Size of Industry

$57,550,000,000

What is it?

The definition of virtual reality comes, naturally, from the definitions for both ‘virtual’ and ‘reality’. The definition of ‘virtual’ is near and reality is what we experience as human beings. So the term ‘virtual reality’ basically means ‘near-reality’. This could, of course, mean anything but it usually refers to a specific type of reality emulation.

We know the world through our senses and perception systems. In school we all learned that we have five senses: taste, touch, smell, sight and hearing. These are however only our most obvious sense organs. The truth is that humans have many more senses than this, such as a sense of balance for example. These other sensory inputs, plus some special processing of sensory information by our brains ensures that we have a rich flow of information from the environment to our minds.

Everything that we know about our reality comes by way of our senses. In other words, our entire experience of reality is simply a combination of sensory information and our brains sense-making mechanisms for that information. It stands to reason then, that if you can present your senses with made-up information, your perception of reality would also change in response to it. You would be presented with a version of reality that isn’t really there, but from your perspective it would be perceived as real. Something we would refer to as a virtual reality.

So, in summary, virtual reality entails presenting our senses with a computer generated virtual environment that we can explore in some fashion.

In technical terms…

Answering “what is virtual reality” in technical terms is straight-forward. Virtual reality is the term used to describe a three-dimensional, computer generated environment which can be explored and interacted with by a person. That person becomes part of this virtual world or is immersed within this environment and whilst there, is able to manipulate objects or perform a series of actions.

HOW does it work?

Headsets — The Basics

The whole point of VR is to immerse yourself in a new world. However, other than the VR headset, there are also many other parts necessary for VR to actually work. VR headsets like Playstation VR and Oculus Rift are called head mounted displays, which means that the screen is mounted to your face. Wherever you move your head, the screen follows you.

For certain VR headsets like the HTC Vive and the Oculus Rift, a console or computer is needed for the headsets to work. Video is sent from the console or the computer to the VR headset. For other headsets like the Google Daydream and the Samsung Gear VR, a smartphone has to be slotted into the headset, and the video plays from the phone.

VR headsets either use two LCD displays (one per eye) or two feeds sent to one display. Headsets also have lenses placed between your eyes and the screen, which are used to focus and reshape the picture for each eye. They create a stereoscopic 3D image by angling the two 2D images. This is because the lenses mimic how each of our two eyes see the world very slightly differently.

VR headsets also need to have a minimum frame rate of at least 60 frames per second in order for the user to not feel sick. Current VR headsets are able to go way beyond this, with Oculus and the HTC Vive at 90 frames per second and PlayStation VR at 120 frames per second.

Head Tracking

For VR to work properly, when you move your head up and down or side to side or tilt your hear, the picture has to move properly with your head. Headsets use a system called six degrees of freedom (6DoF), which looks at your head’s position in terms of the X, Y, and Z axis to measure head movements.

There are a couple of different components use in a head-tracking system, including a gyroscope, accelerometer, and a magnetometer. The PlayStation VR also uses 9 LEDs around the headset, which are used to provide 360 degree head tracking by using an external camera that monitor these signals.

In order for head-tracking to be effective, low latency is needed. Latency is the time from when the user moves their head or moves an input device to the time when that change appears on the display. In order for the user to feel comfortable, the lag cannot be greater than 30 milliseconds.

3D audio is something that is used by developers to increase the sense of immersion. This gives the user the allusion that the sound is coming from behind them, next to them, in front of them, or in the distance.

Motion Tracking

VR headsets like the Oculus Rift and the HTC Vive have a set of wireless controllers that are used to make you feel like you are controlling what is happening in your VR simulation. There are certain buttons on the controller as well as a lot of sensors to detect gestures such as pointing and waving. Different input methods include voice controls, smart gloves, and even treadmills, which allow you to simulate walking around in a VR environment.

Use Case

1. Automotive industry

VR allows engineers and designers to experiment easily with the look and build of a vehicle before commissioning expensive prototypes. Brands such as BMW and Jaguar Land Rover already use VR to hold early design and engineering reviews to check the visual design and object obscuration of the vehicle - all before any money has been spent on physically manufacturing the parts.

VR is saving the automotive industry millions by reducing the number of prototypes built per vehicle line.

JLR are using VR to hold engineering reviews earlier in the vehicle development process.

