VR/AR refers to the products and services involved in building an immersive experience integrating virtual reality and reality with the help of next-generation information and communication technologies such as near-eye display, perceptual interaction, rendering processing, network transmission, and content production.
The technologies we collectively refer to as XR are: Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR), which includes other hybridforms. The Fulfilment of the promise of XR appears to beed imminent with the ubiquity of smartphones and the convergence of exponential technologies such as AI and the Internet of Things (IoT). 5Gs arrival in waves around the world is providing needed speed and bandwidth.
There are three main types of VR Head-Mounted Displays (HMDs), including Tethered VR headsets (high-end VR headsets, PC VR, desktop VR), Standalone VR headsets (all-in-one HMDs), and Smartphone VR headsets.
AR/VR industry landscape
With the pandemic boosting every aspect of the domestic consumer economy, Global VR shipments reached 10.95 million units in 2021. According to IDC, global VR shipments will increase to 15.73 million units in 2022, achieving an important breakthrough in sales, and the Chinese market will account for 29.24%. Besides large shipments, a variety of VR products will be added in the same year. Sony and Apple will launch new products using Micro OLED displays with high resolution to achieve breakthroughs in user experience.
Also benefiting from the stay-at-home economy, the AR industry has seengrowth. Global shipmentsof AR headsetin 2021 were700,000 units, went up33%year on year.According to IDC, 1.06million unitsof AR headsetare expected to be shipped in 2022.
China accounts for more than half of the global VR/AR market. According to IDC, the global spending on VR/AR in 2020 was about USD 12.07 billion, and it is expected to grow to USD 72.8 billion by 2024, with a Compound Annual Growth Rate (CAGR) of 54%. In 2020, the Chinese market spent USD 6.481 billion in the VR/AR, accounting for about 54% of the global market share. It is estimated that by 2024, the scale of China's market spending will reach USD 26.48 billion, accounting for 36% of the global proportion, with a CAGR of 47.1%.
VR headset market structure has turned to an oligopoly
The industrial chain of AR/VR includes hardware, software, content generation and releasing, and applications and services.
1.The upstream industry chain mainly includes equipment components and headsets
manufacturing, related data collection, and processing platforms in other words, hardware and software.
2.The midstream industry chain contains content generation and releases,
which refers to the digital representation of virtual reality scenarios such as games, videos, live broadcasts, and social networking, including virtual reality content representation, content generation and production, content encoding, real-time interaction, content storage, and content publish.
3.The downstream refers to the use of AR/VR technology to provide applications and
services, including scene generation and overall solutions. The application scenarios cover education, healthcare, military, scientific research, manufacturing, tourism, and other fields.
Internationally, foreign brands dominate the share of VR market. In general, Oculus, the only first-tier VR headset maker, is the only giant thatdominates and leads the VR industry, especially since the launch of Quest 2 in October 2020, Oculus market share has jumped to 74% from 29%, and the rapid growth of global VR shipments is mainly driven by Quest 2.
Dr. Tristan Ruoli Dai, co-founder and CTO of Noitom which is a world leading motion capture company based in China, said that currently, meta is the only VR headset company that still focus on underlying technologies, and it has already put resources on underlying infrastructure of VR. It is the only firm that has a chance to make a revolution in VR industry, which will benefit other companies as well.
Apple has reportedlyshown off the AR/VR headset to investors, which is a good sign that the product is closer to launch than not. Also, references to a reality operating system have been uncovered in versions of Apples other software products, while a recenttrademark application appears to confirm realityOSas the softwares working name or branding, tech news portal Tomsguide.com reported.
As much as iOS is integral to the iPhone, realityOS (or perhaps, rOS) will be a major part of using Apples first mixed reality headset. In fact, it could be what truly separates Apples AR/VR headset from all the otherbest VR headsetson the market.
The hardware is, presumably, the Apple AR/VR headset thats expected to rival the likes of theOculus Quest 2, or even Metas upcomingProject Cambria.
For other well-known brands, DPVR (Chinese: VR) and Pico take a large portion of global VR market share together. Although Chinas VR market spending currently accounts for more than half of the world's share, there are few domestic VR headset brands, because most of the XR-related firms are mainly responsible for the supply of AR/VR components or work as original equipment manufacturers (OEMs).
Winning an iF World Design Award in 2019, DPVR, as a leading VR start-up, was recognized for having one of the best wireless VR headset designs in the world. As one of the TOP5 VR headset maker, DPVR accounted for 8% of global VR market share in Q4 2021. The revenue from overseas markets accounts for 40% of DPVRs 2021 total revenue, and is expected to increase to 60% by 2025 through expanding corporation with major local dealers, said by Niu Siyuan, the Strategic VP of DPVR.
With the entrance of top technology giants in China such as iQiyi, Xiaomi, and ByteDance, the internal competition of the industry is getting serious, which means that small and medium-sized VR makers are very likely to be knocked out of the market or even acquired in the face of competition from bigger, more established rivals.
However, DPVR, as an independent VR headset maker, has found its own strategy to keep competitive, meanwhile, it has established more strategic corporation with giants and proceeded more financing, Niu added.
From Nius view, the mid-term goal of DPVR is to go public with a successful initial public offering (IPO). Therefore, with its strength, DPVR has become a competitive firm in the Chinas VR market.
The thriving of VR/AR pulls up the demand of Micro LED and Micro OLED
Dai Ruoli of Noitom said that after acquired by ByteDance, Pico has been moving toward the first-tier of VR industry, which will transform the industry to a situation that is being dominated by Oculus with Pico chasing after.
The VR industry has become mature, with the existence of giants in the industry, other companies will not have too much market shares, just like the situation of VR/AR chip and OEM industry. But opportunities still exist in other sectors in VR industrial chain, Dai added.
The principle of VR display is to split the screen to the size of a mobile phone and display the images of the left and right eyes respectively through the left and right eye screens. The core competitive factors on VR display include field of view (FOV), pixel per degree (PPD), and persistence of vision.
Currently the only way to improve the resolution of VR display is to use the most appropriate screens for HMDs. Current Fast LCD screen imaging still requires a certain backlight response and data transmission time, so most makers are starting to use Micro LED and Micro OLED (OLEDs) as the screen of VR headset.
Micro LEDs are thinner in size, faster in speed, and higher in efficiency compared to above screens. Micro OLED is well-known as The best microdisplay technology for the near-eye display industry. At present, Micro LED and Micro OLED have not been mass-produced and applied due to low yield and high cost, but in the future, with the maturity of technology and cost reduction, they may become the main direction of VR screen development.
According to IDC, global VR shipments are expected to rise to 50 million units in 2025, then by rounding the penetration rate of Micro OLED to 50%, we can conclude that the sales of Micro OLED that will applied on VR headsets will be 25 million units. Therefore, based on the price of AMOLED per VR headset (ignore the fluctuation of price) -- USD 139 per unit, the market scale of Micro OLED for VR headset will be USD 3.475 billion globally.
Omdia, a research and advisory group, shows that the shipments of MicroLED displays will reach 5 million units by 2025, generating revenue of about USD 7 billion.Moreover, itsmarket scalewill exceed $11 billion by 2027.
The near-eye displays, such as AR and VR, have become the third largest driven factor of Micro LED, other than smart watches and Micro LED TV, at the same time. Demand is also continuing and growth happening at a high CAGR.
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Challenge and Opportunity in the Thriving AR and VR Industry - EqualOcean