Virtual Reality is anticipated as having a breakthrough year in 2016, and investors are already showing their interest on the stock market. Sales are tipped to reach $1 billion this year, and the main players in this rapidly developing industry are beginning to compete for customers.
Facebook, Sony and HTC are all aiming to become the breakthrough act of 2016, and all are developing their own versions of virtual reality gaming. They are betting on VR becoming the next generation of entertainment, and this is certainly looking likely with an estimated 2.5 million units thought to be sold this year, according to Deloitte.
Being at the forefront of this technology is, without doubt, a selling point for these companies, but why else are they becoming so heavily invested in it? Because consumer tech companies such as Sony will have to rely on new categories such as virtual reality for growth this year, as sales of products such as desktop computers and smartphones slow down.
The Consumer Technology Association expects virtual reality unit sales in the US to increase by 500% over the next year to 1.2 million. Growth in this area will help compensate for low or no growth in products such as smartphones, tablets and laptops. Tablet sales are predicted to fall, TV sales to be flat, and smartphone sales to only rise 4%. To compensate, tech companies are investing heavily in new areas – such as VR.
So how is this looking on the stock market? It’s clear that investors are becoming interested in what these companies have to offer. On the 6th January, Facebook stock was up 0.52% to $103.26 in afternoon trading after pre-orders for the virtual reality headset Oculus Rift began. Goldman Sachs estimated that Facebook’s sales will rise 38% in 2016.
However, others believe that Sony is in a stronger position that Facebook. The cost of entry for Oculus Rift includes buying a high power PC, something around the $1,000 mark. Meanwhile, Sony has sold around 36 million units of their $349 PlayStation 4 overall. Every one of these PS4s is capable of running the VR experience, concludes a Forbes article.
HTC is also a strong competitor. The company has had a disastrous time recently, with its smartphone business on the rocks. As recently as 2012, HTC was one of Android’s most popular handset manufacturers, with a market share of 10%. Today, that market share is just 1%. HTC have a lot to prove, and we’ll see how their device is received when their pre-orders open on 29th February.
Their VR offering, the Vive headset, is built in partnership with renowned gaming company Valve. It arguably offers a more immersive experience than Oculus Rift, with a 360 degree room scale experience rather than a fixed-point experience.
There is certainly a lot of potential growth forecasted for VR, and it looks set to play an important role in the future – not just in video games, but in other areas such as healthcare and teaching. However, as investment bank Piper Jaffray indicated, patience is key. “We liken the state of virtual and augmented reality today as similar to the state of mobile phones 15 years ago”.
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