TrendForce predicts that Virtual Reality (VR) hardware and software will be a $70 billion market in 2020
VR hardware will account for $20 billion in 2020
VR software will account for $50 billion in 2020
TrendForce predicts the VR market in 2016 will be $6.7 billion
IEShepra Opinion: With the recent announcement of the Oculus Rift at $599, it seems like Facebook may be giving Sony an unintended lead in VR (See Microsoft giving the lead to PS4 because of their always-on technology) by not realizing this type of hardware would greatly benefit from a razor blade model. The software is where the real money is and the distribution platform for that software could results in Billions of dollars of annual revenue.
Look at Steam and their $3.5 Billion in retail sales for 2015 and remember their 30% revenue share – that’s $1.05 Billion to Steam for having 15% of the PC game distribution market.
My own assumptions are that at $299, Oculus would dominate the market and increase the adoption speed by an order of magnitude. The revenue potential is in the Billions if they have aspirations of becoming the Steam of VR.
Now, considering that 15% (equivalent to Steam’s percentage of the PC game market) is a reasonable target for Oculus within 5 years, Facebook has a potential distribution platform worth $7.5 Billion in revenue in 2020..
My assessment is that Facebook has bought into something pretty huge. Disclaimer: I do not own FB stock.
A lower price point accelerates the model, but FB should be fine either way, as long as they own the distribution channel.
I get asked a lot about what the best format is for a company presentation in the games industry. So, after doing a few hundred of these over the past few years, I’ve pulled together a template that gives studios a recommended outline and order for this.
As part of this, there’s also a template for pitching a game. If you just need a company deck (not for investors – you need financials), just leave off the game pitch section.
India is clearly the next untapped market for games. I’ve heard a lot of interesting figures lately, but the market is dominated in the mobile space by Android at around 73 percent of the addressable market. I’ve also heard that India is also more accustomed to subscription based games and micro-transactions are something they are getting more comfortable with, so expect micro-transaction models to grow. Other interesting data includes:
The market for Digital Games in India is $853.9 Million in 2015
Mobile is 49 percent of the market, or around $416 Million today
Mobile is growing at a 64 percent growth rate year-over-year
By 2015, the mobile market for games in India is expected to be around $832 Million
There are approximately 185 Million mobile gamers in India in 2015
ARPPU in India for mobile games in October 2015 was $13.07 with a 1.53 percent conversion rate from player to payer
Digital console is 2.7% of the market today
MMO games are 28 percent of the market, with Free-to-Play MMO games comprising 21 percent of the total market
According to Newzoo, the top 100 countries in the world by game revenue includes:
1.7 billion gamers
$81.5 billion in revenue for 2014 this year
The US is the top country for game revenue in 2014 at $20.5 billion
Japan monetizes the most per person online at $120.20
I ran the numbers differently than they did. You can see the ranks of game revenue by country on the left, but I chose to look at it differently. I divided the revenue by the online population of each country. This gave me the RPPO (Revenue Per Person Online) – since I figure this is a good gauge of technology and that these people are also likely playing on mobile devices. Then I ran the ARPD (Average Revenue Per Day) based on that number divided by 365. It results in some interesting data.
For me, this is most interesting for geographic (soft) launches of mobile games. If we can look at how a game monetizes in specific country or two, we can make a more educated guess about how it might monetize given the propensity to spend per country. Of course it isn’t flawless, but it sure does give an interesting set of benchmarks to measure against. Here’s the full list.