Augmented Reality Will Be Much Bigger than Virtual Reality, Study Says

Digi-Capital says Mobile AR will be main driver of $108 billion market by 2021

Pokémon Go may have been a flash in the pan, but augmented reality — specifically mobile — will completely overshadow virtual reality in the near future, according to a new study from Digi-Capital.

VR may still be one of the darlings of the tech and entertainment world, at least if the Consumer Electronics Show is any indication, but Tim Merel, the founder and CEO of Eyetouch Reality and Digi-Capital, believes that mobile AR is going to be the engine of a combined VR/AR market that could top $100 billion by 2021.

“Our new Augmented/Virtual Reality Report 2017 base case is that Mobile AR could become the primary driver of a $108 billion VR/AR market by 2021 (underperform $94 billion, outperform $122 billion) with AR taking the lion’s share of $83 billion and VR $25 billion,” he wrote.

Merel cited relatively slow sales from the two main PC-tethered VR devices, the Oculus Rift and HTC Vive, as well as Samsung’s phone problems as significant factors that slowed the trajectory of VR. Meanwhile, Pokémon Go made more money than the entire VR software market did last year, according to the story.

“Where at the start of the year we thought 2016 could deliver $4.4 billion VR/AR revenue ($3.8 billion VR, $0.6 billion AR), the launch year’s issues resulted in only $2.7 billion VR revenue,” Merel wrote. “This was counterbalanced by Pokémon Go’s outperformance helping AR to an unexpected $1.2 billion revenue, for a total $3.9 billion VR/AR market in 2016 (we were 11% optimistic). But the last 12 months have fundamentally reshaped how the market could grow going forward.”