Augmented and virtual reality markets to grow to $150B by 2020, forecaster says

Digi-Capital managing director Tim Merel believes that augmented reality, where you can add a virtual overlay to glasses that enable you to see the real world in a new way, will be four times bigger at $120 billion than virtual reality, which immerses you in a virtual world via goggles.
Merel estimates that virtual reality will be more of a niche market at $30 billion by 2020. In 2016, Merel believes the market will be single-digit billions. “VR [virtual reality] and AR [augmented reality] are exciting, Google Glass coming and going, Facebook’s $2 billion for Oculus, Google’s $542 million into Magic Leap, not to mention Microsoft’s delightful HoloLens,” said Merel in a statement.
“There are amazing early stage platforms and apps, but VR/AR in 2015 feels a bit like the smartphone market before the iPhone. We’re waiting for someone to say ‘One more thing …’ in a way that has everyone thinking ‘so that’s where the market’s going.”
Merel acknowledges that a “pure quantitative analysis of the VR/AR market today is challenging, because there’s not much of a track record to analyze yet.” But he believes VR/AR are compelling enough to grow new markets and cannibalize existing ones after the technology really starts taking off next year.
“VR and AR headsets both provide stereo 3D high-definition video and audio, but there’s a big difference,” Merel said. “VR is closed and fully immersive, while AR is open and partly immersive, you can see through and around it. Where VR puts users inside virtual worlds, immersing them, AR puts virtual things into users’ real worlds, augmenting them.
“You might think this distinction is splitting hairs, but that difference could give AR the edge over not just VR, but the entire smartphone and tablet market. There are major implications for Apple, Google, Microsoft, Facebook and others.”
Merel said that VR is great for games and 3D films. However, he sees it primarily as a living room, office, or seated experience, as you might bump into things if you walked down the street wearing a closed headset.