Global Virtual Reality in Gaming Market,Top Key Players: SONY, Microsoft, Nintendo, Linden Labs, Electronic Arts, Facebook, Samsung Electronics, Google, HTC,

Will the launch of virtual reality hardware be impactful to the financial performance of the larger traditional video game content production companies (EA, etc.)?

Virtual reality is impacting the video game industry and will be impactful in a few years on the major video game production companies’ financial performance.

The question is how impactful and in what timeframe?

Today the impact is minor because as Chris Kramer, said in his answer to this question:

“VR is in the same place today that desktop 3D acceleration was in 1995: amazing technology that’s going to take over… someday. It’s going to take a number of years before VR is anything more than an experiment or dalliance for the big traditional publishers.”

but in a few years there will be a huge impact of VR on financial performance of the video game companies.

The launch of virtual reality hardware (Oculus Rift (product) Samsung Gear VR, PS VR, HTC Vive , Holo Lens and Google Cardboard and Many others) is impactful to the financial performance of the larger traditional video game companies. Because, video games will be the key driver of virtual reality hardware this year (2016), according to a new report from SuperData Research. Game developers will also have a global audience of 55.8 million virtual reality users and produce 38.9 million virtual reality devices this year, according to the report.

Consumers will spend $5.1 billion on virtual reality gaming hardware, accessories and software in 2016. That’s up from the $660 million spent in 2015, says the marketing leader. Meanwhile, the global market is expected to grow to $8.9 billion in 2017 and $12.3 billion in 2018.

A breakdown of this year’s $5.1 billion global market shows Europe in the lead with a $1.9 billion share and North America close behind with $1.6 billion. That’s followed by Asia with $1.1 billion, and the rest of the world accounting for $0.6 billion.

According to SuperData director of research Stephanie Llamas, light mobile virtual reality devices (like Google Cardboard) will drive the market at first with an audience of 27.1 million. Premium mobile virtual reality hardware, like Samsung Gear VR, will account for 2.5 million units sold in 2016. However, PC virtual reality devices (like Facebook’s Oculus Rift and the HTC Vive) will only sell 6.6 million headsets, with Sony’s PlayStation VR selling 1.9 million units.

Western markets with large PC and console user bases will ignite device sales for the two platforms, American gamers interested in VR look most forward to console and PC devices. One-third intend to purchase a Playstation VR and 13% look to buy the Oculus Rift.

But, as Sam Houston said in his answer,

Both the Vive and the Oculus Rift have relatively high price tags ($600-800) and require top of the line gaming computers. This means the install base for PC VR will be relatively modest until hardware prices come down and more compelling content comes out and entices buyers to make the jump.

The problem the ecosystem faces is that the consumers who are most interested in virtual reality do not have the spending power necessary to support high-end devices. PC and console virtual reality’s high barrier to entry will cause three out of four early adopters to opt for more affordable mobile devices.

It is the more mature demographics that have the disposable income, with 18-54 year olds saying they’re willing to spend around $280 for hardware, for USA and Europe. Likewise, emerging markets like China and India are volume-reliant since average user revenue is low.

So I think, “Until Virtual Reality platform holders like Facebook-Oculus, HTC, and Sony don’t initially heavily subsidize their hardware to build up significant market share. and Thus VR user base till then the impact will be very insignificant for gaming companies.

SuperData Research forecasts investments in the virtual reality and augmented reality market will grow to $3 billion this year (2016) and nearly $4 billion by 2018. Total investments in virtual and augmented reality reached a combined $6.1B between 2012 and 2015—triggering the current market momentum and increasing industry expectations. Investment in this space grew from $15 million in 2012 to $1.9 billion in 2015. Game development accounted for 60% of this investment, while 360-degree camera technology was the target of 30% of investments.

There are some games that are being developed by major game dev players, but until we have the hardware install base which is big enough to support expected sales of VR games, the larger traditional video game content production companies (EA, etc.) wont go for VR games. Thus not much financial gains for them. Well for all this to happens i will tll you wait till 3 to 5 years timespan by which I assume these HMD’s and systems will be affordable and we’ll have huge VR use-base and then there will be lots of Vr games content from big players like EA, and RackStar, Ubisoft, etc Till then some brave indie guys can swap the available market and get some revenue and can occupy the current use-base for VR content.

Update: Added link to SuperData Research virtual reality market brief report. Most of the numerical figures in this answer I have taken from: Virtual Reality Market Brief—SuperData Research

Thanks for A2A Balaraman Lakshmanan (பலராமன் இலட்சுமணன்)