefront of entertainment development.
  • Ads featured on VR headsets will likely have higher view-through rates than standard video ad spots. However, advertisers are unlikely to invest resources into VR advertisements until VR ads prove that they are not merely a novelty. 
  • Other industries are also beginning to experiment with VR content. Travel companies, publishers, e-commerce merchants, and social platforms are beginning to see potential in this new category.
  • VR content faces two major hurdles that could keep developers from investing: The VR experience must be good enough for people to take up the devices. In addition, developers need to know that a sufficient user base exists to be worthy of the resource investment in VR content.

The VR experience

Virtual reality (VR) has generated a lot of buzz [...]