How Many VR Headsets Could Realistically Sell This Year?

With the upcoming launches of the Oculus Rift, HTC Vive, and PlayStation VR, 2016 marks the most significant year for virtual reality to date. But even with those head-mounted displays joining existing options like Samsung's Gear VR, this isn't expected to be a massive year for virtual reality headset sales, at least compared with where the market is forecasted to go in the years ahead.

There are several reasons for that. The first and most obvious is price: These things aren't cheap, with the Rift going for $599 and the Vive $799. From there, there's also the other PC hardware these devices require—hardware that isn't cheap and that most people don't own. Going from zero to playing on an Oculus Rift will cost around $1500 at least.

How many virtual reality headsets could be sold this year, though? Most projections about virtual reality sales talk in terms of what's expected to happen over the remainder of the decade; the expectation is for major growth as prices (of headsets and the required PC components) decline and more virtual reality-enabled content becomes available. For instance, research firm Tractica believes revenue from virtual reality hardware and content will reach almost $22 billion worldwide in 2020, compared with only $110 million in 2014.

Trying to determine a realistic sales figure for this year first requires us to get a sense of how many potential buyers are out there. We can't say how many people have the money or inclination to drop hundreds of dollars on a virtual reality headset, but we do know how many PlayStation 4s are on the market, and we have some idea of how many people have computers that meet the minimum specs for Rift or Vive.

Neil Schneider, executive director of the Immersive Technology Alliance, recently laid out his expectations for virtual reality headset sales in the coming year in a blog post on Gamasutra. The ITA is a non-profit group that advocates for technologies like virtual and augmented reality, and whose members include companies such as AMD, Electronic Arts, and Crytek. We reached out to Schneider, who previously served as Manager of Immersive Technology Services at the Universe of Ontario Institute of Technology, to get a better sense of what the next year holds for sales of the major headsets on the market.

"In the PC space, VR HMD sales are closely bound to graphics cards (GPU) at the level of an AMD 290 [about $300] series or Nvidia 970 [about $330] series GPU or better because HTC and Oculus consider this part of their minimum recommended spec," says Schneider. "There are other hardware considerations, but I chose the GPU because with data provided by Jon Peddie Research, we kind of know how many of the right graphics cards are out there and will be out there in 2016."

Gaming in virtual reality demands much more of your hardware than the typical gaming session on a TV or monitor. Surveys conducted through Steam reveal 1920x1080 is by far the most common resolution among respondents. Vive and Rift each have two 1200x1080 displays at a refresh rate of 90 frames per second, which is much more demanding than the 60 frames per second that many players shoot for. Virtual reality is a very GPU-intensive task, prompting graphics card maker Nvidia (in an interview with Bloomberg in December) to estimate only 13 million capable PCs currently exist.

Schneider is even less optimistic, noting the number of capable GPUs that have been sold isn't indicative of how many virtual reality-ready PCs exist. These GPUs aren't necessarily paired with a capable processor or the requisite number of USB ports (Oculus, for example, recommends four, and requires at least two are USB 3.0). There are also some users who buy multiple graphics cards for the same computer.

"Factoring in that some computers have more than one GPU and that not all PC hardware is born equal, I estimate that there are about three million PCs powerful enough for an HMD like the Oculus Rift or HTC Vive," Schneider says.

"Within 12 months from launch, I'm estimating 300,000 to 500,000 units sold including all PC HMD brands. Consumer purchases would be in the 300,000 range, and everything above that would be units purchased or given away for content creation and marketing. They may end up selling more than this. I'm just estimating based on the data I have."

Schneider thinks PlayStation VR—which Sony hasn't put a price on yet, but is expected to launch in the $300-$500 range—will fare even better during its first year and "could sell to as much as 10 percent of the PS4 audience within 12 months of launch." With the PS4's install base reaching 35.9 million as of early January, that could mean as many as 3.6 million headsets sold in a year. Schneider says he's "confident [Sony] will do very well," but notes that "early sales don't really matter though because their platform is so consistent, it will be sequential year-over-year growth."

There's also the mobile side of the equation. Gear VR, which launched in November 2015, is far cheaper than the competition on PC, being priced at only $100. More importantly, the potential market is much larger.

