“We’ve been using computers to simulate worlds for years now, and VR is the next big jump in that evolution. It has the potential to revolutionize how we work, play, and connect with each other.” – John Carmack, Chief Technology Officer of Oculus VR

Virtual Reality (VR) is a computer-generated simulation of a 3D environment that allows the user to experience and interact with the virtual world through sensory inputs.

VR technology typically makes use of specialized hardware and software to create an immersive experience for the user. This can include wearing a VR headset, using hand-tracking controllers, and interacting with a virtual environment through movements, gestures, and speech.

With the growing proliferation of VR technology, businesses must now pay attention to how they can integrate it into their business models to stay competitive.

And with the constant evolution of technology, VR is no longer a gimmick but a transformative force that is rapidly reshaping a growing number of markets.

VR technology has the potential to create new types of experiences for gaming, entertainment, healthcare, education, and more. This can include virtual showrooms, learning experiences, and training.

The popular VR game Beat Saber has already sold over 3 million copies to date.

In the education sector, VR is being used to create virtual field trips for students, such as the virtual field trip to the International Space Station, which has been used by over a million students.

Looking at how quickly technology has developed throughout the 20^th Century, it’s not too far off to theorize the next phase of technology evolution will be human-machine convergence. This concept refers to the integration of technology into human beings to improve their cognitive and physical abilities.

To illustrate, Elon Musk’s Neuralink is developing brain-computer interfaces that will allow humans to control digital devices with their minds. The technology has the potential to revolutionize the way humans interact with technology by eliminating the need for keyboards, mice, or screens.

As Neuralink progresses, its advancements could synergize with the growing popularity of VR, paving the way for unprecedented levels of immersion and interaction.

Now is the opportune time for businesses to embrace VR, unlocking its vast potential for immersive customer experiences.

The next step in this journey is to ensure the necessary infrastructure, talent, and collaboration are in place to drive the successful adoption of VR and the broader extended reality (XR) ecosystem.

This entails investing in cutting-edge hardware and software, cultivating a skilled workforce proficient in VR development and design, and fostering partnerships across industries to harness the full potential of immersive technologies.

As VR continues to advance and evolve, the possibilities for its application will only continue to grow and expand, and businesses that invest in VR solutions now will be able to gain a competitive edge in solidifying their position in an increasingly digital and immersive marketplace.

Factors For Evaluating Virtual Reality Investment Opportunities

Top 10 Players In The VR Market:

1. Oculus VR (now owned by Facebook)
2. Sony PlayStation
3. HTC
4. HTC Vive
5. Google Daydream
6. Samsung Gear VR
7. Microsoft Hololens
8. Valve Corporation
9. MagicLeap
10. LG

Top 10 Best Selling VR Headsets:

1. Oculus Quest 2 – ~ 17-18 million
2. Google Cardboard – ~ 15 million
3. Samsung Gear VR – 7.8 million
4. PlayStation VR – 5 million
5. Google Daydream – 2.35 million
6. Oculus Go – 2 million
7. Oculus Quest 1 – ~ 2 million
8. Oculus Rift – 1.5 million
9. Nintendo Labo – 1.42 million
10. HTC – 1.3 million

VR Industry Growth Forecast For The Next 5 Years

The global virtual reality (VR) market is projected to grow from USD 16.67 billion in 2022 to USD 227.34 billion by 2029, exhibiting a CAGR of 45.2% during the forecast period.

In 2024, the VR market is estimated to generate US $38.6bn in revenue.

According to a study conducted by market research firm IDC, 2024 is expected to be a year of significant recovery for the AR/VR headset market, with shipments projected to grow by 46.4%.

The augmented reality (AR) and virtual reality (VR) market is expected to continue to grow at a rapid pace, with a forecast CAGR of 97.2% for AR and 79.8% for VR from 2020 to 2024.

This growth is anticipated to be driven by various factors, including the ongoing development of more advanced hardware technologies, rising consumer demand for immersive experiences, and the increasing adoption of AR/VR in various industries.

Virtual reality headsets are expected to decrease in cost, with a predicted price of $200 by 2025, down from $400 in 2022, driving increased adoption.

Other important trends and developments in the VR industry include the increasing use of VR for training and simulation, the development of more immersive and realistic VR experiences, and the integration of VR with other emerging technologies such as augmented reality (AR), artificial intelligence (AI), and the Internet of Things (IoT).

Additionally, the growing popularity of VR-powered social networking platforms and the increasing use of VR for wellness and mental health applications are expected to contribute to the market growth.

This includes Facebook’s Oculus, with the Quest series headsets selling nearly 20 million to date.

Commercial Sector Adoption:

The commercial segment accounted for a significant revenue share in 2022 due to the increasing use of VR headsets and VR experience rooms in sectors like real estate, vehicle showrooms, and retail stores.

Businesses are leveraging VR technology for virtual events, online business activities, architecture, planning, and product launches, contributing to market expansion.

