Virtual reality makes grand entrance into Australian market

Telsyte’s inaugural virtual reality and augmented reality (VR & AR) market study predicts unmet demand for devices in 2016

SYDNEY, AUSTRALIA – Demand from Australian consumers will outweigh supply in the VR headset market in 2016, according to a new study from emerging technology analyst firm Telsyte.

The Telsyte Australian VR & AR Market Study 2016 predicts 110,000 VR headset units will be sold in 2016 with sales rapidly growing to more than 500,000 units per annum by 2020.

“Strong market growth will come in 2017 and 2018 as manufacturers ramp up production and more ‘must have’ use cases emerge,” Managing Director of Telsyte, Foad Fadaghi, says.

Based on ongoing research conducted for the computer games industry, Telsyte predicts the bulk of the initial VR device demand will be driven by video gamers. Today, one in two households have a game console – of which around a third have a current generation model, such as the Sony PlayStation 4.

“The strongest pent-up demand is coming from gamers, who clearly see VR as the next frontier in immersive entertainment,” Fadaghi says.

For example, the popular Microsoft-owned Minecraft game is expected to be a strong catalyst for adoption, with support announced for Oculus and the game demonstrated on HoloLens.

A VR headset is a head-mounted wearable device that displays a computer-generated 3D virtual world. AR headsets (like Microsoft’s HoloLens) are similar; however, they interact with the real world with visual overlays. Telsyte believes both approaches will grow in popularity and bring different applications for entertainment and work productivity.

Telsyte segments VR headsets into four categories: Computer, Mobile, Console and Standalone. Telsyte forecasts the largest share by value in the Australian market will be VR for consoles for at least the next two years. Beyond 2017, the availability of lower priced products, and more advanced mobile and PC-based options, will help lift the share of non-console based VR.

In Australia, the VR and AR market will spawn an ecosystem of developers that will be looking to help businesses take advantage of this new interface, much like Web and mobile app developers have previously.

“While some will take a leading position, it is more likely that a wait-and-see approach will be adopted by most organisations to substantiate the non-gamer user base, and for the current range of products to mature”, Fadaghi says.

Other segments to benefit include the market for VR cameras and gaming peripherals (e.g. controllers and sensors), VR product retailers with dedicated demonstration rooms, and online streaming entertainment organisations that start serving VR content on subscription.

“As with smartphone penetration, it could take up to a decade for VR to reach mainstream levels, but there is clearly pent-up demand from early adopters,” Fadaghi says.

Telsyte’s survey of a representative sample of 1,075 Australian consumers aged 16 and over shows half of us are already aware of VR technology, with around 20 per cent indicating a desire to purchase a VR capable device. The most popular devices consumers are interested in buying are the Samsung Galaxy VR, Sony PlayStation VR, Google Cardboard and Facebook’s Oculus Rift.

Potential buyers cited games, movies, sports entertainment and education as the main use cases; however, Telsyte has identified many additional applications such as social networking and live streaming; health and fitness; TV and News broadcasting; and use in business applications.

Despite this groundswell of interest, VR and AR still have headwinds to overcome to gain wider consumer acceptance. Only one in five people are willing to spend more than $400 for a VR headset, substantially lower than the price of most first-generation products coming to market.

Furthermore, many computers and smartphones will require upgrades to be able to use VR and AR add-ons. There are also social, health and safety concerns surrounding the prolonged use of VR devices.

Telsyte research on the willingness to pay for VR content shows that high-end games, business applications and education applications are expected to generate the highest average software unit prices.

Telsyte tested numerous VR units and conducted interviews with leading VR and AR manufacturers, developers and publishers, and predicts VR and AR technology is on the cusp of more widespread adoption.

However, Telsyte does not believe VR, as it stands, will replace existing technologies such as smartphones, computers or tablets. Indeed, many of the VR devices are designed as accessories or companions to other devices.

“Telsyte predicts VR and AR will help revive the more mature smartphone and high-end PC markets,” Fadaghi says.

For further information on the report or media inquiries contact:

Foad Fadaghi
Managing Director
Tel: +61 2 9235 5851
Twitter: @foadfadaghi

For sales and consulting enquiries please contact Foad Fadaghi on +612 9235 5851 (

About Telsyte’s VR & AR Market Study 2016

Telsyte’s Australian VR & AR Market Study 2016 is a comprehensive 55 page report which provides subscribers with:

  • Market sizing estimates, platform and vendor market shares and forecasts

  • End user trends across devices

  • Purchase intentions and use cases

  • Device profiles and ratings

  • Forecasts, and audience estimates usable by contentand application developers

In preparing this study, Telsyte used:

  • Interviews conducted with executives from VR/AR vendors, retailers, software developers, game publishers and channel partners.

  • An online survey of a representative sample of Australians 16+ years of age conducted with 1,075 respondents in October 2015.

  • Financial reports released by manufacturers, publishers and service providers.

  • On-going monitoring of local and global market and vendor trends.

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