2. Healthcare

Healthcare in an important application where VR can have a significant impact. Healthcare professionals now use virtual models to prepare themselves for working on real bodies and VR has even been used as pain relief for burn injuries.

VR can also be used as a treatment for mental health issues, with Virtual Reality Exposure Therapy thought to be particularly effective in the treatment of PTSD and anxiety. There are many other ways spending time in VR can have therapeutic benefits.

Osso VR provide a surgical training and assessment tool.

3. Retail

The problem with online shopping is that we can’t try on the clothes we want before we buy them, which results in us buying two sizes and sending one back, or ordering one size and praying it fits your shape and size. This could soon change with body-scanning technology in VR, which would allow us to try on clothes in the virtual world to see what they would look like in person.

Various companies are attempting to bring us the VR shopping experience, including the European retailer ASOS, who invested in software development company Trillenium.

And it’s not just fashion getting a makeover. Last year, eBay launched 'the world’s first virtual reality department store' in partnership with Australian retailer Myer. Is this the future of shopping?

vRetail are using VR to enhance the shopping experience.

4. Tourism

Imagine being able to try your holiday before you buy it. That’s exactly what the future could hold. The industry is taking the first steps to enabling you to go on guided virtual tours of hotels, restaurants and tourist landmarks.

Thomas Cook launched their 'Try Before You Fly' VR experience in 2015, where potential holidaymakers visit stores in various countries to experience the holiday in VR before booking it. There was a 190% uplift in New York excursions bookings after people tried the 5 minute version of the holiday in VR.

Google Expeditions is another way tourism can become more accessible. Users can travel the world from the comfort of their own home, allowing people of all ages and backgrounds to explore coral reefs or the surface of Mars.

5. Real estate

You can look round properties from the comfort of your [existing] home - no estate agent or sacrificing your weekend needed. This allows people to explore houses online and then only view the ones you’re most likely to love in person. Matterport are leading the way and have already scanned thousands of homes using their scanning hardware.

Matterport 3D camera produces realistic scanning of buildings which you can then visit in VR.

6. Architecture

VR is gradually changing the way that architects design and experiment with their work. VR makes it possible to see not just what a building or space will look like but how it will feel. For home-owners, they can experience the space before it is physically built and make real-time changes, which saves the customer and the architect time and money (as well as increasing satisfaction on completion of the project).

Architects have been using 3D models for years but using immersive tools such as Iris VR allows them to understand and explore the space at the deepest level possible.

7. Gambling

You can now play multiplayer poker in VR with Poker VR. It’s just like being in a real casino where you can talk to other players and read their body language. Currently they have a prize pool with prizes totalling $5000.

8. Learning and Development

The L&D market is beginning to open up to VR, with companies such as VirtualSpeech providing VR training for soft skills. They combine VR apps with Web VR and work with companies to integrate their corporate training into current LMS. This makes training more accessible, cheaper, and increases learning retention levels.

Learn and practice communication skills with VirtualSpeech.

9. Recruitment

Lloyds Banking Group have introduced a VR exercise to assess graduates for its 2017 intake. In the future, virtual environments could replace assessment days and interviews themselves, saving on cost and time for both the employer and the potential employee.

10. Entertainment

VR is being used in the entertainment industry to heighten experiences with 360 films (Examples on YouTube) and increase your emotional connection with them and/or the characters. Disney Movies VR, for example, takes the user to red carpet events and to an interview with ‘The Jungle Book’ cast.

VR could also revolutionise the way that media content is made. Flipside is now the fastest way to make shows that can be viewed through traditional channels like YouTube, Twitch, or Facebook live and inside virtual reality itself.

11. Education

VR could revolutionise education by enabling students to learn in an immersive, experiential way. Unimersiv have apps that allow users to take a tour of Ancient Rome, explore the human brain, and board the Titanic. ImmersiveVREducation are building a VR classroom / meeting room space with their ‘Engage’ product, where people can learn from lecturers around the world.

Engage application with students learning collaboratively inside a lecture room.

12. Sports

The way that we watch sports is already changing, with several VR companies specialising in watching live sports events. For example, you can watch the NBA, NFL, and other events in VR. Companies such as LiveLikeVR enable broadcasters and sports teams to deliver live sports viewing experiences on mobile VR.