For instance, real estate firms are using VR technology to give customers a virtual tour of properties, while car companies are using VR headsets to allow prospective customers to experience their vehicles in a virtual showroom.

The demand for personalized experiences is on the rise, led by customer’s use of social media to browse, buy, and review products and services. Companies adding VR experiences across the sales funnel are experiencing enhanced customer engagement, improved product understanding, and ultimately, increased conversion rates.

For example, Meta’s Oculus Quest headset is being used to create a VR storefront where customers can explore virtual showrooms and make purchases using VR. 

According to a survey from Shopify, brands that incorporate augmented reality (AR) into their advertising campaigns are seeing a significant increase in conversion rates, with some reporting as high as 94%.

What are the factors driving the growth of the virtual reality market?

• VR technology is constantly evolving, with new products, features, and applications being developed. The Oculus Quest 2, which was released in 2020, is a VR headset that does not require a PC or smartphone to work. It features advanced tracking technology and a high-resolution display, making it one of the most advanced and immersive VR headsets on the market. This technology has created new market opportunities by allowing more people to experience VR gaming in a way that was not previously possible.

• Businesses are increasingly adopting VR technology, creating new market opportunities beyond gaming and entertainment. For example, medical students can use VR technology to practice and perfect surgical techniques, while pilots can use VR technology to train for emergency situations.

• The increasing adoption of VR technologies in consumer electronics, including handheld devices with VR support, is driving the usage of VR technologies. For example, smartphones like the Samsung Galaxy S8 and Google Pixel 2 are now equipped with sensors and other hardware features that enable them to support VR experiences like the Oculus Gear VR.

Benefits Of VR Development For Businesses

VR offers companies an opportunity to create personalized and immersive experiences for their customers, bringing them closer to the products and services they offer.

By providing customers with an in-depth understanding of a product through VR technology, organizations can engage with customers on a more meaningful and intimate level, ensuring they feel a deeper connection to the brand.

Additionally, VR can be used to create customized marketing campaigns for each individual customer, ensuring they receive targeted and tailored messaging that speaks directly to their needs and interests.

Here are some of the ways early VR adoption can make businesses more competitive:

1. Utilize the try-before-you-buy concept: A furniture store could use VR to allow customers to place virtual versions of their furniture in their living room, allowing them to experiment with different arrangements before making a purchase.

2. Introduce established products to new audiences: A fashion brand could use VR to showcase its latest clothing collection to customers who may not have access to a brick-and-mortar store.

3. Expand education and training programs: Corporates sales teams can use VR to create simulated environments that test and train employees to follow special guidelines when dealing with complex real-life scenarios.

4. Challenge traditional sales strategies: Real estate agents can virtually tour properties before physically visiting them and allow prospective buyers to get a more accurate sense of what a space is like before making a purchase.

5. Streamline Product Design and Development: Engineers can create accurate digital models of their products and test them in a simulated environment before creating physical prototypes.

6. Cost Reduction: Remote collaborations, virtual tours, and inspections without the need for extensive travel. This can include virtual work environments that fuse the physical and digital where remote employees can meet in the metaverse.

Should Businesses Wait To Invest In Virtual Reality Until More People Wear Headsets?

The virtual reality market, valued at $19.44 billion in 2022 and projected to skyrocket to a staggering $165.91 billion by 2030, stands as a testament to the potential power of immersive technology.

However, some businesses may be hesitant to invest in VR, waiting for widespread adoption of headsets among consumers. Yet, this cautious approach overlooks the current opportunities VR presents.

As the market continues its exponential growth trajectory, delaying investment until headset adoption reaches a certain threshold could mean missing out on a significant competitive edge and potential market share.

As of 2024, the live virtual entertainment and gaming sectors are driving market growth.

Although gaming may be a thriving sector, it’s important to look at these estimates as measures of early adoption, with the potential for other businesses to use VR gamification in various applications such as product development, healthcare training, sales, and social media marketing.

To better understand, here are some examples of how virtual reality can be used without a headset:

• Augmented reality: Augmented reality (AR) involves enhancing the real world with computer-generated information, images, or animation. This technology can be used with a smartphone or tablet, allowing users to see 3D models of computer-generated realities on their screen. For example,  IKEA has developed an augmented reality application that allows users to visualize how furniture would look in their home before buying it.

• Virtual reality monitors: Virtual reality monitors are screens that create a virtual, 360-degree viewing experience without requiring a headset. Virtual reality monitors can enhance the experience of training or education venues by providing a larger screen and more immersive environment. The medical device company Siemens Healthineers has developed a virtual reality monitor that provides a three-dimensional view for use in image guidance during surgery.

• 360-degree videos: 360-degree videos can be viewed on a smartphone or tablet without a headset and can create an immersive, virtual experience. 360-degree videos are often used in virtual reality or augmented reality experiences, allowing a viewer to feel like they are in the middle of the action. YouTube hosts many of these videos, a popular one being of Space X’s Tour of Dragon 2, taking the viewer on a tour of the spaceship designed to carry astronauts to and from the International Space Station.