"When I originally calculated mobile sales numbers, I figured that 20 percent of Samsung's annual sales of 300 million phones would be Gear VR-compatible," Schneider says. "Of these 60 million phones, if they achieved a five percent attach rate within 12 months of launch, they would sell about three million Gear VR units."

Samsung complicated matters recently when it announced plans to give away a Gear VR headset to anyone who pre-purchases its upcoming Galaxy S7 or Galaxy S7 Edge. We don't yet know how many will be distributed in this manner, but Schneider says, "If they seed the market by bundling certain phones with the Gear VR at launch or during the holiday season, I could see this figure bump up to nine to 12 million units within 12 months from launch of the Gear VR."

Tractica, a firm that specializes in technology market research, also shared its predictions for the year with Motherboard. It forecasts a total of 15.9 million virtual reality headsets to be shipped in 2016. That breaks down to five million PC headsets, 1.7 million for PS4, and 9.2 million for mobile.

Neither Oculus nor HTC has offered any hard sales figures since pre-orders began for their respective headsets in January and February, respectively. HTC did reveal that it sold more than 15,000 Vives in its first 10 minutes of availability, but that window is far too limited to be helpful. When it went on sale in January, the allotment of Rifts available to ship in March sold out within 15 minutes. This trend has continued, with the ship date for new orders being pushed back again and again; one pre-ordered today won't ship until July. Without knowing how many units were available in each wave, though, this also leaves us with little hard data to go on.

There will be developments that affect virtual reality headset sales all throughout the year. The Gear VR giveaway, for one, could be a boon for sales of the device.

"The bundling of Gear VR should have a stimulating effect on mobile VR headset sales in the near term, and should in turn provide an incentive for consumers to choose the Galaxy S7 and Galaxy S7 Edge devices as opposed to competing smartphone models," says Tractica managing director Clint Wheelock. "We have not specifically tried to quantify the impact of this campaign, but I would not be surprised to see it drive sales of a couple hundred thousand Gear VR headsets."

There's also the possibility that headset prices could go down before the end of the year.

"In general, we are expecting HMD prices to drop by approximately 15 percent annually over the next several years," Wheelock says. "I think it is fairly likely that we will see price reductions by vendors such as HTC or Oculus as we get toward the end of 2016, in an effort to stimulate holiday purchases."

Schneider says he believes discounts around the holidays are "possible, though I think it's more likely that we will see increasingly better savings in bundles where the computer has been discounted and the unified price is significantly less."

Regardless, he's of the belief that the prices of virtual reality headsets are not their main problem—it's the other requirements that pose a hurdle.

"The HMD price is not the issue," he says. "I wrote an analysis in December that the VR HMD makers could have billed $1,000 a unit and had the same result. The issue is the cost of processing power and the limited availability of processing power. The Oculus Rift and HTC Vive are enthusiast-level products and they are priced as such—their pricing shouldn't have been surprising to anyone."

Sony still has the potential to surprise the public—for good or bad—with its announcement of PlayStation VR's pricing. Oculus and HTC have both shown their hands here. Much like when it had the advantage of revealing the PS4's price after Microsoft announced the Xbox One's in 2013, Sony can again ensure its device launches with the most competitive price possible. The company has shied away from offering any indication of how much it will charge, though Sony Computer Entertainment CEO Andrew House did tell Bloomberg in September 2015 that its headset would be priced like "a new gaming platform."

Gamers are used to measuring the success of gaming platforms in tens of millions of units sold. Sony sold over 13.5 million PS4s in its first year on the market, while Microsoft shipped about 10 million Xbox Ones to retailers in the same period. Those are standalone devices that were priced in the $400-$500 range for most of that time

Schneider's projections, by comparison, see anywhere from 7 million to 16 million headsets sold during their first 12 months on the market, while Tractica's forecast calls for just under 16 million to ship before the end of the year. In both cases, the bulk of those sales are on mobile devices.

Whatever the specific price of PlayStation VR ends up being, prepare for a year where just a few million units sold could represent a real success story for Oculus, HTC, or Sony.