This is a great way of opening up live sports events to people who can’t travel to the venue or can’t afford tickets to watch the sports in person.

BT Sport broadcasted the UEFA Champions League final in 360 degree VR via YouTube and the BT VR app, all for free. You could watch the game from several locations in the stadium, as if you were actually there. Initiatives like this will help change the way sports are watched.

13. Art and design

With VR, you don’t just create life-size artwork - you can be in it. You can actually step into your image and come out the other side. The most well-known application for creating art in VR is Tiltbrush and it’s amazing what some people have managed to paint in it. You can also make virtual 3D models and sculptures with MasterpieceVR.

Tiltbrush lets you create beautiful 3D paintings in VR.

14. Events and conferences

Since VR enables individuals to be places virtually, it provides an avenue for organizers to welcome more individuals into in-person events. For example, Paul McCartney released a 360-degree concert recording through a virtual reality app linked to the inexpensive Google Cardboard headset.

VR can be used in a similar way to enable virtual conference attendance, but event-industry stakeholders are also using it to drive collective experiences among in-person audiences. An example of this was at the Mobile World Congress 2016, when conference attendees wore VR headsets as they attended the launching ceremony of the new Samsung S7 and S7 edge smartphones.

15. Well-being

With the rise in popularity for wellness and meditation, it’s not surprising that there are VR applications that enable users to immerse themselves in a meditative space. Guided Meditation VR is one of the most popular and surrounds the user with beautiful 360 images while they listen to soothing music and a guided meditation.

16. Social

There are several players already building social communities in the VR space, such as High Fidelity, vTime, AltspaceVR, Oculus Rooms and Parties, and VRChat. Altspace is one of the most popular and holds regular community-created meetups on topics from ‘Mingle and Chill’ to ‘Boss Monster’ to ‘Lia’s birthday drawing party’.

Party inside High Fidelity which can host multiple players.

17. Charity

One of the best things about the emergence of VR is its ability to evoke empathy. This makes it extremely valuable to charities as it can be used to increase understanding of an issue.

People are more likely to be moved to action when they are immersed in a situation they would otherwise not be able to relate to, or come close to experiencing. For example, in 2015, Unicef used the video ‘Clouds Over Sidra’ to double their donations towards their work with the Syrian Refugee Crisis.

18. Marketing

Marketing is becoming more and more about how companies make customers feel so using VR is a natural extension. Coca-Cola was one of the first companies to try out virtual experiences in their marketing when they transformed their Christmas advert into VR in Poland.

It’s also becoming popular for universities to create virtual campus tours of universities. Princeton, Yale and Columbia have all tried this out as a way of more students to be able to see their campus.

19. Recreation

Many real-life hobbies are available in VR, and the immersive experience makes them all the more enjoyable and accessible. If you’re a fan of cultural activities, you can visit museums such as the Natural History Museum in London or, if you’re more of a thrill-seeker, there’s even a VR theme park opening in China. One of the more unique ways VR is being used is by Galatea, who provide a writing and narrative design management tool for immersive storytelling.

VR theme park in China from SLQJ.

20. Law enforcement

As with the military, police forces are using AR and VR tools from companies like VirTra to train personnel in simulated scenarios complete with visual, auditory, and physical stimuli (ranging from barking dogs and street noise to the recoil of discharging a weapon).

The technologies even enable police forces to escalate or de-escalate trainees’ simulated interactions with individuals inside the virtual training environments, helping learners practice making judgment calls and critical decisions under stress.

A group of University of Alabama researchers had collaborated with law enforcement officials to measure brain waves during VR police training. One of the lead researchers said the work may “improve training of officers and positively affect the hiring process.”

21. News and journalism

You can now watch news stories and documentaries in VR. The New York Times has already entered this space, and it’s only a matter of time before other media outlets join them. In the NYTVR app, you can experience stories rather than just listen to them, as if you were standing opposite the journalist where the story is happening.

VR is likely to influence your workplace, hobbies and social life in the future - and that’s sooner than you may think. The possibilities of VR are endless; the only things we can’t replace in VR are eating and sleeping… for now.

