Virtual reality (VR) and augmented reality (AR) business is set to become much more profitable over the course of the next four years, according to the latest market study conducted by the International Data Corporation (IDC) earlier this month. The Framingham, Massachusetts-based company predicts this emerging business will have a compound annual growth rate (CAGR) of 57.7 percent between 2016 and 2021 while simultaneously shipping 100 million units in the final year of that period, ten times more than it did in the first one. CAGR is a metric that's often used by investors to track and forecast a rate of return on their investment over any given period, meaning IDC is claiming that financial commitments to VR and AR products and services will pay off in a significantly quicker manner come 2021 compared to how they do now.
The industry is projected to grow in the medium term due to a variety of factors, one of which is the constantly increasing diversification of the market that now contains everything from high-end standalone headsets to smartphone-powered devices and a third, emerging category of affordable head-mounted displays (HMDs) that can operate on their own. The latter has been specifically promoted by Google and its Daydream platform in recent months and may end up filling the final hole in the market that will soon be able to cater to all types of tech enthusiasts regardless of their buying power, some industry watchers speculate. Even the high-end segment isn't completely one-dimensional and is characterized by noticeable differentiation between PC-reliant products like the HTC Vive and Oculus Rift and Sony's PlayStation VR headset designed to work with the PlayStation 4 console.
IDC is predicting that the industry will start growing even quicker by the end of 2018 once Microsoft and a number of other manufacturers introduce new, unique offerings like the HoloLens. With everyone from Facebook to Intel investing billions of dollars into this emerging segment, it seems that the VR and AR market is certainly set for another major adoption wave in the near future, though it remains to be seen how accurate does IDC's latest forecast ends up being. An update on the situation is expected to follow later this year.