“VR will be big, AR will be bigger and take longer.” What sounded revolutionary 2 years ago has become accepted wisdom. But now we’ve got 12 months of real world performance and major tech players’ strategies emerging. And that’s changed our views on VR/AR growth. A lot. Our new base case is that Mobile AR could become the primary driver of a $108 billion VR/AR market by 2021 (underperform $94 billion, outperform $122 billion) with AR taking the lion’s share of $83 billion and VR $25 billion.
The absolute performance of VR/AR in 2016 was not as important as how it changed the trajectory of the market. The first full year of VR/AR delivered $2.7 billion VR revenue, which was complemented by Pokémon Go helping AR to $1.2 billion revenue, for a total $3.9 billion VR/AR market in 2016. But beyond the numbers, the last 12 months have fundamentally reshaped how the market could grow going forward.
Let's look at what's changed in the last year, and what the future holds.
Tim Merel is Founder/CEO of VR/AR M&A adviser Digi-Capital and VR/AR visual messaging platform Eyetouch Reality. He is a software engineer, investment banker and lawyer, writes a monthly VR/AR column for TechCrunch, and is regularly featured discussing VR/AR by Bloomberg, CNBC, Wall Street Journal, The Economist, The Financial Times, USA Today and more.