Market

The global virtual reality market size is expected to reach USD 57.55 billion by 2027. In 2019, the market size was USD 3.10 billion and is further anticipated to showcase a remarkable CAGR of 44.3% during the forecast period. The increasing utilization of virtual reality in sectors such as automotive, healthcare, manufacturing, entertainment industry and several others is expected to steer the market growth. Virtual reality in healthcare sector is utilized for clinical training, patient instruction, medical calculation, rehabilitation, and many others. For instance, VRPhysio based in the U.S., offers environment physical treatment workouts virtually to be conducted at home and delivers the records to the medical experts in the hospitals. This information is published by Fortune Business Insights™, in its report, titled, “Virtual Reality Market, 2020-2027.”

COVID-19 Outbreak to Shoot VR Technology Demand and Foster Market Growth

COVID-19 has considerably elevated the demand for virtual Reality technology. The associated firms, clinics, and other companies have adopted the technology for virtual meetings, conferences, gatherings, exhibitions and more purposes and are fuelling the demand for captivating results. For example, LAVAL conducted its first virtual exhibition with assistance of virtual technology glasses and 3D illustrations. They invited contributors from various locations to showcase their work by virtual means at the online exhibition.

Automotive industry, manufacturing sectors, and entertainment industry have rapidly adopted the virtual reality technology to fulfil their respective business requirements. The virtual simulator also assists by designing the merchandise remotely. The pandemic is anticipated to further enhance the need for distance learning and online lectures along with other learning activities.

Segmentation

By components, the market is divided into hardware, software development, and content. The hardware segment is predicted to dominate the global virtual reality market share during the forecast period. Based on industry, the market is separated into gaming, entertainment, automotive, retail, healthcare, education, aerospace & defence, and manufacturing. In terms of region, the market is categorized into North America, Europe, Asia Pacific, the Middle East and Africa, and Latin America.

Based on device type, the market is further classified into head mounted display (HMD), VR simulator, VR glasses and treadmills & haptic gloves. Among these, the head mounted display segment dominated the market share and held 29.2% of the total shares by type.

Drivers and Restraints

Surging Demand for Virtual Trainings in Various Sectors to Promote Overall Growth

Various industries such as automotive, education, healthcare, aerospace & defence, and many others are considerably investing in virtual reality-based training and educational platforms. For example, in the automobile industry, the newly joined employees are offered VR training at their work stations to prevent work accidents. For instance, in an article from the year 2015, Ford published a report stating the drop in accidents at work station due to installation of virtual reality technology for beginners. It offers practical training for new employees by using the virtual simulator, headsets, eye-glasses, and other equipment. The retail industry too has adopted virtual reality technologies and are implementing them to uphold consumer relations. For example, in 2018, Walmart Inc. trained 200 employees virtually for its Black Friday sale to assist their clients. Furthermore, the company also made a crucial investment in Oculus Go headsets and placed order of 17,000 headsets to provide support to their employees working in all the 4,700 stores across the U.S. This is predicted to boost the virtual reality market growth in the upcoming years.

Regional Insights

North America Set to Lead in the Market Backed by Constant Government Support

North America stood at USD 1.03 billion in 2019 and is projected to dominate the virtual reality market share in terms of revenue. The U.S. is anticipated to grow at a rapid-pace on account of the important business establishments of leading players in the nation. The U.S government is making heavy investments in the technology and that is stimulating the market growth. For example, the US Department of Agriculture (USDA) under its branch of Food Safety and Inspection Service (FSIS) executed virtual training conferences on community wellbeing veterinary.

Asia Pacific is estimated to showcase immense growth in the upcoming years, due to the growing advances in developing economies. The leading nations in this region such as China, it is predicted to achieve majority of the market share. It is one of the primary suppliers of head mounted products. Additionally, the 5G network and its rapid implementation is promoting growth in the virtual reality market in China.

Europe is likely to display remarkable growth in the foreseeable future. It has adopted the virtual technologies in the automobile industry earlier than any other region.

Competitive Landscape

Brand Acquisitions by Giant Companies to Boost the Market Growth

Prominent leaders in the market are on a constant lookout for efficient strategies to apply for investment purposes. One such effective strategy is to acquire another company or firm to enhance the parent company’s market value and further bolster self-growth in terms of monetary benefit. Also, such acquisitions motivates the company to innovate new products and present them to end-users and customers. For example, in May 2020, Apple completed the acquisition of NextVR, which is a California-based start-up. This acquisition will help the company to enter the virtual reality market with advanced and innovative product fragments.