What you need to know

Some 33% of people who own and use a VR headset use the device to watch films, rising from 22% in 2019. Apps like AmazeVR, which feature interactive short films which place the user into the narrative of the story, highlight the direction that the major streaming platforms could move in with their VR apps to take advantage of the growing trend of watching films on a headset. Netflix, for example, has already experimented with interactive films and offering them in VR would take that to the next level.

In terms of how the usage of VR headsets has changed since COVID-19, some 40% of people who own and use a headset have used it more since the pandemic. With the UK returning to a full national lockdown in January 2021, it is likely that consumers have maintained this higher usage of VR headsets. However, due to the individualistic nature of the technology, usage is expected to drop after whatever point consumers can resume face-to-face interaction. A third of people interested in buying VR headsets say that COVID-19 has made them more likely to consider buying one, indicating that the pandemic could – or at least should – provide a platform for growth.

The biggest challenge for the VR industry is converting general interest into sales. Interest in the technology has been there for several years and our latest data shows that 30% of consumers are interested in buying a VR headset. However, overall ownership has stayed at a similar level, with 7% of people owning a headset now, the same level as in 2018.

One of the key audiences that could help to turn interest into sales is Older Millennials. Some 40% of them who are interested in buying a VR headset are now more likely to consider buying as a result of COVID-19. Our upcoming In vs Out-of-Home Leisure - UK, May 2021 Report has also found that 39% of Older Millennials say that more artistic content in VR would make it worth buying a headset, compared to the 24% average. Therefore, retailers demonstrating concert apps like Melody VR in stores could have success in engaging Older Millennials to buy headsets.

Key issues covered in this Report

  • The short-, medium- and long-term impact of COVID-19 on buying and using virtual reality headsets.

  • Which type of VR headset consumers own and which factors are most important to them when deciding on a new headset.

  • The growth in using VR headsets to watch films and how the major streaming platforms can enhance their apps to take advantage of this trend.

  • The interest in VR for people who do not currently have headsets and some of the barriers to using technology.

COVID-19: market context

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. As the case level rose, the government ordered the closure of non-essential stores on 20 March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolute necessary’ followed on 23 March. It wasn’t until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions in January 2021, effectively leading to a full UK-wide lockdown. There is no defined end date for the lockdown, although the legislation regarding the English lockdown that was presented to Parliament extends to 31 March.

The UK’s vaccination programme started on 8 December 2020, and with both the Pfizer-BioNTech and the Oxford-AstraZeneca vaccines licenced for use in the UK, the government aims to offer a vaccine to 15 million people by mid-February.

Impact of the January lockdown and the vaccination rollout

Much of this Report was prepared in December 2020, before the announcement of the January lockdown.

However, the content was reassessed and, where necessary, adjusted on 19 January, in order to ensure that our analysis and our forecast expectations still hold true. We have also reassessed the content in the light of the progress of the vaccine rollout, and the resolution of the Brexit negotiations.

Our core assumptions on the path of the pandemic had always included an expectation of severe disruption to markets and consumers’ lifestyles well into 2021, with a strong likelihood that the virus would still be with us even into 2022. Although the second wave of infections and subsequent lockdown puts us towards the negative end of our initial expectations, these developments are still broadly consistent with our previous assumptions.

Similarly, Mintel had factored in the likelihood that an effective vaccine would be available from early- to-mid 2021. The licensing of the Pfizer-BioNTech and Oxford-AstraZeneca vaccines puts us slightly ahead of that assumption, but the challenge associated with rolling out a new vaccination programme to millions of people means that our previous assumptions are still broadly consistent with the new reality.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP will have fallen by 11.3% in 2020, recovering by 5.5% in 2021, and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until the fourth quarter of 2022. The central scenario has unemployment peaking at 7.5% in Q2 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The second wave of infections and subsequent lockdowns mean that the short-term prospects for the country are consistent with the OBR’s negative scenario, but this needs to be balanced against the fact that the vaccine rollout is ahead of even the OBR’s central scenario. In the medium to-long term- , then, we are still basing our forecasts and market analysis on the OBR’s central economic scenario.

Products covered in this Report

This Report looks at the UK market for Virtual Reality. This is defined as computer-generated 3D simulations experienced through a headset and often using electronic equipment such as handheld controllers to interact with the environment. The Report includes the market for consumer virtual reality headsets and content used in and out of the home. It also focuses on usage of VR, perceptions of the technology and which applications consumers are most likely to use.

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