Michael Inouye, principal analyst at ABI Research (www.abiresearch.com) says Virtual Reality (VR) creates more revenues today than Augmented Reality (AR), but it relies heavily on hardware sales, which account for over 60% of total revenue compared to roughly 30-40% in AR.

AR has tremendous viral potential because it leverages mobile devices already in most end users’ pockets, with service availability in the home, public spaces, and workplaces, says Inouye. This creates nearer term synergies with mobile device manufacturers (such as Apple) and social networks (such as Facebook), he adds. By 2019 AR is forecast to surpass VR in total revenue opportunity, reflecting VR’s longer-term development cycle as content developers, workplaces, and consumers incrementally embrace future iterations of VR hardware and optimize new use cases.   

ABI Research estimates that virtual reality (VR) device shipments will hit over 110 million units by 2021, generating revenues of $64 billion throughout the value chain.  While mobile device-reliant VR shipments currently outshine other VR device types, accounting for 93% last year, this figure is expected to drop to 60% in 2021 according to ABI Research.

ABI Research predicts that standalone VR devices will see huge growth through 2021, with a 405% CAGR [compound annual growth rate] expected compared to a 42% CAGR for mobile VR (CAGR from 2016 to 2021).  
Non-gaming software and content, VR advertising, and VR-related video revenue will together hold a significant portion of the market, 32% of the total VR value chain in 2021 according to the research group’s latest figures. ABI Research anticipates strong growth in the machine/embedded vision market for mobile, AR, and VR devices with shipments forecast to grow from just over one million units in 2016 to more than 460 million by 2021.

AR and MR markets will together exceed a total market revenue of $95 billion by 2021, according to the research group. ABI Research predicts AR and VR head-worn device shipments to reach 37 million units by 2018.