Smartphone to drive $8.2b VR games market by 2023

17 Jan 2019

New research forecasts that mobile VR will account for over 55% of total VR games revenues by 2023. The report by Juniper Research forecasts revenues from VR-specific games to reach $8.2 billion by 2023, rising from an expected $1.2 billion in 2019.

Smartphone-based VR headsets accounted for 73.6% of total device shipments in 2018, dwarfing all other including standalone (10.1%), console (8.3%) and PC (8.0%), the report estimates.

It argued that the development of smartphone VR content is essential to increase consumer confidence in VR across all platforms, following a disappointing year of hardware sales in 2018. It also forecasts that over 100 million mobile VR devices, including smartphone and standalone headsets, will access games globally by 2023; rising from 52 million devices in 2019.

The researcher argued that low-cost mobile VR content is needed to initially engage users and encourage them to other VR platforms.

Mobile VR to rule by 2023

Research author Sam Barker explained: “Revenues from VR-specific mobile games will exceed $4.6 billion by 2023, however average revenue per mobile VR games user will be the lowest of all VR platforms. In response, app developers must mitigate high app abandonment rates by providing engaging and continually-updated content”.

Juniper forecasts that more than 50% of mobile VR games accessed in 2019 will not be monetized due to the difficulty of implementing advertising in VR content without impeding the user experience. In response, app developers must leverage in-app purchases to recover this shortfall in potential advertising revenue.

Content trumps hardware by 2023

The Juniper whitepaper: The Roadmap for Future VR Success says revenue from hardware sales will generate the majority of revenues throughout the forecast period. However, the lack of content creation in the market will continue to plague the industry; if this trend continues then the value proposition of a headset will only diminish.

The research reasoned that sustaining the growth of VR hardware sales will only be achieved by creating a profitable VR content market. Juniper has identified 2023 as the year in which VR content revenues, including games, multimedia, gambling and others, will surpass hardware revenues for the first time.

It recommended that VR headset vendors now focus on increasing their VR content libraries through app store partnerships to capitalize on the anticipated growth of VR users.

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