• Virtual reality photography: Virtual reality photography involves taking photos in a 360-degree format that can be viewed on a smartphone or tablet without a headset. This can be used for real estate listings and travel photography. Matterport, a technology company that provides 3D modeling, has become popular in the real estate industry for its ability to give potential buyers and sellers a more realistic sense of what a space is like, without having to physically go and see it.

Examples Of Successful VR Implementations In Businesses

• BuildChange – A non-profit organization that has successfully implemented virtual reality (VR) for the construction industry in developing countries. VR technology was used to create an interactive platform that allows construction workers and engineers to view 3D models of buildings, which can be rotated and manipulated in real-time. This technology has increased the efficiency, quality, and cost-effectiveness of construction projects throughout diverse communities that traditionally lack sophisticated tools.

• Shopify’s Thread Studio – A virtual reality platform developed by Shopify, a popular ecommerce platform. It allows vendors to create interactive 3D product previews for their Shopify-powered online stores, giving a realistic shopping experience to customers. Everlane, a popular clothing brand, used the platform and saw an increase in conversion rates. Everlane’s customers enjoyed seeing brand information such as the factory where it was made, the materials used, and the true cost of production.

Future Outlook For Virtual Reality Adoption – Is It Worth It?

“VR is not the next smartphone, even if some in the industry disagree with me. The experience should be minutes not hours, but that doesn’t mean that experience can’t be special. VR is a transportation machine. It can create or recreate one of a kind experiences. A little bit of VR goes a long way, and even a short experience can have a profound impact.” Jeremy Bailenson – Thomas More Storke Professor, Department of Communication, Stanford University

Bailenson’s perspective helps us better evaluate the practical applications of virtual reality. The adoption curve for VR is still in the early stages of mainstream acceptance, making it important for businesses to approach VR investment with a nuanced understanding of its unique capabilities and limitations.

Although business leaders should impart due diligence when researching how VR can benefit their operations, extended reality (XR) and VR are set to transform how customers experience a brand.

In the next 5 to 10 years, extended reality (XR) – which includes virtual reality (VR), mixed reality (MR), and augmented reality (AR) – will be one of the most important technology trends for businesses to integrate into their enterprise operations.

One of the enabling factors for XR technology is super-fast networking, which refers to the next generation of high-speed internet connectivity that allows for smooth and seamless interactions between humans and digital content.

In the context of XR technology, super-fast networking will enable experiences that are immersive, personalized, and seamless by allowing for real-time streaming of high-quality content from the cloud to users’ devices.

XR technology will allow users to experience VR as a cloud service, where high-quality content is streamed directly to the user’s headset or other wearable device. This will allow for greater flexibility and mobility for users, as they will not be limited by geography or hardware constraints.

For example, a main driver of the coming VR boom will be cloud-based gaming platforms, such as Nvidia GeForce Now. With cloud-based VR gaming, users can experience high-quality VR content streamed directly to their headsets, even on low-end hardware, enabling a more accessible and cost-effective VR experience.

Artificial Intelligence (AI) will be an additional factor accelerating the pace of development and business potential of XR and VR. The integration of AI in XR technology can create more intuitive and seamless user interactions, making the virtual world more accessible and user-friendly. One case is AI virtual assistants, like Siri, that can help the user complete designated tasks while in a VR game or platform.

Another case can be for businesses selling products online and on social media. Imagine a clothing retailer utilizing VR technology to create virtual fitting rooms. AI can suggest clothing items based on the user’s style preferences, body measurements, and previous purchases. AI can also provide real-time feedback on fit, fabric, and styling options, simulating a real-life shopping experience without leaving one’s home.

For businesses that are more cautious about XR/VR adoption, here is what needs to take place in order for it to become mainstream:

• Reduction in size and weight of VR headsets and hardware. The hardware will need to be seamless and practical.

• Broader adoption of 5G technology for quicker streaming of cloud-based VR games and platforms. It will also enable users to stream VR content directly to their smartphones or standalone VR headsets without the need for a PC or console.

• Marketing that leverages influencers who provide evidence of an in-demand virtual community who use VR to find a range of products like vacations, social events, or how-to sessions.

• High-quality content and expansion of VR content libraries with a focus on diverse and high-quality experiences across various genres and industries.

• Public perception needs to change from VR being a niche to being an everyday tool, like how we use voice assistants. Price plays a role.

Becoming a pioneer in VR investment holds immense promise for future success.

The key may be to start small, such as experimenting with VR content on social media platforms, a low-risk avenue for businesses to gauge the effectiveness of VR for their specific needs.

In light of the ongoing innovation in XR, early adopters of XR/VR can establish strong brand differentiation, foster customer loyalty, and drive innovation, ultimately reshaping entire markets and redefining the way businesses interact with their stakeholders.